Privacy & Information Security Law Blog

On July 2, 2009, five marketing industry associations jointly published a set of voluntary behavioral marketing guidelines entitled “Self-Regulatory Principles for Online Behavioral Advertising.” The American Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, the Interactive Advertising Bureau and the Better Business Bureau developed the standards, which correspond to the self-regulatory principles proposed by the Federal Trade Commission (“FTC”).

On June 30, 2009, the Obama Administration sent legislation to Congress that would create a new Consumer Financial Protection Agency ("CFPA").  Working with state regulators, the new agency would assume authority for the privacy provisions of the Gramm-Leach-Bliley Act, and would have the power to write rules and impose penalties pursuant to a variety of existing statutes, including the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act.  To date, these powers have been shared among all financial services regulators, including the Federal Trade ...

The Obama Administration today formally announced its sweeping proposal for new regulation of the financial industry.  The plan proposes the formation of a new watchdog agency that would seek to protect consumers' interests.  The proposal raises a number of privacy and data security questions, such as the role of the new financial services consumer protection agency in protecting privacy and data security and the continued role of the Federal Trade Commission as the lead agency in this area.  We will keep you posted as more details regarding the plan emerge.

On June 4, 2009, the Federal Trade Commission (“FTC”) reported that Sears Holdings Management Corporation (“Sears”) agreed to enter into a settlement regarding the Commission’s allegations that the company violated Section 5 of the FTC Act in connection with a new online community application it had developed.  Participation in the community allowed Sears to track consumers’ online and, to some extent, offline activities.  The FTC’s action is notable as a potential precursor to future enforcement by the FTC in the areas of both transparency and tracking online behavior, the latter having been previously highlighted as an area of interest for the agency.  The settlement, discussed in more detail below, is notable in that its requirements make clear that substantial tracking of consumer behavior must be sufficiently transparent (not disclosed only in a lengthy privacy policy or agreement), consumers’ opt-in consent to such tracking must be obtained and, disclosures regarding the nature of the tracking must be made at a meaningfully early stage of the transaction.

On May 15, 2009, the German Federal Council adopted the "Act against unsolicited commercial phone calls and improvement of consumer protection."  According to the Act, violations of the existing prohibition on unsolicited commercial phone calls can now be sanctioned with a fine up to € 50,000.

In addition, the Act clarifies that a commercial phone call is only lawful if the recipient has given his or her prior explicit consent to receive the call.  The provision is intended to prevent the caller's reliance on consent that may have been given by the recipient in a totally different ...

In February 2009, the Ponemon Institute published the results of its inaugural study "Germany - 2008 Annual Study: Cost of a Data Breach."  The study is the first such research study undertaken in Germany, using data from actual incidents to estimate the costs of dealing with data breaches by German companies.  The study examined the experience of 18 German organizations that suffered a breach.  These case studies reviewed ranged in size an incident involving less than 3,750 records to an incident involving more than 90,000 records.  The breaches reviewed occurred across ten industry ...

On May 5, 2009, the Federal Trade Commission’s ("FTC's") Acting Director of the Bureau of Consumer Protection, Eileen Harrington, testified before the House Energy and Commerce Committee Subcommittee on Commerce, Trade and Consumer Protection in support of the proposed federal Data Accountability and Trust Act (H.R. 2221).  The Act would require companies to implement reasonable data security policies and procedures to protect personal information.  It would also mandate security breach notifications for consumers affected by data security breaches.

Federal Trade Commission Chairman Jon Leibowitz has appointed six senior staff members with extensive experience in the private sector, in the public interest community, in academia, and in government.

“We’re delighted to attract such a talented and creative group of people,” Leibowitz said. “Their leadership and expertise will help ensure that the Commission’s work on behalf of American consumers will continue to be effective. We’re very fortunate.”

Various authorities, both at a European and a national level, are currently addressing the issue of online behavioral advertising. On March 31, 2009, Meglena Kuneva, the European Commissioner for Consumer Affairs, gave a keynote address in Brussels in which she raised the issue of online behavioral advertising and addressed the need to enhance consumer protection related to the practice. While recognizing the numerous beneficial applications for consumers made possible by the Internet, Kuneva expressed her concern that the World Wide Web could become the “world wide west” and called for a better balance between the interests of businesses and consumers. 

This week, the Federal Communications Commission announced a broad consumer privacy enforcement action against over 600 telecommunications carriers.  The Commission issued notices of liability against carriers that failed to certify compliance with regulations governing the protection of Consumer Proprietary Network Information (“CPNI”) and carriers that filed inadequate certifications.  The Commission proposed fines of $20,000 against carriers that failed to file the required certification and up to $10,000 against carriers whose certifications were non-compliant.

A recent federal court decision offers a detailed analysis of several theories of liability for violations of a privacy policy.  Pinero v. Jackson Hewitt Tax Service Inc., No. 08-3535, 2009 WL 43098 (E.D. La. January 7, 2009). 

Plaintiff Pinero visited Jackson Hewitt Tax Service in Louisiana to have her tax returns prepared.  During her visit, she provided Jackson Hewitt with confidential information such as her Social Security number, date of birth and driver’s license number.  Pinero signed Jackson Hewitt’s privacy policy, which stated that Jackson Hewitt had policies and procedures in place, including physical, electronic, and procedural safeguards, to protect customers' private information.  Pinero alleged that she relied on this statement in her decision to turn over her information.