SENATOR TOUGHENS PRIVACY BILL

Online Protections Extended to Cover Offline Marketers

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WASHINGTON (AdAge.com) -- A U.S. privacy bill that gives consumers a right to file class action lawsuits against Internet marketers that release their information without permission was altered today to also cover offline marketers and will soon go to the Senate floor.

The proposed legislation, the most extensive yet on privacy from Congress, would have a major impact on marketers while seeking to protect consumers.

Senate Commerce Committee Chairman Ernest "Fritz" Hollings, D-S.C., made the changes as his privacy legislation made its way through the committee, though the bill's trip to the Senate floor was temporarily delayed by a parliamentary maneuver.

Opt-in notices
As altered, the bill

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forces marketers that want to keep certain "sensitive" personal information to get consumers to "opt in" while marketers keeping less sensitive information would have to provide "robust notice."

Marketers revealing sensitive information could be assessed a $500 per violation penalty.

Responding to criticism that the legislation unfairly puts online marketers at a disadvantage, Sen. Hollings today added language that would require the Federal Trade Commission to propose similar rules for offline companies within six months of the bill's enactment, though the FTC rules would take effect only if Congress failed to pass legislation containing equivalent protections.

Payback for consumers
Today Sen. Hollings said the legislation would give consumers a chance to get some financial repayment from marketers if the release of their information caused them harm. He pointed to the "slap on the wrist" Eli Lilly & Co. received for its accidental release of a list of Prozac users as something the legislation would correct.

Other senators, marketing groups and the U.S. Chamber of Commerce, however, warned that the revised legislation conflicted with existing privacy laws, increased the possibility of lawsuits and gave the FTC "a blank check" for writing privacy rules. They also warned that because the bill offered few standards for defining "harm," marketers could be open to lawsuits.

"The private right of action opens a can of worms," said Sen. Kay Bailey Hutchison, R-Texas. "It's a poison pill that will kill the bill [on the Senate floor.]"

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