[Federal Register Volume 63, Number 108 (Friday, June 5, 1998)]
[Notices]
[Pages 30729-30732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15063]
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DEPARTMENT OF COMMERCE
[Docket No. 980422102-8102-01]
RIN 0660-AA13
Elements of Effective Self Regulation for the Protection of
Privacy and Questions Related to Online Privacy
AGENCY: National Telecommunications and Information Administration,
Department of Commerce.
ACTION: Notice and request for public comment.
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SUMMARY: The Department of Commerce, along with the Office of
Management and Budget has been asked to report to the President on
industry efforts to establish self-regulatory regimes to ensure privacy
online and to develop technological solutions to protect privacy. The
President also directed the Commerce Department and the Office of
Management and Budget to ensure that means are developed to protect
children's privacy online. The Department of Commerce requests comments
on various aspects of Internet Privacy including the effectiveness of
self regulation for privacy. Specifically, the Department of Commerce
seeks comment on the staff discussion paper ``Elements of Effective
Self Regulation for Protection of Privacy.'' It also asks for responses
to specific questions concerning online privacy protection. In
addition, the Department seeks input on the specific instances in which
government action may be necessary to protect privacy on the Internet.
DATES: Comments must be received by July 6, 1998.
ADDRESSES: Mail written comments to Jane Coffin, Office of
International Affairs, National Telecommunications and Information
Administration (NTIA), Room 4898, 14th St. and Constitution Ave., NW,
Washington, DC. 20230, or email comments to privacy@ntia.doc.gov.
Messages to that address will receive a reply in acknowledgment.
Comments submitted in electronic form should be in ASCII, WordPerfect
(please specify version), or Microsoft Word (please specify version)
format. Comments will be posted on the NTIA website at http://
www.ntia.doc.gov. Detailed information about electronic filing is
available on the NTIA website, http://www.ntia.doc.gov. Paper
submissions should include three paper copies and a version on diskette
in a format specified above.
FOR FURTHER INFORMATION CONTACT: Jane Coffin, NTIA, (202) 482-1890.
SUPPLEMENTARY INFORMATION:
Background
The rapid growth in the use of the Internet, for both personal and
commercial purposes, has led to increased public concern about personal
privacy. The promise of information technologies--their ability to
facilitate the collection, re-use and instantaneous transmission of
information--can, if not managed carefully, diminish personal privacy.
A Framework for Global Electronic Commerce, issued by the
Administration on July 1, 1997, recognizes that it is essential to
assure personal privacy in the networked environment if people are to
feel comfortable doing business online.
There are a number of statutory or regulatory regimes that continue
to apply in an online environment (e.g., the Fair Credit Reporting
Act). For Internet industries and commercial activities not covered by
statute or regulation, however, the Administration has called on the
private sector to develop self-regulatory mechanisms to protect privacy
online. The President directed the Department of Commerce and the
Office of Management and
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Budget to work with the private sector to develop and implement
effective, consumer-friendly, self-regulatory privacy regimes. These
regimes should enable consumers to choose how their personal
information will be used, ensure adoption of and adherence to fair
information practices, and provide for prompt, efficient dispute
resolution.
The Administration supports private sector efforts to implement
effective self-regulatory privacy regimes for the Internet. These
include mechanisms for facilitating consumer awareness of privacy
principles and the exercise of choice about whether and under what
circumstances to disclose personal information online, evaluating
private sector adoption of and adherence to fair information practices,
and dispute resolution. The Administration also anticipates that
technology tools will empower consumers to exercise choices about their
privacy. If, upon evaluation, this approach proves not to be effective,
other government action may be needed.
The Department of Commerce has talked with industry, members of the
academic community, public interest groups and the international
community to consider what characteristics of a self regulatory program
would be necessary to protect privacy effectively. The Department seeks
the views of the public regarding the draft discussion paper,
``Elements of Effective Self Regulation for Protection of Privacy''
(``the draft discussion paper'' published below), which proposes the
elements that should be present in a self regulation regime that
effectively protects privacy online, while encouraging industry to
craft methods of implementing those elements that best serve its needs
and the needs of its consumers. The Department also seeks comment on
issues surrounding self regulation and online privacy. Specifically,
the Department seeks information on the following:
1. The discussion paper sets out nine specific characteristics of
effective self regulation for privacy: awareness, choice, data
security, data integrity, consumer access, accountability, consumer
recourse, verification and consequences. Which of the individual
elements set out in the draft discussion paper do you believe are
necessary for self regulation to protect privacy? To what extent is
each element necessary for effective self regulation? What are the
impediments and costs involved in fulfilling each element of a self
regulatory scheme? What are the competing interests in providing each
element? How would the inclusion of each element affect larger, medium
sized, and smaller companies? What advantages or disadvantages does
each element hold for consumers? What are the challenges faced by
companies in providing each element? How do these challenges depend
upon the size and nature of the business?
2. The draft discussion paper notes that individual industry
sectors will need to develop their own methods of providing the
necessary requirements of self regulation. How might companies and/or
industry sectors implement each of the elements for self regulation?
3. Please submit examples of existing privacy policies. In what
ways do they effectively address concerns about privacy in the
information to which they apply? In what ways do they fail?
4. Are elements or enforcement mechanisms other than those
identified in the draft discussion paper necessary for effective self
regulation for privacy protection? If so, what are they? How might they
be implemented? In addition to the fair information practices and
enforcement mechanisms stated in the discussion draft, are there other
privacy protections or rights essential to privacy protection?
5. Should consumer limitations on how a company uses data be
imposed on any other company to which the consumer's information is
transferred or sold? How should such limitations be imposed and
enforced?
6. Please comment specifically on the elements set out in the draft
discussion paper that deal with enforcement (verification, recourse,
and consequences) and suggest ways in which companies and industry
sectors might implement these. What existing systems and/or
organizations might serve as models for consumer recourse mechanisms,
and explain why they might or might not be effective? Would a
combination of elements from existing systems and/or organizations be
effective? How might verification be accomplished? What would
constitute adequate verification, i.e., in what instances would third-
party verification or auditing be necessary, and in what cases would
something such as self certification or assertions that one is ``audit-
ready'' suffice? What criteria should be considered to determine the
kind of verification that would be appropriate for a company or sector?
What constitutes ``reasonable access?'' What are the costs/impediments
involved in providing access? What criteria should be considered to
determine ``reasonable access'' to information for a company or sector?
7. In the section on consequences, the draft discussion paper
states that ``sanctions should be stiff enough to be meaningful and
swift enough to assure consumers that their concerns are addressed in a
timely fashion.'' Identify appropriate consequences for companies that
do not comply with fair information practices that meet this goal, and
explain why they would be effective.
8. What is required to make privacy self regulation effective?
Self-regulatory systems usually entail specific requirements, e.g.,
professional/business registries, consumer help resources, seals of
accreditation from professional societies, auditing requirements. What
other elements/enforcement mechanisms might be useful to make privacy
self regulation effective? How have these enhanced or failed to enhance
a self-regulation regime?
9. Self regulation has been used by the business community in other
contexts. Please provide examples and comment on instances in which
self regulation is used in an industry, profession or business activity
that you believe would be relevant to enhance privacy protection. In
what ways does self regulation work in these instances? In what ways
does it fail? How could existing self-regulatory regimes be adapted or
improved to better protect privacy?
10. Please comment on the extent to which you believe self
regulation can successfully protect privacy online. Are there certain
areas of online activity in which self regulation may be more
appropriate than in others? Why?
11. Please comment on the costs business would incur in
implementing a self-regulatory regime to protect privacy. How do these
costs compare to the costs incurred to comply with legislation or
regulation?
12. What issues does the online environment raise for self
regulation that are not raised in traditional business environments?
What characteristics of a self-regulatory system in a traditional
business environment may be difficult to duplicate online? Does the
online environment present special requirements for self regulation
that are not present in a traditional business environment? Does the
traditional business environment have special requirements that are not
presented in the online environment? What are these requirements?
13. What experiences have you encountered online in which privacy
has been at issue? In what instances has privacy appeared to be at
risk? In what instances is it well protected? In what ways have
businesses or organizations been responsive to privacy concerns? How
difficult have you found it to protect your privacy online? What
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circumstances give rise to good privacy protection in a traditional
business setting or online?
14. The Administration's A Framework for Global Electronic Commerce
cites the need to strike a balance between freedom of information
values and individual privacy concerns. Please comment on the
appropriate point at which that balance might be struck. What is the
responsibility of businesses, organizations or webpages to protect
individual privacy? To what extent do these parties have a right to
collect and use information to further their commercial interests? To
what extent is it the individual's responsibility to protect his or her
privacy?
Elements of Effective Self-Regulation for Protection of Privacy
As set forth in A Framework for Global Electronic Commerce, the
Clinton Administration supports private sector efforts to implement
meaningful, consumer-friendly, self-regulatory regimes to protect
privacy. To be meaningful, self-regulation must do more than articulate
broad policies or guidelines. Effective self-regulation involves
substantive rules, as well as the means to ensure that consumers know
the rules, that companies comply with them, and that consumers have
appropriate recourse when injuries result from noncompliance. This
paper discusses the elements of effective self-regulatory regimes--one
that incorporates principles of fair information practices with
enforcement mechanisms that assure compliance with those practices.
A. Principles of Fair Information Practices
Fair information practices form the basis for the Privacy Act of
1974, the legislation that protects personal information collected and
maintained by the United States government. In 1980, these principles
were adopted by the international community in the Organization for
Economic Cooperation and Development's Guidelines for the Protection of
Personal Data and Transborder Data Flows.
Principles of fair information practices include consumer
awareness, choice, appropriate levels of security, data integrity, and
consumer access to their personally identifiable data. While the
discussion that follows suggests ways in which these principles can be
implemented, the private sector is encouraged to develop its own ways
of accomplishing this goal.
1. Awareness. At a minimum, consumers need to know the identity of
the collector of their personal information, the intended uses of the
information, and the means by which they may limit its disclosure.
Companies are responsible for raising consumer awareness and can do so
through the following avenues:
Privacy policies. Privacy policies articulate the manner
in which a company collects, uses, and protects data, and the choices
they offer consumers to exercise rights in their personal information.
On the basis of this policy, consumers can determine whether and to
what extent they wish to make information available to companies.
Notification. A company's privacy policy should be made
known to consumers. Notification should be written in language that is
clear and easily understood, should be displayed prominently, and
should be made available before consumers are asked to provide personal
information to the company.
Consumer education. Companies should teach individuals to
ask for relevant knowledge about why personal information is being
collected, what the information will be used for, how it will be
protected, the consequences of providing or withholding information,
and any recourse they may have. Consumer education enables consumers to
make informed decisions about how they allow their personal data to be
used as they participate in the information economy. Consumer education
may be carried out by individual companies, trade associations, or
industry public service campaigns.
2. Choice. Consumers should be given the opportunity to exercise
choice with respect to whether and how their personal information is
used, either by businesses with whom they have direct contact or by
third parties. Consumers must be provided with simple, readily visible,
available, and affordable mechanisms--whether through technological
means or otherwise--to exercise this option. For certain kinds of
information, e.g., medical information or information related to
children, affirmative choice by consumers may be appropriate. In these
cases companies should not use personal information unless its use is
explicitly consented to by the individual or, in the case of children,
his or her parent or guardian.
3. Data Security. Companies creating, maintaining, using or
disseminating records of identifiable personal information must take
reasonable measures to assure its reliability for its intended use and
must take reasonable precautions to protect it from loss, misuse,
alteration or destruction. Companies should also strive to assure that
the level of protection extended by third parties to whom they transfer
personal information is at a level comparable to its own.
4. Data Integrity. Companies should keep only personal data
relevant for the purposes for which it has been gathered, consistent
with the principles of awareness and choice. To the extent necessary
for those purposes, the data should be accurate, complete, and current.
5. Consumer Access. Consumers should have the opportunity for
reasonable, appropriate access to information about them that a company
holds, and be able to correct or amend that information when necessary.
The extent of access may vary from industry to industry. Providing
access to consumer information can be costly to companies, and thus
decisions about the level of appropriate access should take into
account the nature of the information collected, the number of
locations in which it is stored, the nature of the enterprise, and the
ways in which the information is to be used.
6. Accountability. Companies should be held accountable for
complying with their privacy policies.
B. Enforcement
To be effective, a self-regulatory privacy regime should include
mechanisms to assure compliance with the rules and appropriate recourse
to an injured party when rules are not followed. Such mechanisms are
essential tools to enable consumers to exercise their privacy rights,
and should, therefore, be readily available and affordable to
consumers. They may take a variety of forms and businesses may need to
use more than one depending upon the nature of the enterprise and the
kind and sensitivity of information the company collects and uses. The
discussion of enforcement tools below is in no way intended to be
limiting. The private sector may design the means to provide
enforcement that best suit its needs and the needs of consumers.
1. Consumer recourse. Companies that collect and use personally
identifiable information should offer consumers mechanisms by which
their complaints and disputes can be resolved. Such mechanisms should
be readily available and affordable.
2. Verification. Verification provides attestation that the
assertions businesses make about their privacy practices are true and
that privacy practices have been implemented as represented. The nature
and the extent of verification depends upon the kind of information
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with which a company deals--companies using highly sensitive
information may be held to a higher standard of verification. Because
verification may be costly for business, work needs to be done to
arrive at appropriate, cost-effective ways to provide companies with
the means to provide verification.
3. Consequences. For self-regulation to be effective, failure to
comply with fair information practices should have consequences.
Examples of such consequences include cancellation of the right to use
a certifying seal or logo, posting the name of the non-complier on a
``bad-actor'' list, or disqualification from membership in an industry
trade association. Non-compliers could be required to pay the costs of
determining their non-compliance. Ultimately, sanctions should be stiff
enough to be meaningful and swift enough to assure consumers that their
concerns are addressed in a timely fashion. When companies make
assertions that they are abiding by certain privacy practices and then
fail to do so, they may be liable for deceptive practices and subject
to action by the Federal Trade Commission or appropriate bank or
financial regulatory authority.
Shirl Kinney,
Deputy Assistant Secretary and Administrator.
[FR Doc. 98-15063 Filed 6-4-98; 8:45 am]
BILLING CODE 3510-60-P
