Leibowitz Challenges Cable Industry to Self-Regulate
LOS ANGELES -- FTC Chairman Jon Leibowitz said the fastest way to protect consumer privacy on the Internet is through government regulation, but it’s not the preferred method. Speaking at the NCTA show Wednesday, he stressed the agency doesn’t want to stifle innovation or shut down the online marketplace. “But we do want to protect consumer choice and control,” he said. “And the message we have to the business community is: As long as you work toward the goal of meaningful self-regulation, then we will support it. But Congress will step in if the business community falls off the track and does not find a way to protect consumers’ privacy.”
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Leibowitz warned that consumer online privacy “is going to be a big issue for everyone in the room during the next Congress. The more forward progress [the broadband industry] shows, the less pressure there will be to push through legislation to address the issue.” The FTC tries to be reasonable and balanced and understands that targeted ads can be good for the consumers, good for the advertisers and good for the Internet because, he said. “It does support the free content everyone in this country has come to expect. But behavioral advertising raises questions of consumer control.”
Internet users “scatter crumbs of personal information wherever they go,” Leibowitz said. “But they have no idea what these invasions of privacy may lead to –- if they are even aware advertisers are charting their personal information.” It’s also problematic that consumers have no say in how the data is stored or necessarily know if it is stolen, he said. While security is a top priority of the FTC, Leibowitz said it’s been very difficult for the agency to find the right framework to analyze behavioral advertising. “We want to stop practices that do consumers harm, but how do we quantify the loss of personal info or privacy?”
An easier issue is making sure advertisers and businesses provide truthful information, Leibowitz said. “Notice and consent only works when consumers understand what exactly they are consenting to. It seems that disclosure forms are currently written by lawyers paid by the syllable so rarely does consent involve true choice.” He cited when Sears paid consumers $10 to opt in to let the retailer track their information.“ Sears tracked not just what sites they visited but pharmacy purchases, bank accounts. I don’t believe there was malicious intent and Sears wasn’t sure what they wanted to do with the information. But even though it was an opt-in, it is doubtful consumers really understood what they were agreeing to.” Leibowitz still believes an opt-in process will probably work best.
Leibowitz outlined four principals he felt necessary to address the privacy issue. First, each website gathering data needs to tell consumers what they are doing and why they are doing it, upfront in clear language, he said. “And not buried deep within the site in a four-point font.” Second, companies that collect consumer data need to store it securely and delete it after a specified length of time. Leibowitz noted: “Yahoo’s data retention is down to around 90 days.” Companies need to materially change their privacy policies to be in opt-in form, he said. And finally, companies that use sensitive data only can only use it after affirmative-expressed consent from consumers. “Companies need to be sensitive as to what consumers think is sensitive,” Leibowitz said. Summing up, he said, “You can’t go wrong if you allow the principle of transparency to rule cyberspace.” -–