A Corporate Call for Privacy Legislation

Over 200 of the largest companies in the country are proposing a new set of national privacy laws that would apply to large companies nationwide. They are pushing to have this considered by the upcoming Congress.

The coalition includes some of the largest companies in Silicon Valley like Apple and Oracle, but it doesn’t include the big three of Facebook, Google and Amazon. Among the other big businesses included the group are the largest banks like Bank of America and Wells Fargo, big carriers like AT&T and big retailers like Walmart.

As you might expect, a proposed law coming from the large corporations would be favorable to them. They are proposing the following:

  • Eliminate Conflicting Regulations. They want one federal set of standards. States currently have developed different standards for privacy and for issues like defining sensitive information. There are also differing standards by industry such as for medical, banking and general corporations;
  • Self-regulation. The group wants the government to define the requirements that must be met but don’t want specific methodologies or processes mandated. They argue that there is a history of government technical standards being obsolete before they are published;
  • Companies Can Determine Interface with Consumers. The big companies want to decide how much rights to give to their customers. They don’t want mandates for defining how customer data can be used or for requiring consumer consent to use data. They don’t want mandates giving consumers the right to access, change or delete their data;
  • National Standard for Breach Notification. They want federal, rather than differing state rules on how and when a corporation must notify customers if their data has been breached by hackers;
  • Put the FTC in Charge of these Issues. They want the FTC to enforce these laws rather than State Attorney Generals;
  • Wants the Laws to Only Apply to Large Corporations. They don’t want rigid new requirements on small businesses that don’t process much personal data.

There are several reasons big companies are pushing for legislation. There are currently different privacy standards around the country due to actions brought by various State Attorney Generals and they’d like to see one federal standard. But like most laws the primary driver behind this legislation is monetary. Corporations are seeing some huge hits to the bottom line as a result of data breaches and they hope that having national rules will provide a shield against damages – they hope that a company that is meeting federal standards would be shielded from large lawsuits after data breaches.

I look at this legislation both as a consumer and as somebody working in the small carrier industry. With my consumer hat on there are both good and bad aspects of the proposed rules. On the positive side a set of federal regulations ought to be in place for a complex issue that affects so many different industries. For example, it is hard for a corporation to know what to do about a data breach if they have to satisfy differing rules by state.

But the negatives are huge from a consumer perspective. It’s typical political obfuscation to call this a privacy law because it doesn’t provide any extra privacy for consumers. Instead it would let each corporation decide what they want to disclose to the public and how companies use consumer data. A better name for the plan might be the Data Breach Lawsuit Protections Act.

There are also pros and cons for this for small carriers. I think all of my clients would agree that we don’t need a new set of regulations and obligations for small carriers, so small carriers will favor the concept of excusing smaller companies from some aspect of regulations.

However, all ISPs are damaged if the public comes to distrust ISPs because of the behavior of the largest ISPs. Small ISPs already provide consumer privacy. I’ve never heard of a small ISP that monitors customer data, let alone one that is trying to monetize their customers’ data. Small ISPs are already affording significant privacy rights to customers compared to the practices of AT&T, Verizon or Comcast who clearly view customer data as a valuable asset to be exploited rather than something to protect. The ISP industry as a whole would benefit by having rules that foster greater customer trust.

I’m not sure, however, that many small ISPs would automatically notify customers after a data breach – it’s a hard question for every corporation to deal with. I think customers would trust us more if there were clear rules about what to do in the case of a breach. This proposed law reminds me that this is something we should already be talking about because every ISP is vulnerable to hacking. Every ISP ought to be having this conversation now to develop a policy on data breaches – and we ought to tell our customers our plans. Small ISPs shouldn’t need a law to remind us that our customers want to trust us.

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