A privacy policy is a legal document that discloses some or all of the ways a party gathers, uses, discloses and manages a customer's data. The exact contents of a privacy policy will depend upon the applicable law and may need to address the requirements of multiple countries or jurisdictions. While there is no universal guidance for the content of specific privacy policies, a number of organizations provide example forms or online wizards.

Contents 1 Development of Privacy Policies 2 Fair Information Practice 3 Current Enforcement of Privacy Policy in the United States. 4 Applicable US Law 5 Privacy Policies and the European Union 6 Online Privacy Certification Programs 7 Technical Implementation of Privacy Policies 8 Criticism 9 References 10 External links

[edit] Development of Privacy Policies

In 1995 the European Union introduced the Data Protection Directive^[1] for its member states. As a result, many organizations doing business within the EU began to draft policies to comply with this Directive. In the same year the Federal Trade Commission published the Fair Information Principles^[2], which provided a set of non-binding governing principles for the commercial use of personal information. While not mandating policy, these principles provided guidance of the developing concerns of how to draft privacy policies.

[edit] Fair Information Practice

The four critical issues identified in Fair Information Principles are:

• Notice – data collectors must disclose their information practices before collecting personal information from consumers
• Choice – consumers must be given options with respect to whether and how personal information collected from them may be used for purposes beyond those for which the information was provided
• Access – consumers should be able to view and contest the accuracy and completeness of data collected about them
• Security – data collectors must take reasonable steps to assure that information collected from consumers is accurate and secure from unauthorized use.
  

In addition the Principles discuss the need for enforcement mechanisms to impose sanctions for noncompliance with fair information practices.

[edit] Current Enforcement of Privacy Policy in the United States.

The United States does not have a specific federal regulation establishing universal implementation of privacy policies. Congress has, at times, considered comprehensive laws regulating the collection of information online, such as the Consumer Internet Privacy Enhancement Act^[3] and the Online Privacy Protection Act of 2001^[4], but none have been enacted. In 2001, the FTC stated an express preference for “more law enforcement, not more laws^[5]”and promoted continued focus on industry self regulation.

In most cases, the FTC enforces the terms of privacy policies as promises made to consumers using the authority granted by Section 5 of the FTC Act which prohibits unfair or deceptive marketing practices^[6]. The FTC’s powers are statutorily restricted in some cases; for example, airlines are subject to the FAA’s authority^[7], and cell phone carriers are subject to the FCC’s authority.^[8].

[edit] Applicable US Law

While no generally applicable law exists, some federal laws govern privacy policies in specific circumstances, such as:

The Children's Online Privacy Protection Act (COPPA)^[9] affects websites that knowingly collect information about or target at children under the age of 13^[10]. Any such websites must post a privacy policy and adhere to enumerated information-sharing restrictions^[11]. COPPA includes a Safe Harbor provision to promote Industry self regulation^[12].

The Gramm-Leach-Bliley Act^[13] requires institutions “significantly engaged ^[14]” in financial activities give “clear, conspicuous, and accurate statements” of their information-sharing practices. The Act also restricts use and sharing of financial information^[15].

Health Insurance Portability and Accountability Act (HIPAA) Privacy Rules^[16] requires notice in writing of the privacy practices of health care services, and this requirement also applies if the health service is electronic^[17].

Some states have implemented more stringent regulations for privacy policies. The California Online Privacy Protection Act of 2003 - Business and Professions Code sections 22575-22579 requires “any commercial web sites or online services that collect personal information on California residents through a web site to conspicuously post a privacy policy on the site^[18]” Both Nebraska and Pennsylvania have laws treating misleading statements in privacy policies published on Web sites as deceptive or fraudulent business practices^[19].

[edit] Privacy Policies and the European Union

There are significant differences between the EU data protection and US data privacy laws. These standards must be met not only by businesses operating in the EU, but also by any organization that transfers personal information collected concerning citizen of the EU. In 2001 The United States Department of Commerce worked to ensure legal compliance for US organizations under an opt-in Safe Harbor Program^[20]. The FTC has approved eTrust to certify streamlined compliance with the US-EU Safe Harbor.

[edit] Online Privacy Certification Programs

Online Certification or “Seal” programs are an example of industry self regulation of privacy policies. Seal programs usually require implementation fair information practices as determined by the Certification program and may require continued compliance monitoring. TRUSTe^[21], the first online privacy seal program, included more than 1,800 members by 2007^[22]. Other Online Seal programs include the Better Business Bureau Assurance on the Internet^[23], eTrust^[24] and Webtrust^[25].

[edit] Technical Implementation of Privacy Policies

Some websites also define their privacy policies using P3P or Internet Content Rating Association (ICRA), allowing browsers to automatically assess the level of privacy offered by the site. However, these technical solutions do not guarantee websites actually follows the claimed privacy policies. They also require users to have a minimum level of technical knowledge to configure their own browser privacy settings^[26]. These automated privacy policies have not been popular either with websites or their users^[27].

[edit] Criticism

Many critics have attacked the efficacy and legitimacy of privacy policies found on the Internet. Concerns exist about the effectiveness of industry-regulated privacy policies. For example, a 2000 FTC report Privacy Online: Fair Information Practices in the Electronic Marketplace1 found that while the vast majority of website surveyed had some manner of privacy disclosure, most did not meet the standard set in the FTC Principles. In addition, many organizations reserve the express right to unilaterally change the terms of their policies. In June 2009 the EFF website TOSback began tracking such changes on 56 popular internet services, including the monitoring the privacy policies of Amazon, Google and Facebook^[28].

There are also questions about whether consumers understand privacy policies and whether they help consumers make more informed decisions. A 2002 report from the Stanford Persuasive Technology Lab contended that a website’s visual designs had more influence than the website’s privacy policy when consumers assessed the website’s credibility^[29]. A 2007 study by Carnegie Mellon University claimed “when not presented with prominent privacy information...” consumers were “…likely to make purchases from the vendor with the lowest price, regardless of that site's privacy policies^[30].” However, the same study contends where privacy information is clearly presented, consumers prefer retailers who better protect their privacy and may “pay a premium to purchase from more privacy protective websites.” Furthermore, a 2007 Berkeley study found that “75% of consumers think as long as a site has a privacy policy it means it won’t share data with third parties,” confusing the existence of a privacy policy with extensive privacy protection^[31].

Critics also question if consumers even read privacy policies or can understand what they read. A 2001 study by the Privacy Leadership Initiative claimed only 3% of consumers read privacy policies carefully, and 64% briefly glanced at, or never read, privacy policies^[32]. One possible issue is length and complexity of policies. According to a 2008 Carnegie Mellon study the average length of a privacy policy is 2,500 words, the research and requires an average 10 minutes to read. The study cited that “Privacy policies are hard to read” and, as a result, “read infrequently”^[33].

[edit] References

[edit] External links

• BBBOnLine privacy policy template.
• FTC Guideline Publication Archive.
• P3P Code Generator.
• EFF Best Practices for Online Service Providers (2008) including Privacy Policies.