Loyola Consumer Law Review

Volume 10 | Issue 2 Article 3

1998 Consumers Online: Your Rights to Privacy in Cyberspace Nancy Lazar

Follow this and additional works at: http://lawecommons.luc.edu/lclr Part of the Consumer Protection Law Commons

Recommended Citation Nancy Lazar Consumers Online: Your Rights to Privacy in Cyberspace, 10 Loy. Consumer L. Rev. 117 (1998). Available at: http://lawecommons.luc.edu/lclr/vol10/iss2/3

This Recent Legislative Activity is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola Consumer Law Review by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. RECENT LEGISLATIVE by Nancy Lazar ACTIVITY Consumers Online: Your Right to Privacy in Cyberspace

"According to some predictions, applied federal laws safeguarding consumer nearly one billion people will be privacy to commercial transactions in online in the next 10 years. If people cyberspace, the protection of consumer privacy are uncomfortable sending personal online is limited. For instance, although information over the Internet, the Congress amended the Electronic largest potential consumer market Communications Privacy Act of 1986, 18 will be closed to nearly every U.S.C. § 2510 - 2710 (1982 Supp. IV 1986) company in the world," according to ("Act"), to prevent Internet service providers Joseph L. Dionne, chairman and from releasing personal information of their CEO of The McGraw-Hill members to a government agency absent a legal Companies, a leading information request, the Act does not explicitly prohibit services provider. Internet service providers from distributing the members' private information to any individual A Business Week/Louis Harris & Associates or entity outside of government. Furthermore, survey released on March 4, 1998 noted that the Act fails to provide adequate remedies for consumers' concerns about the protection of those whose privacy was violated in their privacy in cyberspace will significantly cyberspace. For instance, the Act does not impede the growth of online electronic include any immediate punishments or commerce in the U.S. The survey found that deterrents for violators of consumer privacy many American consumers believe entering online. In addition, the law fails to establish a personal information into cyberspace poses a mechanism by which private information potential threat to their privacy. Seventy-eight illegally obtained over the Internet can be percent of Americans who use online services excluded from civil or criminal court stated they would use the Internet more if they proceedings. As a result, consumers who use were confident that the Internet system the Internet are not guaranteed true and safeguarded the privacy of their individual complete protection of their right to privacy in information and communications. Similarly, in a cyberspace. The absence of a strict, clear policy recent Georgia Institute of Technology survey on consumer privacy on the Internet and of 10,000 online users, privacy in cyberspace consumer reluctance to participate in online was considered the greatest challenge to the electronic commerce absent privacy protection development of online electronic commerce. has caused the President, Congress, state Since consumer participation in online government, and the information industry itself commercial transactions is a relatively recent to create guidelines on privacy safeguards for phenomenon, the law governing the use of the consumers using the Internet. Internet is obscure. While some courts have

1998 Loyola University Chicago School ofLaw •117 President Clinton Urges Private Industry Requests Limited Aid Industry to Create Internet Privacy from Government in Regulating Safeguards the Internet On July 1, 1997, President Clinton began the In response to President Clinton's surge towards developing online privacy recommendations for the regulation of the guidelines when he approved and issued "A Internet, 11 leading American high-technology Framework for Global Electronic Commerce," companies formed a coalition, the Computer an extensive report describing the role the Systems Policy Project, and issued an 18-page federal government will assume in the evolving position paper on the development of the electronic marketplace. Clinton believes that electronic marketplace on November 18, 1997. "[g]overnment officials should respect the Members of the Policy Project are chief unique nature of the medium and recognize that executive officers of companies including widespread competition and increased Apple Computer Inc., Compaq Computer consumer choice should be the defining Corp., Data General Corp., Digital Equipment features of the new digital marketplace. They Corp., Hewlett-Packard Co., International should adopt a market-oriented approach to Business Machines Corp., NCR Corp., Silicon electronic commerce that facilitates the Graphics Inc., Sun Microsystems Inc., Stratus emergence of a global, transparent,and Computer Inc., and Unisys Corp. To quicken predictable legal environment to support the development of online electronic commerce business and commerce. The report's author, and to gain consumer faith in the electronic Ira Magaziner, the President's senior adviser on marketplace, the coalition urges both Congress Internet policy development, emphasizes and the White House to participate in the throughout the report that the federal creation of electronic commerce policy. government will take a passive role in the However, the coalition requests only limited regulation of electronic commerce. Rather than government involvement. enacting laws to protect the privacy of The coalition makes proposals on consumers online, the federal government controversial Internet issues, such as Internet wants to ensure the implementation of a clear, taxes and consumer privacy on the Internet. strict industry-created system that allows The CEOs propose a "tax neutral" system in consumers to protect themselves. The federal Internet commerce that would not discriminate government urges the information industry to based upon a consumer's method of purchasing set its own policies and procedures if it does a product. To prevent discriminatory and not want the government to play a significant multiple taxation upon Internet users, the role in regulating online commerce. coalition requests that Congress enact legislation that would place a moratorium on new Internet taxes until the information industry and federal and state governments collaboratively create a national standard for imposing Internet taxes. Moreover, the coalition urges the revision of the Uniform

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Commercial Code so that it would apply entirely absent from participating in Internet specifically to Internet transactions. regulation. Even though he recommended that Mr. Magaziner applauded the CEOs of the the industry itself create its own rules and major high-technology companies for their regulations for safeguarding consumers' immediate response and initiative in developing privacy on the Internet, regulating content, Internet policy. He views the coalition's work creating technical standards, and developing as "a very interesting, useful and helpful electronic payment systems, he believes that the initiative. The principles are consistent with federal government must actively participate in what we're hoping for. And, what's important the regulation of specific Internet policies, is they are stepping up and leading." including taxation, copyright protection, and encryption. Mr. Magaziner explained to industry leaders that "[i]n the Industrial Age, Government Asks Industry to governments passed laws to protect people. In Resolve Internet Privacy Issues at the Digital Age, the role of government will Policy Forum help ensure that regimes come in place in the private sector so people can protect leaders of the On January 8, 1998, themselves." information industry and government officials met to discuss the rapid evolution of Internet commerce at the Internet Policy & Law President Sets Firm Deadline for Forum's 1998 conference in Seattle, Industry to Create Internet Privacy Washington. Mr. Magaziner again urged Policy industry leaders to take immediate initiative in creating various Internet guidelines if they did To prompt information industry leaders into not want the government to play a significant creating their own rules on Internet privacy, role in the regulation of Internet commerce. He President Clinton has set a July 1, 1998 warned that there are currently more than 80 deadline for U.S. Secretary of Commerce bills before Congress concerning the regulation William Daley to submit to the President an of Internet privacy and suggested that if industry-led solution to protect the privacy of industry leaders failed to take quick initiative, consumers who go online. Even if the top the federal government will create more costly executives fail to develop an Internet privacy and less effective Internet policy. Mr. policy by the deadline date, Secretary Daley Magaziner explained to the nearly 150 chief stated that the administration insists upon executive officers of leading electronic industry leaders to at a minimum establish an commerce companies that the "slow-moving independent body of private-sector and bureaucratic" nature of government representatives by the set date. Such a group of prohibits government from keeping up with the industry representatives would create and rapidly evolving technology of the Internet. implement guidelines for releasing private Although the Clinton administration information into cyberspace. If industry leaders generally supports a hands-off policy of fail to satisfy Clinton's demand, the federal Internet regulation, Mr. Magaziner stressed at government may be required to revise its the conference that the government must not be hands-off Internet policy and actively

1998 Loyola University Chicago School ofLaw - 119 participate in the creation of Internet privacy will be to maintain this [hands-off] position." policy. In an effort to provoke industry leaders into meeting the deadline, the federal government The Federal Government Audits scheduled three consumer privacy roundtable Industry for Creation of Internet discussions with industry executives during the Privacy Policy first two months of 1998. Federal government During March 1998, the Federal Trade officials attending such roundtables included Commission ("FTC") "swept" the Web sites of Secretary Daley, Assistant Secretary of 1,200 companies to determine whether Commerce Larry Irving, and Mr. Magaziner. American businesses have created Internet Claiming to be "educators," rather than regulators on the issue of consumer privacy on consumer privacy guidelines. Specifically, the FTC looked for the posting of statements on the Internet, federal government officials proposed at the roundtables that industry designated Web sites which fully informed use of their representatives create a Web site certification online consumers of the company's program, which would encourage consumers to personal information. participate only on Web On June 1, the sites marked by a seal of federal agency will report to Congress approval. This seal would Ro br r findings, which signal to consumers that r theFTCits with r will provide the basis the site complies ,,7ll specific privacy protection stese t we wait 1for deciding whether must requirements developed a yerp ort o f self- Congress intervene by by the industry group. To rel, to enacting legislation assure Internet consumers Iprpred t to protect consumer that the seal does, in fact, predic in l Such represent strict adherence 'I mt nget privacy online. now that prompt federal to privacy guidelines, tr righ government policing government officials also . , recommended that the I . il happen, of the information industry group regularly happn vey idustry's development of oversee the activity of 9 I Internet policy member Web sites. reflects the Such an immediate consumer response by the federal government in government's willingness to pass privacy legislation if the industry itself fails to scheduling discussions with industry leaders Pitofsky, throughout the nation reflects the government's implement such guidelines. Robert we wait willingness to "educate" the private industry chairman of the FTC, stressed that "[i]f or two for self-regulation and it doesn't into creating Internet privacy policy by the a year in the strongest government deadline. Secretary Daley stated happen, I'm prepared to predict that "[t]ime is of the essence ... [a]nd the terms right now that legislation will happen, longer we wait for action, the more difficult it and it will happen very promptly."

120 o Loyola ConsumerLaw Review Volume 10, number 2 Recent Legislative Activity

The FTC examined the Web sites of the Telecommunications Act of 1996 to Internet following companies: 100 financial institutions, commerce. Specifically, the Act prohibits the 200 sites targeting children, 100 companies in FCC and the states from regulating "Internet the health care industry, 100 retail companies, Information Services" except for areas dealing and 100 of the most widely used Web sites on with local exchange services, law enforcement the Internet. The FTC randomly chose the access to the Internet, national security, and remaining Web sites from names listed in an network reliability. The act primarily prohibits Internet directory. the FCC and the states from determining and charging the rates applied to Internet Congress Proposes "Hands-Off" consumers. "[W]e don't want the FCC Policy on Internet Regulation morphing into the Federal Computer Commission," argues Representative Despite the presence of nearly 80 pending Christopher Cox (R-Calif.), who introduced the bills before Congress concerning consumer bill with Representative Tauzin to the House privacy on the Internet, two main bills being Committee on Commerce. considered before the U.S. House of Second, Chairman Tauzin submitted to the Representatives reflect Congress' general House Committee on Commerce on July 30, "hands-off policy on the regulation of Internet 1997, the "Data Privacy Act of 1997," H.R. commerce. On July 30, 1997, not even one 2368, 105th Cong., 1st Sess. (1997), which month after President Clinton's call upon the mandates the information industry to create information industry to develop its own standards for the protection of consumer Internet privacy guidelines, House privacy on the Internet. Specifically, the Data Telecommunications Subcommittee Chairman Privacy Act would require Web sites to provide Billy Tauzin (R- La.) introduced a package of notice to consumers that the site is collecting cellular and internet privacy bills, which their private information and that they may demand that "[t]he Internet community itself choose to "opt out." In addition, the bill would ought to work out its problems." First, compel Web sites to notify children that they Chairman Tauzin submitted "The Internet need to obtain parental permission to enter any Protection Act of 1997," H.R. 2372, 105th private information about themselves or their Cong., 1st Sess. (1997), a bill that "tells the families over the Internet. Not only would the FCC that the Internet is off limits." According Data Privacy Act of 1997 protect the privacy of to Tauzin, "[i]f regulation is eventually needed, consumer information released over the it will be a policy decision made by Congress Internet, it also would significantly reduce and the administration. This is a legislative consumer receipt of unsolicited junk e-mail. statement of intent for the regulators to leave The bill provides that the information industry this unregulated side of the telecom industry must require senders of advertising e-mail to alone to remain as free and unfettered from place the sender's business name on the government regulation as possible." In general, message's subject line and that the message's The Internet Protection Act of 1997 forbids the body include the sender's business address. Federal Communications Commission ("FCC") Lastly, the bill would forbid the use of any from applying the regulations outlined in the government-held information, specifically

1998 Loyola University Chicago School ofLaw 121 Social Security numbers, for purposes of July 1997 electronic commerce report and the marketing on the Internet. House's package of Internet bills represents Although Congress and the Clinton the general "philosophical tone" of the federal administration are willing to regulate Internet government concerning Internet regulation: commerce, they will do so only if the leaders of "[I]f they [industry leaders] do develop these the information industry fail to promptly guidelines voluntarily, they'll have safe harbor regulate their own industry. The message from the regulatory reach of government." specifically reflected in both President Clinton's MI

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