Congress starts scrutinizing online privacy

The debate over online privacy tends to be simplified as a tug of war: Consumers demanding privacy protection are pitted against businesses that fear government restrictions will hamper electronic commerce. But legislators, who are rolling up their sleeves on privacy legislation this session, are learning the issue is not so black and white.

Lawyers and analysts framed the debate in a larger historical and legal context in recent testimony before the U.S. House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection.

"Isn't privacy one of those warm fuzzy things everyone should be in favor of?" asks Eugene Volokh, a law professor at the University of California at Los Angeles who previously served as the chief consumer protection economist at the U.S. Federal Trade Commission. "But if people have the right Exploitation of personal information is the fear voiced by worried consumers. Junk mail is often cited as an annoying result of such Web site data-gathering. to control information about themselves, they also have the right to stop others from communicating, and that's where we run into the First Amendment."

Such freedom is both an individual and a business interest where privacy in the digital age is concerned, says Solveig Singleton, a lawyer and policy analyst at the Competitive Enterprise Institute, an organization dedicated to the principles of free enterprise and limited government.

"What has not been widely recognized is the extent to which business relies on the freedom of information for businesses and services," Singleton says. "The idea that people should own and control information about themselves is a radical and extreme departure from the free flow of information that has made the U.S. the world's leading economy."

The ideas that privacy can actually be good for business and that information sharing can actually be good for consumers are the "two dirty little secrets" of the privacy issue, says Rep. Diana DeGette, D-Colorado.

A Different Tack Online

Whether by default or on purpose, the government has taken a new approach to digital information, noted Marc Rotenberg, executive director of the Electronic Privacy Information Center (EPIC).

"The reason we're seeing consumer alarm is that we haven't set up laws," Rotenberg says. "This is really the first instance with a new technology that Congress has decided not to regulate and to allow industry self-regulation." EPIC is a member-funded public interest research center established to focus public attention on civil liberty issues.

Exploitation of personal information is the central fear voiced by consumers worried about e-commerce privacy, and junk mail is often cited as an annoying result of such Web site data-gathering. But in actuality, the opposite is true, according to Fred Cate, a law professor at Indiana University in Bloomington who testified at last week's hearing.

If online companies can't gather information about their customers, they can't target their mailings to reflect consumers' likely interest, and the result is even more junk mail, he says.

Emory University law and economics professor Paul Rubin raised another view opposing privacy regulation. "The potential benefits of regulation appear to be small because there is little evidence that consumers are now being harmed by misuse of marketing and advertising information."

Growing Scrutiny Expected

But consumers continue to fear that personal information collected on the Web will be exploited.

"The real and perceived fears surrounding privacy need to be addressed," says Rep. DeGette.

The hearing is just the first in a series of many to examine privacy issues, says W.J. "Billy" Tauzin, R-Louisiana, chair of the Energy and Commerce committee.

"Before we can have great debates of how to fix the current situation, we must understand the current situation and the constraints we are bound by," Tauzin said. "Before we add new law, we must examine the old, as the heavy hand of government often takes a broad swipe when invited in."

This story, "Congress starts scrutinizing online privacy" was originally published by PCWorld.

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