Internet Advertising Privacy Bill Draws Criticism from Both Sides

In this morning’s Quick Hits we gave a preview of Rep. Rick Boucher (D-VA) and Rep. Cliff Stearns’ (R-FL) pending Internet advertising legislation. This afternoon, the full text of the legislation hit the web. You can check out a copy of the legislation in PDF form here – Discussion Draft Of Internet Advertising Privacy Legislation.

Predictably, the legislation is being criticized by the Internet marketing industry for being overly broad and too restrictive. Interestingly, privacy advocates also have problems with the legislation, complaining that it doesn’t go far enough in protecting user data.

A recent Forbes article discusses both sides of the debate.

One of the key battles in online privacy has been over the question of “opt-out” vs. “opt-in”: Should users have to agree to have their online behavior data collected, or should sites legally be allowed to track their behavior by default, with an option to stop that collection upon request?

Boucher’s and Stearns’ bill offers just enough of each approach to please neither advertisers nor privacy advocates. For sensitive data such as telephone numbers, postal and e-mail addresses, social security numbers or financial data, a site would have to explicitly request a user’s permission to track and store the information. For tracking of users’ paths around the Web for what the bill calls “transactional” or “operational” purposes, sites would be allowed to collect data on users’ behaviors without their permission, though they would be required to overtly state on their site with a “seal or symbol” that the page engages in behavioral tracking, and would have to allow the user to prevent that tracking upon request.

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To Mike Zanneis, vice president of public policy at the Internet Advertising Bureau, the new safeguards sound ill-defined and potentially dangerous to the $23 billion online ad industry. “Opt-in is really the most burdensome privacy restriction that we implement in the U.S.,” Zanneis says.

He argues that the data requiring opt-in measures defined by the bill in its current form could include not just names and addresses but also IP addresses and “cookie” files that sites download to a user’s browser to note his or her path on the Web. “We know that greater than 70% of all online advertising depends on targeting techniques,” he says. “If we have an opt-in standard for cookies, that would impact the vast majority of online advertising, and that’s what we want to avoid.”

Meanwhile, privacy advocates argue that the bill’s exemption for “operational” collection of data–allowing those practices to take place under an “opt-out” rule–gives advertisers far too much leeway. “This bill really adopts an archaic and bankrupt ‘notice and consent’ regime that we all know doesn’t’ work,” says John Simpson, head of the Google Privacy and Accountability project at Consumer Watchdog.

Clearly, given the negative reaction from both sides, Boucher and Stearns will have to go back to the drawing board before they can take the legislation from the discussion phase into the halls of Congress. What do you think of the legislation in its current form?