Online privacy bills would hurt e-commerce, trade group says

IDG News Service - Proposals in the U.S. Congress that would create new rules for websites collecting personal data would cripple the online advertising and publishing industries, e-commerce trade group NetChoice said Thursday.

NetChoice, in releasing its fourth Internet Advocates' Watchlist for Ugly Laws (iAwful), named online privacy legislation from Representative Bobby Rush and a similar draft bill from Representatives Rick Boucher and Cliff Stearns as the worst current legislative proposals for the Internet.

Second on the iAwful list is the Main Street Fairness Act, a bill from Representative Bill Delahunt, a Massachusetts Democrat, that would allow states to collect sales taxes from online sellers after they sign on to the so-called Streamlined Sales and Use Tax Agreement.

The bill from Illinois Democrat Rush, introduced in July, would allow individual Internet users to sue some websites and advertising networks if they fail to comply with the legislation's rules on getting permission for collecting personal data. The bill, which would allow Web users to seek up to $1,000 per violation, would create a "barrage of lawsuits," said Steve DelBianco, executive director of NetChoice.

Rush's bill, along with the privacy draft from Virginia Democrat Boucher and Florida Republican Stearns, would regulate marketing data used in behavioral, or interest-based, advertising, DelBianco said. Marketing data "deserves much less concern" over privacy than does financial or medical information, he said.

"If we apply the same financial and medical scrutiny to non-personally identifiable information, we're going to endanger one of the few remaining growth industries where America leads the world, that is online services," he added. "These bills, if they move forward, are going to make interest-based advertising much less effective. That causes less revenue to pay for reporters, for writers, for developers ... on ad-supported websites."

The two proposals would make it easy for website users to opt out of data collection, even when it's not personally identifiable, DelBianco said. The Boucher and Stearns proposal would create new data-collection regulations for small websites asking only for user names, he added.

There has been recent controversy over the privacy implications of new products offered by Google, Facebook and other websites, but users and privacy advocates let the companies know immediately of their privacy concerns, DelBianco said.

"Those companies made adjustments right away, in Internet time, not on legislative time," he added. "That's the way it ought to work. If America is going to continue to innovate, we need flexibility to try things and the flexibility to immediately adjust and react. If you don't keep customers happy, they leave."

Representatives of Rush and Boucher didn't immediately respond to a request for comments. But both lawmakers have said they're concerned that e-commerce sites have little oversight about what information they collect from consumers. Some privacy advocates have criticized the bills, saying they would write lax privacy practices into law.