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Senate shift could mean new tack on tech issues

November 6, 2002 12:00 PM ET

Computerworld - WASHINGTON -- The biggest impact of Republican control of both houses of Congress, and the leadership changes it will bring about, could be on efforts by Sen. Ernest "Fritz" Hollings (D-S.C.) to bring "opt-in" privacy protections to online commerce as well as force hardware makers to build copyright protections into their products.
Hollings' legislative efforts drew the ire of the tech industry, which will be happy to see Sen. John McCain (R-Ariz.) return as chairman of the key U.S. Senate Commerce Committee.
"McCain is certainly more tech-industry-sensitive then Hollings," said John Palafoutas, vice president of the tech industry group AEA in Washington. But Hollings "is still a force to be contended with, and for anything to happen in that committee, Sen. McCain is going to need Hollings' cooperation."
The differences between McCain and Hollings were obvious on privacy, where McCain has previously backed an opt-out approach to privacy legislation. Hollings wanted opt-in, or customer consent.
But while the Senate Commerce Committee will likely see a shift in approach, the same can't be said for the Senate Banking Committee, which is expected to take up renewal of the state preemption provisions of the privacy protections in the Fair Credit Reporting Act (FCRA).
The FCRA allows sharing of certain kinds of data among business affiliates; states are prohibited from setting their own data sharing rules. That particular provision, which expires at the end of next year, has the potential to become the leading financial privacy issue of 2003.
In this case, a change in leadership may not make a difference. Sen. Paul Sarbanes (D-Md.), the current chairman of the banking committee, may be replaced by Sen. Richard Shelby (R-Ala.), who is also a very strong advocate for privacy protections.
"Shelby is one of the most ardent pro-privacy senators of either party," said Evan Hendricks, editor and publisher of Privacy Times. "Privacy is in much better shape there [in the banking committee] than anywhere else."
But the Senate Commerce Committee has been the key committee for technology legislation. It was there that Hollings began his effort, through Senate Bill 2048, to force technology makers to build in mechanisms to stop piracy.
That measure, widely attacked, already faced problems. "If it wasn't already going nowhere, I think with the Republican control of the Senate it would be even less so," said Rhett Dawson, president of the Information Technology Industry Council.
The Republicans, said Dawson, "are even less enthusiastic about having Congress get in the middle of technology choices" than the Democrats.
Tech industry officials, however, said no tech bills will get passed without Democratic support, particularly because of the 60-vote rule in the Senate.
Ari Schwartz, associate director of the Center for Democracy and Technology, said McCain worked to get bipartisan privacy legislation adopted, and he believes that debate will resume. "There are a significant number of members ... that are for stronger privacy rules."
In April, Hollings introduced an online privacy bill requiring opt-in, or consumer consent, before a business could sell or share some types of personal information.
Technology association and business trade groups, by contrast, have supported opt-out laws because consumers often don't take advantage of them (see story). For example, the 1999 Gramm-Leach-Bliley financial modernization act included a number of opt-out privacy protections.
Gramm-Leach-Bliley gave customers the right to stop financial service firms from selling or sharing their personal data with third parties. All that customers had to do was opt out. But critics charged that the privacy notices were full of legal jargon, fine print and difficult to understand. Less then 5% of customers opted out of data sharing.
But the new Congress will have to deal with a spreading backlash over financial privacy protections. In August, San Mateo County, Calif., approved a measure forcing financial services in that county to get a customer's permission, or opt in, before sharing data with third parties. The county also now gives customers an ability to opt out of data sharing with a company's affiliates -- something Gramm-Leach-Bliley doesn't even address.
In June, voters in North Dakota overwhelmingly voted to tighten financial privacy laws. Vermont officials have also imposed similar restrictions.

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