Politicians, Industry Gear Up for Public Battle Over Privacy

Politicians have been jawboning about privacy for years. Last fall, Maryland’s Sen. Paul Sarbanes tried something different: He campaigned on the issue.

Though the popular Democrat probably would have been reelected anyway, his unusual campaign--which relied heavily on TV spots touting his efforts to keep consumers’ financial records from being peddled to marketers--was considered somewhat of a watershed event in the evolution of privacy from a social-studies debate into a full-fledged political issue that could take center stage in Washington this year.

With polls showing that consumers increasingly are worried about the use of their personal information, Congress’ interest in privacy is stronger now than perhaps any time since the 1970s, when the Watergate scandal spurred a wave of new restrictions on the government collection of data about citizens.

Dozens of lawmakers, both Democrats and Republicans, are staking out ground in the debate, planning to offer scores of privacy-related bills this year. Internet privacy is drawing much of the attention. The Internet caucus, including 166 members of Congress, is considering issuing its own set of online-privacy recommendations.

And because privacy tends to draw bipartisan support, the issue may be tailor-made for the narrowly divided 107th Congress.

Most eyes are on Sen. John McCain (R-Ariz.), who used his influential post as head of the Senate Commerce Committee to hold privacy hearings last year and is expected to reintroduce his online-privacy bill now that George W. Bush has been inaugurated as president.

McCain’s bill, which requires companies to disclose what sort of data they collect online and give consumers a chance to opt out of the process, has the best shot of passage, analysts say.

But several other lawmakers are expected to push for tougher rules that would require companies to get consumers’ prior approval before using or selling their personal data, known as an “opt-in” system.

Legislators who have expressed interest in privacy include Sen. Dianne Feinstein (D-Calif.), Sen. Orrin G. Hatch (R-Utah), Sen. Ernest F. Hollings (D-S.C.), Rep. Edward J. Markey (D-Mass.) and Sen. Conrad R. Burns (R-Mont.).

Elsewhere, political and industry forces are gearing up for a privacy showdown this year.

Last spring, the Federal Trade Commission called on Congress to give it new enforcement powers to crack down on privacy abuses on the Internet.

“We need to get at the holes in the Swiss cheese,” said Mozelle Thompson, an FTC commissioner.

He cited Sarbanes’ reelection campaign as evidence that privacy is ripe for action. “It was the first time you actually had a senator running on privacy,” he said. “That shows it’s a front-burner issue.”

Meanwhile, several states also are preparing to jump into the fray with a joint recommendation to Congress calling for broad federal protections while still allowing local lawmakers to adopt stronger rules, according to a draft report being circulated by the National Assn. of Attorneys General.

By joining forces, states hope to give their views greater clout in the national debate, similar to the way they banded together in the Microsoft antitrust trial and tobacco-industry litigation.

Last year, more than two dozen states separately tried to strengthen their privacy laws, but nearly every local effort was quashed by intense lobbying from business and technology groups.

The draft NAAG report, which has not yet been formally adopted, also endorses an opt-in system.

“Consumers own that information, and they ought to give their permission before it can be used commercially,” said California Attorney General Bill Lockyer, who is co-chairing the NAAG privacy task force.

Lockyer said states should be permitted to adopt tougher standards, as they have been able to do on other issues, such as air-quality standards for automobiles or the safeguarding of financial records.

But allowing states to pass their own privacy laws is certain to be opposed by businesses, which prefer self-regulation or a single federal standard.

“These issues don’t limit themselves to one state’s borders,” said Chase Untermeyer, director of government affairs at Compaq Computer Corp. “They call out for uniform legislation.”

Last week, the American Electronics Assn. said for the first time that it would support new federal privacy rules, but only if states were prevented from passing their own laws.

Exactly how the Bush administration will approach the privacy issue is unclear. Though the president-elect has vowed to reduce regulation for businesses, he expressed strong privacy views during the campaign, saying he believed that businesses should get prior approval before using certain types of sensitive data, such as health and financial records. A former governor, Bush also tends to support states’ rights to make their own decisions.

Polls show a growing number of Americans agree.

Nearly 80% of consumers complained recently that they have lost control over how their personal information is collected and used, according to a survey by the Center for Social & Legal Research, which tracks privacy issues for businesses.