Privacy groups ask Obama for stronger FTC

About a dozen leading privacy and consumer groups met with members of President-elect Barack Obama's transition team Tuesday to discuss the Federal Trade Commission's role in protecting consumer privacy.

While participating organizations addressed a range of problems and potential solutions, the underlying message was clear: the FTC has for too long allowed industries to self-regulate their online privacy practices--to the detriment of consumers.

"The FTC keeps moving the goal post on what privacy advocates need to prove" before it provides substantive regulation, said Chris Jay Hoofnagle, director of the Berkeley Center for Law and Technology's Information Privacy Programs. "The commission has taken this posture that allowed business interests to win by just showing up. Self-regulation in online privacy has gotten more than a fair shake."

Hoofnagle took part in Tuesday's meeting, along with representatives from the Privacy Rights Clearinghouse, the Consumer Federation of America, the American Civil Liberties Union, the Center for Digital Democracy, the World Privacy Forum, the Electronic Privacy Information Center, the Privacy Times, the Privacy Journal, the Consumers Union, the Electronic Frontier Foundation, and U.S. PIRG, the federation of state Public Interest Research Groups. The groups met with Susan Ness and Phil Weiser, the FTC review team leaders for the Obama transition team.

While the transition's agency review leaders have been seeking insight from numerous sources about the functionality of agencies like the FTC, this meeting was held at the request of the privacy groups, according to Jeff Chester, the executive director of the Center for Digital Democracy.

"We wanted to impress upon the transition team that there are many online privacy issues that need to be the highest priority of the incoming Obama FTC," Chester said. "The last eight years has been a disaster for consumer protection and privacy, and the agency has not really had the interest to work on behalf of consumers to investigate the online ad industry and its harmful and problematic practices."

Along with the need for better regulation of targeted online marketing, the groups discussed the need for more oversight in the data broker industry and privacy policies for medical information, among other things. A range of solutions were offered, from more benchmarks for self-regulated industries to new legislation.

If the FTC is going to let industries self-regulate their privacy policies, it should provide clear benchmarks, Hoofnagle said. Without clearly defining the problems that need to be solved and the measures of success, the commission cannot know when it should intervene, he said.

More regulation for targeted online ads?
The Network Advertising Initiative, for example, is a group of third-party network advertisers including Google and Yahoo that has created its own online behavioral advertising guidelines. The group announced Tuesday it updated its code of conduct, but multiple groups at the meeting with the Obama transition team said that behavioral tracking and targeting is still a problem that the FTC needs to address.

Susan Grant, director of consumer protection at the Consumer Federation, called the practice "deceptive on its face."

"The FTC approach to this issue is emblematic of its timid and inadequate approach to consumer privacy in general over the past several years," she said. "Information is collected by entities with whom people have no relation, without consumers having any idea of what would be done with that information."

The Consumer Federation is calling for the FTC to establish a "Do Not Track" registry, Grant said. The FTC already oversees the Do Not Call Registry, which lets consumers opt out of receiving telemarketing calls. The registry has been very successful, Hoofnagle said, with telemarketers reporting larger profits and more effective results.

"It was a polar opposite from the self-regulatory system," he said. "It seems we can learn from these lessons but the FTC couldn't."

Groups like Center for Digital Democracy are now waiting for Congress to introduce legislation to empower the FTC to better regulate in this area, Chester said.

Congressman Ed Markey (D-Mass.) is, in fact, interested in introducing some type of omnibus electronic privacy legislation next Congress, according to his communications director Jessica Schafer. Though the legislation has yet to be drafted or finalized, it would likely include provisions to protect consumers from online Web tracking used to create targeted online ads, she said. Markey has criticized behavioral tracking in the past.

More oversight of the data broker industry
Multiple groups at Tuesday's meeting also told the transition team that the data broker industry needs better oversight from the FTC.

The Privacy Rights Clearinghouse, a nonprofit consumer rights group, has received numerous complaints from consumers about companies that sell their personal information, including companies that supposedly violate their own privacy policies, according to the Clearinghouse's director Beth Givens.

"This is an unregulated industry that needs to be investigated by the FTC," Givens said. "It's long overdue."

Data brokering may have contributed to the mortgage meltdown of the past year, Hoofnagle said, since Internet users would typically face a deluge of offers from mortgage brokers after making a single inquiry online about how to get a mortgage.

Those who participated in the meeting said it was difficult to gauge the transition team's interest in their ideas.

"They were in fact-gathering mode," Grant said.

One significant improvement Obama could make to the FTC, Hoofnagle said, would be to alter its makeup by appointing a commissioner to with a background in consumer advocacy.

"If you look around they're often antitrust lawyers," he said. "That reflects its important antitrust mission, but that leaves the other half of the mission a little short."

The privacy and consumer advocates also suggested Obama consider creating a national privacy official. The United States and Japan are the only two countries in the developed world that do not have overarching privacy laws or an official who enforces them, said Barry Steinhardt, director of the Technology and Liberty Program for the ACLU.

"It's time for the us to get in the international consensus on that," he said.