The FTC Releases Report Calling for Less Consumer Tracking and More Transparency

Monday, April 2nd 2012 by Barbara L. Herrera

The Federal Trade Commission (FTC) has released a new report titled, “Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Business and Policymakers.”

In this detailed report, the FTC is calling for many changes to help improve and protect consumer privacy while more companies and industries are tracking consumer information unbeknownst to the consumer. For example, the FTC is calling on industry efforts to continue development on the Do Not Track system, which allows consumers to opt out of third party tracking.

Another recommendation is that companies dispose of customer information after completion of a particular transaction.  This would mean, for example, that after a weekend vacation is over, the customer would not be contacted with additional advertisement for car rentals and hotel offers.

Additional recommendations include providing consumers with the same level of protection as desktop users, improve overall disclosure about tracking systems, and requesting that the industry develop a centralized self-regulatory program that would set industry standards to which the public can determine whether a company’s behavior is an acceptable one.

Companies and marketers are at odds with the FTC on its recommendations, asserting that companies should make the ultimate choice on how consumer data is stored. Noting that some sensitive information should have higher protection, consumer data indicating purchasing habits may not be harmful, and this information is oftentimes critical for the success of marketers.  More importantly, having such regulation would impede Internet companies and networks by imposing additional burdens and hindering growth.

“The recommendations by the FTC and the Obama administration have set the stage for regulatory reform on consumer privacy protection.”

Others believe that despite the FTC’s efforts, the recommendations are still too soft. Urging the industry to be self-regulating and developing systems like the Do Not Track system may simply not be enough.  The FTC has its hands tied however, since the FTC has limited power in enacting and enforcing rulesthat would dictate what Internet and date providers can do with tracking consumer information.

Still, despite the lack in power, the FTC can have a heavy hand in helping influence legislation through Congress. Many of the provisions of the report reflect recommendations by President Barack Obama’s administration in the proposed “Consumer Privacy Bill of Rights.” This Bill, much like the report, seeks more accountability and transparency from data brokers and Internet providers, and declares that the consumer has the right to limit the information that is used by these providers.

The recommendations by the FTC and the Obama administration have set the stage for regulatory reform on consumer privacy protection. The FTC guidelines were two years in the making, through various drafts that took into consideration many comments regarding the proposed guidelines. This is indicative of the battle consumers and regulators will face. Consumers who will welcome these changes will have to face a major opposing group: U.S. businesses that have come to rely on easily retrieving consumer purchasing habits through data brokers. Certainly, such disparate positions will require more of a balance.  Reaching this balance is the next step, whether or not companies and data brokers take the initiative, as the FTC suggests.