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The year 2000 passed without Congress sending any of the over two dozen privacy bills it considered in the 106th session to the President. Now, many expect the new Congress to pass significant privacy legislation this year. As of March 13, more than 25 bills have already been introduced. Not all agree that new privacy legislation is urgently needed, however. At a March 1 House subcommittee hearing on “Privacy in the Commercial World,” Rep. Billy Tauzin, R-La., expressed hesitation at proposals for further federal regulation in this area. Representative Tauzin is the new chairman of the House Commerce Committee, to which virtually all this legislation has been referred. Following Representative Tauzin’s lead, on March 12, the industry Online Privacy Alliance went public with the results of four industry-funded studies asserting that privacy legislation would cost consumers billions of dollars annually. If new privacy legislation is enacted, will it set minimal guidelines and encourage industry self-regulation or will it provide for strong consumer protections? Will Congress choose to include opt-in provisions, or will individuals be required to opt out of having their information shared with third parties? Perhaps the legislation will allow for opting out, but will require opting in when dealing with sensitive information such as an individual’s medical or financial data. It is likely that any legislation will include, in some form, the FTC’s Fair Information Practice Principles of notice, choice, access and security. These four principles have been the focal point of the FTC’s stance on privacy since the publication of the first Report to Congress in 1998. Moreover, these are principles consumers are familiar with and, to some degree, have come to expect. The following are several bills Congress is currently considering. � The Online Privacy Protection Act of 2001 (H.R.89). This bill requires the FTC to prescribe regulations to protect the privacy of personal information collected on the Internet from and about individuals who are not covered by the Children’s Online Privacy Protection Act of 1998. The regulations seek to protect the confidentiality, security and integrity of personal information, and would provide a process by which individuals could consent to or limit the disclosure of their personal information. A similar bill, the Consumer Online Privacy and Disclosure Act (H.R.347), has been introduced by Rep. Gene Green, D-Texas. � The Consumer Internet Privacy Enhancement Act (H.R.237). Introduced in January by Rep. Anna G. Eshoo, D-Calif., this bill endeavors to protect the privacy of consumers who use the Internet by declaring it unlawful for web site operators to collect personally identifiable information from users, unless the operator provides notice and an opportunity for the individual to restrict the use and disclosure of their information. The bill also allocates enforcement authority among designated federal agencies and the FTC, and establishes a civil penalty for violations. � The Financial Information Privacy Protection Act of 2001 (S.30). If signed into law, this legislation would amend the Gramm-Leach-Bliley Act to provide that a customer must grant consent prior to a financial institution’s disclosure to its affiliates of the customer’s personal information, including information about personal spending habits. Currently such consent is only required for disclosure to nonaffiliated third parties. The bill also revises the requirements regarding disclosure of a financial institution’s privacy policies and practices, including a new requirement that the disclosure first occur before a customer relationship is established. � The Spyware Control and Privacy Protection Act of 2001 (S.197). This bill, in addition to other prohibitions, requires that software that is made available to the public and which is capable of collecting information about the user of such software, or the hardware on which such software is used, or the manner in which such software is used, and which is capable of disclosing such information to third parties, must include: (1) a notice regarding the software’s capabilities; (2) a description of the information subject to collection; and (3) instructions on how to disable such capability. � Bankruptcy Reform Legislation (S. 420). Although the prospects for general privacy legislation are unclear, Congress may soon address a data privacy issue that is coming up increasingly as a result of dot.com business failures. On March 15, the Senate passed its version of long-awaited bankruptcy reform legislation (S.420), including a data-privacy amendment. The amendment provides that if a debtor has obtained personally identifiable information from an individual under a privacy policy that prohibits the transfer of information to unaffiliated third parties, a bankruptcy trustee may not sell or lease the personal data unless bankruptcy court approval is obtained. The Bankruptcy Court, after notice and a hearing, may approve the sale or lease if it is “consistent” with the data privacy policy. The amendment is intended to address the issue raised in the Toysmart.com bankruptcy proceedings, where the failed online toy-seller was sued by the FTC when it sought to sell its customer database. The Toysmart.com litigation was ultimately settled when the Bankruptcy Court approved an offer by Walt Disney Co., a majority shareholder of Toysmart.com, to purchase the customer list for $50,000 and destroy it. The bankruptcy bill will go to a House-Senate conference committee, which could remove the amendment. Stefania R. Geraci is an associate in the New Media, Internet, Technology and Computer group at Squadron, Ellenoff, Plesent and Sheinfeld in New York.

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