The Secure Times

An online forum of the ABA Section of Antitrust Law's Privacy and Information Security Committee

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Senators Kerry and McCain Introduce the Privacy Bill of Rights Act of 2011

Sen. John Kerry (D-Mass.) and Sen. John McCain (R-Ariz.) introduced today a bi-partisan privacy bill, the Privacy Bill of Rights Act of 2011, a bill “[t]o establish a regulatory framework for the comprehensive protection of personal data for individuals under the aegis of the Federal Trade Commission, and for other purposes.”

The Act would apply to covered entities, that is, “any person who collects, uses, transfers, or stores covered information concerning more than 5,000 individuals during any consecutive 12-month period,” and is a person a person over which the FTC has authority pursuant to section 5(a)(2) of the Federal Trade Commission Act , a common carrier, or is a non-profit organization (p.29-30).

The Act would be enforced by the FTC and by State Attorney Generals (p.30-31). However, no simultaneous enforcement by a State Attorney General and the FTC would be allowed. The Act would also prevent private rights of action (p.37).

The FTC would establish rules to be followed by nongovernmental organizations administrating safe harbor programs. Participation in these programs would be voluntary, not mandatory (p. 37-41).

The right of security and accountability

Not later than 180 days after the enactment of the Act, the FTC would initiate a rulemaking proceeding requiring covered entities to implement security measures protecting the coverd personal data information they collect and maintain. These security measures would be proportional to the size, type, and nature of the collected information (p.15). Covered entities would have a duty “to respond to non-frivolous inquiries from individuals regarding the collection, use, transfer, or storage of [their] covered information.”

Covered entities will “in a manner proportional to the size, type, and nature of the covered information that it collects, implement a comprehensive information privacy program.” Such a program would be a “privacy by design program,” which would “incorporate necessary development processes and practices throughout the product life cycle that are designed to safeguard (… ) [individuals’] personally identifiable information based on both individuals’ reasonable privacy expectations in their data  and relevant threats against data privacy (p.17).

The right to notice, consent, access, and correct information

Not later than 60 days after the enactment of the Act, the FTC would initiate a rulemaking proceeding requiring covered entities “to provide clear, concise, and timely notice to individuals” regarding data collection, use, transfer, and storage of covered information, and also regarding the specific purposes of those practices.  Covered entities would have “to provide clear, concise, and timely notice to individuals before implementing a material change in such practice (p.18).

The FTC rulemaking proceeding would also require covered entities:

“to offer individuals a clear and conspicuous mechanism for opt-out consent for any use of their covered information(…);  to offer individuals a robust, clear, and conspicuous mechanism for opt-out consent for the use by third parties of the individuals’ covered information for behavioral advertising or marketing;  to offer individuals a clear and conspicuous mechanism for opt-in consent for (… ) the collection, use, or transfer of sensitive personally identifiable information other than (i)to process or enforce a transaction or deliver a service requested by that individual; (ii) for fraud prevention and detection; or (iii) to provide for a secure physical or virtual environment ( … )”

In case of bankruptcy or if an individual requests termination of a service, a individual would have the right to request that all of his personally identifiable information maintained by covered entity, except for some publicly shared information or information that the individual authorized the sharing of, “be rendered not personally identifiable,” or, if this is not possible, the covered entity will have to stop the use or transferring such information to a third party (p.18-20).

The right to data minimization, constraints on distribution, and data integrity

Covered entities would be authorized to collect “only as much covered information relating to an individual as is reasonably necessary “during a transaction or when delivering a service requested by the individual. However, covered entities could keep such data “for research and development conducted for the improvement of carrying out a transaction or delivering a service” and for “internal operations” such as customer satisfaction surveys (p. 24-25).

Covered entities will have to require by contract that any third party to which they transfer covered information use the information only for purposes consistent with the provisions of the Act, and as specified in the contract (p. 25), unless the covered entity obtains individuals’ consents to such transfers. Data transfers to unreliable third parties would be prohibited (p.27).

Data integrity would be achieved by covered entities by establishing and maintaining “reasonable procedures to ensure that (… ) covered information (… ) is accurate in those instances where the covered information could be used to deny consumers benefits or cause significant harm” (p. 28).

More information here.