NetChoice: Financial Reform Bill Among the Year's Worst

Today's Best Tech Deals

Picked by PCWorld's Editors

Top Deals On Great Products

Picked by Techconnect's Editors

Legislation in the U.S. Congress intended to create new regulations for the U.S. financial industry tops a list of bills that are bad for the Internet, because it would remove safeguards on the rulemaking authority of the U.S. Federal Trade Commission, an e-commerce trade group said Thursday.

The Wall Street Reform and Consumer Protection Act, which the U.S. House of Representatives passed in December, would, among other things, remove some steps the FTC needs to take before approving new rules that affect commerce in the U.S.

With fewer checks in place, the FTC could move to require online advertisers to get opt-in permission before collecting Web users' information, as FTC Chairman Jon Leibowitz has called for, said NetChoice, an e-commerce trade group.

The Wall Street Reform and Consumer Protection Act topped NetChoice's list of 10 "awful" legislative proposals. NetChoice released two other versions of its so-called iAwful list in 2009.

The Wall Street Reform bill would remove some restrictions on the FTC's rulemaking authority passed in 1975. Congressional Democrats have pushed the legislation as necessary to stop lending practices that helped lead to the economic recession of recent years.

The bill would protect "consumers from predatory lending abuses, fine print, and industry gimmicks and finally [bring] transparency and accountability to a financial system that has run amok," House Speaker Nancy Pelosi, a California Democrat, said in a statement.

But the legislation would remove checks on the FTC in other areas, NetChoice said.

If the FTC requires opt-in permission for data collection, targeted advertising would largely grind to a halt, and much of the free content and services online would need to collect money from users, said Steve DelBianco, executive director of NetChoice. Typically, only about 5 percent of Web users ever opt in to a new service, and an opt-in regime for data collection used to deliver targeted ads would "devastate" the online ad business, he said.

Web sites shouldn't need to get opt-in permission to serve ads based on users' surfing habits, DelBianco said. "That results in you getting ads that are more relevant to you," he said. "If you're going to see ads, they ought to be more relevant and interesting."

Web sites should have to get permission before collecting sensitive information like health information, he said. But most data collected to deliver ads isn't sensitive, he said. "When it dries up that ad revenue, where else will these sites get the revenue to provide free information and free services to people online?" he said. "They're going to have to either start charging for it, or stop providing it."

Privacy advocate Jeffrey Chester disagreed, saying NetChoice's members include large online advertising companies that "now freely can harvest consumer data."

The Wall Street Reform and Consumer Protection Act would provide several protections for consumers, including privacy protections, said Chester, executive director of the Center for Digital Democracy.

"Online marketing lobbying groups such as NetChoice are terrified that its members will start to be held accountable by the FTC," he said. "NetChoice should not be trying to help kill legislation designed to protect consumers."

Web users will opt in if they believe their privacy will be protected, Chester added. "Online marketing companies that can secure the trust of these consumers will prosper," he said. "The idea that the Internet will go 'dark' if opt-in is required is a self-serving scare tactic."

Spokesmen for the FTC and Representative Barney Frank, a Massachusetts Democrat and sponsor of the Wall Street bill, were not immediately available for comment on the iAwful list.

Note: When you purchase something after clicking links in our articles, we may earn a small commission. Read our affiliate link policy for more details.
Shop Tech Products at Amazon