Online privacy? Principles of self-regulation emerge, feds to follow

Last week, a collection of trade organizations announced the release of a set of privacy principles for the use and collection of behavioral data in online advertising. The public adoption of these principles moves the industry towards self-regulation, though adoption measures that substantially improve protections for the online privacy of consumers will remain an open question for implementation.

Given the vast amount of data that is being collected online daily, the move can’t come soon enough. Whether the move is enough to head off regulation from Congress is likely a moot point; as my colleague Linda Tucci blogged last week, a national data privacy law is coming. As she noted, “the proposed federal electronic data privacy bill, known as H.R. 2221, was introduced in April with little fanfare but is generating a bit more buzz in the wake of recent hearings on Capitol Hill.”

Concern over online privacy is reflected by the relevant regulatory bodies, particularly at the federal level. To whit, as Pamela Jones Harbour, commissioner of the Federal Trade Commission, notes in the release:

“Consumers deserve transparency regarding the collection and use of their data for behavioral advertising purposes. I am gratified that a group of influential associations – representing a significant component of the Internet community – has responded to so many of the privacy concerns raised by my colleagues and myself. These associations have invested substantial efforts to actually deliver a draft set of privacy principles, which have the potential to dramatically advance the cause of consumer privacy. I commend these organizations for taking this important first step. I am hopeful that successful implementation will follow. In the meantime, I encourage the entire privacy community to continue a dialogue that places the interests of consumers first.”

According to the announcement on AAAA.org, these principles were developed by a “cross-industry self-regulatory task force” that included the American Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association (DMA) and the Interactive Advertising Bureau. The Council of Better Business Bureaus, has agreed, along with the DMA, to implement accountability programs “to protect consumer privacy in ad-supported interactive media that will require advertisers and websites to clearly inform consumers about data collection practices and enable them to exercise control over that information.”

Such protections are commendable but perhaps somewhat less laudable, in the context of looming regulation. In this case, release of such guidance for the protection of online privacy may help head off potential sanctions or fines under new legislation, demonstrating some good faith by the industry. Adoption is another matter. Electronic publishers used to collecting reams of data about Internet audiences are likely to have a new kind of compliance to address in 2010: privacy.