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Congressional staffers have posted a very well-written summary of the two Internet privacy bills working their way through the U.S. Congress. It provides a nice birds-eye-view of what the two bills are trying to accomplish without the usual reams of supporting information and point-counterpoint verbiage.

The memorandum was prepared by the staff of the Committee on Energy and Commerce subcommittee on Commerce, Trade, and Consumer Protection, which held hearings last week on the two.

Three key paragraphs sum up the issues and the balancing act between preserving consumer privacy and allowing fair commercial use of information that the Congressmen are struggling with:

“There is no dispute that the reasonable collection and use of consumer information offer benefits to businesses, consumers, the marketplace, and society generally. Companies must collect information to process transactions and conduct day-to-day operations. Moreover, authentication, fraud prevention, and background checks are all activities that rely on consumer information. In addition, marketing databases help companies identify new sales leads, improve customer service, develop new lines of products, and make marketing more efficient.

“However, numerous consumer groups, privacy advocates, academics, companies, and others have raised privacy concerns about the collection and use of consumer data. Most recently, 17 consumer groups outlined their concerns and renewed their call for a comprehensive consumer privacy law in a letter to the Federal Trade Commission (FTC) on July 14, 2010. Privacy concerns range from being subjected to unwanted marketing to being denied goods or services based on a profile. In addition, the sale of targeted customer lists that characterize consumers as risk takers or gullible may expose consumers to increased risks of fraud. The use or misuse of sensitive information such as health information also could embarrass consumers, impact their employment, or lead to other problems. Other concerns have also been raised that consumers will unknowingly be “boxed” into categories based on past behavior and that their choices, and the information presented to them, will be limited as a result.

“Transparency is another issue raised by many stakeholders. Data collection practices are complex, varying from entity to entity. Even when choices are offered to consumers, they may be difficult to use, require the payment of fees, or only partially address the collection or use of information.”

The hearing process has just begun for these two. Stake holders on every side of the issue have been contributing to the discussion. The next step will be a new draft or drafts with revised wording reflecting the compromises. We’ve seen no estimate of how long that might take.

The bills:

— The Best Practices Act (HR 5777), introduced July 19 by Rep. Bobby L. Rush (D-Illinois). (Text here.)

— A discussion draft of a bill that would “require notice to and consent of an individual prior to the collection and disclosure of certain personal information relating to that individual” submitted May 3  by Congressman Rick Boucher (D-Va.) and Cliff Stearns (R-Fla.). Boucher is Chairman of the House Committee on Energy and Commerce Subcommittee on Communications, Technology and the Internet and Sterns is Ranking Member. (Text here. )

Summary memo here.

Earlier Sunbelt Blog coverage here: “Is there a privacy law in the making for the U.S.?”

Tom Kelchner

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