FTC wants to beef up consumer privacy standards

Federal Trade Commission chairman Jon Leibowitz testified before Congress this month, calling his agency's new privacy framework a "decisive moment" for consumer privacy. In March, the FTC unveiled the final version of a report it has worked on since releasing an early public draft in December 2010.

The report impacts credit card issuers, technology companies, and any other businesses that handle consumer data. Leibowitz told lawmakers that the FTC's report and underlying policy recommendations hinge on three main areas: privacy by design, simplified choice and greater transparency.

  1. "Privacy by Design" - Companies that intend to handle more than 5,000 consumer records must build privacy protections into their products from the beginning, according to the FTC report.
  2. "Simplified Choice" - In addition to offering service-specific "do not track" mechanisms, companies must adhere to industry standard tracking preference tools, like those included in modern web browsers.
  3. "Greater Transparency" - The FTC called on companies to provide consumers access to the information collected about them, with clear disclosure about how companies gather and use the data.

"Do Not Track" movement gains momentum

The December 2010 draft report inspired discussions of a comprehensive "do not track" system, enabling consumers to opt out of online advertising tracking using clear, browser-based tools. In his testimony, Leibowitz praised Microsoft, Mozilla, Apple and Google for implementing the agency's recommendations in the latest versions of their web-browsing applications. Leibowitz cited recent enforcement actions against RockYou and UPromise as examples of how the FTC intends to prosecute firms that fail to ensure consumer privacy.

Leibowitz also told lawmakers that the FTC would pay closer attention to the actions of third-party data brokers. These companies, including major credit reporting agencies, have licensed information from online platform operators and advertisers that could eventually match up with consumer credit reports, credit card purchase histories, or location data. Available for download from the agency's website, the FTC report calls upon data brokers to disclose how they collect and use consumer information.