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Will New FTC Privacy Recommendations Challenge E-Commerce?

Mar 29, 2012 (10:03 AM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=232700520


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While the Federal Trade Commission's (FTC) final recommendations on online privacy are now public, discussion about what that will mean for the e-commerce and online advertising communities is far from over.

The FTC report, released Monday, called for organizations to build privacy protections into their offerings by design, simplify privacy choices for consumers, and be more transparent about the collection of data. The commission also recommended Congress consider enacting legislation to enforce that transparency for "information brokers" to ensure consumers have reasonable access to the data companies gather and store about them.

But the report still left some feeling as though the FTC's proposals could create a burden for businesses and restrict online advertising. For instance, it may not always be appropriate for companies to provide consumers access to their data, says Daniel Castro, senior analyst with the Information Technology and Innovation Foundation (ITIF).

[ Restrictions or empowerment? See Dear FTC: Privacy Power Trumps Privacy Rules. ]

"For example, does every online retailer really need to create an interface to its backend CRM? Does every charity with over 5,000 donors need to provide access to the personally identifiable information it maintains about its supporters?" Castro says. "Organizations should not have to create a system or process so that any individual can inspect what data is stored about them. The costs involved in setting up such a system would be burdensome, unnecessary, and ultimately benefit few at the expense of many."

He says the big challenge of building in privacy "is that privacy is one of many objectives for an organization, and these objectives cannot be legislated no matter how noble the cause."

"As long as we are legislating business processes, why not add in 'security by design,' 'green by design,' 'accessible by design,' 'cost-effective by design,' 'works by design,' and 'good design by design?'"

Privacy by design works best as an approach when it is aligned with the business requirements of a company offering a service to individuals, says Forrester Research analyst Eve Maler.

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