April 19, 2002  (New York)

Senator Ernest “Fritz” Hollings (D – SC) today introduced the “Online Personal Privacy Act” designed to protect consumers and promote commerce online. Analysis of the staff draft of the bill by The Information Policy Institute staff concludes that the Hollings bill will likely fail on both accounts.

“Requiring American firms to gain permission before using ‘sensitive’ personal information does nothing to stop bad actors,” said Dr. Michael Turner, President and Senior Scholar at The Information Policy Institute. “U.S. jurisdiction ends at the border, but the Internet is a global medium. Renegade players will simply relocate. How will ‘opt-in’ stop Nigerian scam artists?” Turner added.

The Hollings bill would require firms doing business with U.S. citizens on the Internet to obtain their affirmative permission (opt-in) before collecting or making use of their sensitive personal identifying information for any purpose. Sensitive information is defined as personal information pertaining to health, finance, race, religious beliefs, sexual orientation, and political affiliation among others.

“This bill reflects a trend in thinking about information,” argued Robin Varghese, Adjunct Fellow of New Media Studies at The Information Policy Institute. “Lawmakers are struggling to define ‘sensitive’ and ‘non-sensitive,’ and are distinguishing between ‘online’ and ‘offline’ data. In reality, very few private or public sector actors collect data using just one channel. Thus, distinguishing between ‘online’ data and ‘offline’ data is not particularly meaningful.”

“I understand the desire to make consumers feel more comfortable transacting online,” said Varghese, “Consumers in the past have not reacted to legislation,” continued Varghese, “they are most concerned about the most heavily regulated types of data – sensitive health, financial, and children’s information. Legislation has never, and will never, make consumers more confident on privacy matters. This bill, while well-intended, is motivated by a curious logic,” said Varghese.

President of The Information Policy Institute, Michael Turner, argued that by separating non-sensitive contact and transactional data from sensitive data, and by including a state pre-emption clause, the Hollings bill represents a positive step in the right direction. “Unfortunately,” Turner stated, “if the objective involves anything beyond making consumers believe the Internet is more secure for conducting business, this bill will not succeed.”

“Ironically, consumers may be lulled into developing a false sense of security, and, as a result, neglect personal responsibilities that would actually enhance their security,” Turner added. “What is needed are more resources for enforcement of existing laws and issue education. Such a two-pronged approach would likely yield far better results for consumers than would additional legislation.”

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