A bill has been introduced to Congress that would give consumers a right to block certain companies from tracking consumer Internet activities, and the Federal Trade Commission (FTC) Chairman is predicting congressional action on Internet privacy if industry doesn’t make progress on self-regulation. The bill, titled the “Do Not Track Me Online Act,” was introduced to the House on February 11 by Rep. Jackie Speier (D-CA). It directs the FTC to establish regulations that would prohibit the collection or use of information relating to online activities if a consumer “opts out” of such tracking. Industry observers believe the opt out mechanism would most likely take the form of signal, or “flag,” from customers’ Internet browsers to commercial entities.
FTC enforcement is the heart of privacy regulation in online commercial dealings in the United States, but the agency’s activity has been confined primarily to action against companies for breach of their own privacy promises. Regulations under “Do Not Track” would expand the FTC’s reach and effectively give consumers—backed by FTC enforcement—the ability to control companies’ privacy practices via an opt out.
The control offered under the proposed bill would be subject to several limitations however. The prohibition on tracking would not apply to federal and state governments or to certain smaller-scale commercial entities. Due to the FTC’s limited statutory jurisdiction, the regulations would also not apply to many financial institutions, to telecommunications carriers, and to airlines. In addition, the bill gives the FTC authority to exempt certain “commonly accepted commercial practices” from the regulations. As such, the opt-out requirement may not apply to tracking that takes place on “primary” websites, such as Facebook, visited by a customer (“first-party” tracking), as opposed to tracking by third-party advertisers or data collectors.
Also notable is the bill’s choice of an opt-out model, rather than a default rule that would bar consumer data retention unless a consumer opts in. When put to the choice, industry generally favors an opt-out, instead of opt-in, rule. Opt-out rates are historically very low, despite an apparently overwhelming consumer preference for greater online privacy.