A Case for Federal Privacy Law

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An informative event concerning all things related to data privacy took place in Washington, D.C. on July 11.

Data Done Right, a conference hosted by the U.S. Chamber of Commerce, featured discussions on many of the policy issues that surround the use of consumer data by the tech industry.

A variety of speakers presented their views on the future of tech innovation, and how to protect the individual privacy of consumers, while at the same time promoting innovation and certainty.

The common theme shared by the speakers focused on perspectives on data privacy and the various ways in which the U.S. seeks to introduce effective consumer privacy laws.

Tom Wilson, chairman, CEO and president of The Allstate Corporation, gave an enlightening presentation on the economics of data. Noting that businesses such as Google and Facebook have revenue's of $192 billion that comes largely from the use of consumer data to sell advertising, Wilson said consumers that exchange their data for access to those company's services have no way of knowing whether that's a fair deal.

In his presentation Wilson calls for a “Digital Bill of Rights” focusing on individual ownership of data, with data policy agreements that can be easily understood.

A transcript of Tom Wilson's presentation follows...

“Today, consumers allow Facebook and Google to collect and sell their data to get free services. Google and Facebook have $192 billion of revenue, that they largely get by using that data to sell advertising.

We have no way, as consumers or users of those services, to know whether that's a fair deal.

Asked another way – if consumers could sell their data to a third-party, for $192 billion, would they then write a check for $192 billion to Facebook and Google to have their services?

Some clearly would. Some might not.

So, consumers should have this freedom of choice. And, this is not just a Google or Facebook issue.

Too many so-called privacy policies

Technology has developed so fast that we have no idea who has our information, or what they do with it.

So, let me ask you a personal question:

  • Do you know what your digital footprint is?

  • Do you know who's collecting information on you?

  • Do you know what their so-called privacy policies are?

If you're like most of us, you have no idea. So, we're introducing a new product later this year to help you manage your digital footprint.

In developing that product, we surveyed consumers, and 87 percent of them said they thought they had under 50 active online accounts. The real answer? Over 152 - which means there are more than 3 times as many potential ways to steal your information.

Now, knowing how many is, of course, one thing. But knowing what they're doing with our information is also extremely important to our safety.

So many privacy statements are not really about privacy at all. They are really about data-sharing. They're too long and they're too complicated to understand, you need a college degree to read most of them. In addition, if you have 152 accounts you get 152 different agreements.

Consumers are concerned about this situation, which is why privacy legislation is so politically popular.

Two thirds of Americans are worried about identity theft. They should be. Because half of Americans have had their personal information compromised online.

So, what do we do about that, right? We create laws like GDPR, or the California Consumer Privacy Act. Much of what was done in those laws is needed. However, in some ways they don't go far enough. In other ways they restrict everybody to the same rules, which is not the freedom we're hoping to get in this digital world.

What do American consumers want?

Creating a digital world that meets a variety of needs, yet enables us to prosper together be difficult but it should be worth it. And it has to be done.

As a consumer company, we always start with “what do consumers want?”

So, Americans love choice. Freedom is just part of our history.

Some consumers have really little concern about their privacy, while others are completely freaked out about giving up their data.

So, we did some consumer research and we identified 4 segments of customers.

The “not protective” segment really doesn't care what happens with their data, they're typically younger, they're digitally engaged. That's about 15 percent of consumers.

41 percent fall into the “necessary evil” category. They skew slightly older, they're digitally engaged, but they really don't like the fact that their data is sold. That said, they see the benefits of some of the services they get.

The “cautious” segment is 26 percent, and they prefer not to have their data sold or to lose control.

The “very protective” segment is 18 percent of the population. And they're not comfortable about sharing any data.

So, 97 percent - almost everybody in that segment believes their data should never be sold, even if it's anonymized. They also feel it's unfair that they have to sacrifice their privacy to get access to an app.

Only 3 percent, barely anybody in that segment believes it's worthwhile giving up their data to get a targeted off them. On the other hand, if you go to the “not protected segment, three-quarters of them believe it's giving up their data to get a targeted ad.

So, one solution will obviously not work for all of these segments.

Federal Law: One simple solution?

You have multiple customer segments, thousands of companies, thousands of privacy agreements, so, the question you're dealing with today is, you know, “how do we create a market in a regulatory structure in such a complicated world?”

One way to deal with complication is simplification. So, we can simplify this by empowering individuals by creating a digital bill of rights. This would give them government protection, and a market to enable them to to make the choices that are right for them.

A digital bill of rights would have 4 components:

  1. Individual ownership of data;

  2. Standardized data-sharing agreements;

  3. Data protection, and;

  4. Freedom to trade their data.

First, individuals should be given freedom to own The data they create. You know, if you write a book, or you draw a creative piece of art, it's your property. If you create data, you should own it.

Secondly, we need to create simple data-sharing agreements that enable people to provide the data to others in exchange for goods and services.

Nobody reads today's statements. Like, we just click “accept”, and we go to the next screen.

That's not the right way to handle an asset that's worth $192 billion to just two companies. And, just for reference, $192 billion is equal to the total annual income of 3 million American households.

A digital bill of rights should create a standard data-sharing agreement that are readily understandable in 5 minutes for the high school reading level. And, based on our research, there are four types of consumers that have a choice to deal with companies, while greatly simplifying relationships.

The most restrictive agreement would be a Guest Agreement, right?

Individuals would not give companies the right to use any of their data outside the immediate transaction, and no cookies could be embedded in their device.

The Closed Agreement would limit companies to using data for just transactions with their consumers. Data could not be sold, even in an anonymized form. And that's the type of agreement that would resonate with the “very protective” segment.

The Anonymous Agreement would be where an individual agrees to let their data be sold to others as long as its in an anonymized form.

The Open Agreement would basically be what most agreements are today.

Individuals would have greater freedom of choice, and would likely use different agreements for different companies.”

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“Federal legislation could ensure that these standard agreements would have federal pre-emption over state laws. That would encourage companies to provide these four choices to customers.

It's also necessary, to operate in today's world …

Consider our collection of driving data, to help customers get the most accurate price, or be safer drivers. It would be very difficult to do this if we had to do a different standard when you cross from Virginia, to D.C., to Maryland.

Federal legislation could do two other things:

Protect our individual data. Regulations must assure that companies are accountable for cybersecurity. Appropriate remediation standards must established for breaches.

This works in the insurance space, it works in 50 different states we're in, so it can clearly work in the digital space.

We also have to protect ourselves from the government, unfairly using our data like they do in China.

Now, if I keep a diary by my bedside, the government cannot come into my house and take it without due process. The same should be true about my digital footprint on my phone.

Legislation needs to broaden the protections granted to individuals in the recent supreme court case .. the Carpenter case.

Lastly, federal legislation should clarify the giving-up of ownership of individually-owned data for goods and services that [are] not taxable. That's the situation today.

Ownership, combined with standardized agreements, creates the opportunity for a market to develop, for individual data. So, as an individual you could decide if you want to use an Open Agreement, and get Facebook for free.

Alternatively, you could decide “I think I'll use the closed agreement and pay Facebook $2 a month to use the service”. That would bring market economics into how we provide and manage data.

A digital bill of rights would also need some transition tools. So what happens to all the existing data we have?, [and] how long does the company have it before they get started here?

So, let's create a digital world that is consistent with Americas values of ownership rights, and individual freedom.

Hard work

Now, crafting these changes will be hard. As a digital company like us, adapting to them also is going to be hard. But the hard work will be worth it.

A free and open market, driven by individual choice, but regulated by federal government, would create a new wave of innovation in the digital economy.

This will speed up innovation – not slow it down.

That will keep America at the forefront of the digital evolution, and to do that though, we're going to have to work together – that means legislators are going to have to create new laws, regulators are going to have to interpret those laws and then work with businesses to try to figure out how to adapt them. Companies are going to have to rebuild their business models that are built on existing structures, and we're going to have to adapt.

But, doing it together will be worth it, and it's going to require the expertise in this room.

So we need to work cooperatively across party and industry lines. Because together we can improve our digital world. And that is what will keep America strong.”

Source: U.S. Chamber of Commerce