NewsMax Wires
Thursday, May 16, 2002

The bill as now written would require that individuals specifically grant permission before Internet providers or companies with Web sites can collect or use sensitive personal data such as financial information, ethnicity, sexual orientation, or political party affiliation.

Other nonsensitive data -- such as items purchased -- could be shared without advance permission but customers would still have the opportunity to "opt-out" of such exchanges.

The legislation also mandates that individuals be allowed, under 'reasonable" circumstances to see information kept about them and try to correct anything they believe erroneous.

The bill, S. 2201, was introduced by Sen. Ernest Hollings, D-S.C., who will offer the amendment. According to a summary of the amendment provided by Hollings' office, the bill would still apply to the activities of federal agencies as well as companies. It would also pre-empt relevant state privacy laws. Individuals could still sue directly for compensation in the case of violations involving sensitive data and states can sue on behalf of their residents for other types of violations.

In a controversial expansion, the amendment would mandate that the Federal Trade Commission draft rules within six months to bring privacy practices for off-line sources in line with those for online data. If, after 18 months, Congress failed to adopt a new law making treatment of the two types of data comparable, then the draft FTC rules would go into effect.

The expansion of the bill to off-line data, such as that gathered when grocery-store shoppers use a preferred-customer card, is controversial. Groups against online privacy legislation have asserted that off-line data need to be included in any privacy legislation or treatment of the two types of data would be unfair and incomplete.

Complicating the Debate

Privacy groups have suggested, however, that including off-line data provisions is a tactic to complicate the debate and thereby stop legislation of any kind from becoming law.

"[Such a stoppage] is a significant concern," said Hollings spokesman Andy Davis. "That has certainly been part of the concern amongst members on the committee.

"If you try to make an absolute equivalent -- you can't do online privacy unless you are doing equivalent things in the off-line world -- ultimately you won't pass either," he said.

"Meeting all those off-line concerns is not a reason not to move forward on online privacy," Davis told United Press International.

But regulating off-line data could have untoward consequences and needs "a lot more investigation," asserted Jerry Cerasale, senior vice president of government affairs at the Washington-based Direct Marketing Association. Direct marketing is responsible for $1.7 trillion in sales annually, Cerasale told UPI.

The Hollings bill could have a significant impact Cerasale said, increasing costs and --unfortunately -- suggesting to other countries that the United States was more open to the regulation of the Internet. Moreover, if off-line data rules were to be established, they should not be set by the FTC, said Cerasale. "We think that's just a broad expansion of FTC power and, at a minimum, Congress should be setting the standards," he said.

Cerasale takes the position, however, that the problem is more fundamental and that the bill is trying to address concerns that industry self-regulation can handle. "Our basic view is, this kind of overall privacy bill is not necessary."

Copyright 2002 by United Press International.

All rights reserved.

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