FTC releases final privacy report, says ‘Do Not Track’ mechanism may be available by end of year

March 26, 2012

Udpated at 11:45 a.m.

The Federal Trade Commission on Monday outlined a framework for how companies should address consumer privacy, pledging that consumers will have “an easy to use and effective” “Do Not Track” option by the end of the year.

The FTC’s report comes a little over a month after the White House released a “privacy bill of rights” that called on companies to be more transparent about privacy and grant consumers greater access to their data but that stopped short of backing a do-not-track rule.

The FTC also said it plans to work with Web companies and advertisers to implement an industry-designed do-not-track technology so as to avoid a federal law that mandates it. The Digital Advertising Alliance, which represents 90 percent of all Web sites with advertising, is working with the Commerce Department and FTC to create an icon that would allow users an easy way to stop online tracking.

But the enforcement agency said that if the companies aren’t able to get the technology launched by the end of the year, lawmakers should force those companies to offer consumers a similar option to stop tracking.

“Although some companies have excellent privacy and data securities practices, industry as a whole must do better,” the FTC said.

In its report, the agency called on companies to obtain “affirmative express consent” from consumers before using data collected for a different purpose and encourage Congress to consider baseline privacy legislation and measures on data security and data brokers.

The FTC also reiterated its recommendations that Congress pass legislation to provide consumers with access to their personal data that is held by companies that compile data for marketing purposes.

The 73-page report focuses heavily on mobile data, noting that the “rapid growth of the mobile marketplace” has made it necessary for companies to put limits on data collection, use and disposal. According to a recent report from Nielsen, 43 percent of all U.S. mobile phone subscribers own a smartphone.

The commission called on companies to work to establish industry standards governing the use of mobile data, particularly for data that reveals a users’ location.

Commissioner Thomas Rosch dissented from the other commissioners in a 3-1 vote on the privacy report. Rosch said that while he agrees with much of what the agency released Monday, he disagrees with the commission’s approach to the framework, which focuses more on what consumers may deem “unfair” as opposed to actual deception perpetrated by companies.

“Unfairness is an elastic and elusive concept,” Rosch wrote, saying that it is difficult to determine how consumers feel about privacy.

He also said in his dissent that the recommendations were overly broad and would apply to “most information collection practices.”

“It would install ‘Big Brother’ as the watchdog over these practices not only in the online world but in the offline world,” Rosch wrote of the report.

While the FTC is not a rule-making body but an enforcement agency and needs explicit authority from Congress to create new codes, Rosch said he believes that there should be no pretense that the report’s recommendations are “voluntary.”

Many firms, he wrote, may “feel obliged to comply with the ‘best practices’ or face the wrath of ‘the Commission’ or its staff.”

Hayley Tsukayama covers consumer technology for The Washington Post.
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