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April 05, 2012

FTC Wants 'Do Not Track' Framework in Place to Protect Consumer Privacy

By Jacqueline Lee, Contributing Writer

Whether ‘Do Not Track’ rules come from the Internet industry or from Congress, the Federal Trade Commission wants those rules in place by next year. These rules could have significant consequences for the both the telematics and insurance industries.

Many auto insurance companies, for instance, have launched usage-based insurance programs. The programs, nicknamed “pay-as-you-drive,” use telematics devices to collect GPS data including mileage, location, braking patterns and speeds. The industry touts the usage-based model as a way to give consumers more control over their premiums because safer drivers, theoretically, would be charged less for insurance. However, consumer groups fear that the data collection constitutes a violation of privacy for consumers.

“If companies adopt our final recommendations for best practices – and many of them already have – they will be able to innovate and deliver creative new services that consumers can enjoy without sacrificing their privacy,” said Jon Leibowitz, chairman of the FTC (News - Alert). “We are confident that consumers will have an easy to use and effective ‘Do Not Track’ option by the end of the year because companies are moving forward expeditiously to make it happen and because lawmakers will want to enact legislation if they don't.”

Senator John Rockefeller of West Virginia introduced the Do Not Track Online Act last year, which would have required the FTC to promulgate regulations regarding both the collection and use of personal information obtained by tracking individual online behavior. While the legislation has stalled in the Senate, Congress may choose to introduce a Do Not Track bill that covers more than just the tracking of browsing behavior.

The FTC report that contained the call to action, entitled “Protecting Consumer Privacy in an Era of Rapid Change,” included a list of best practices for companies looking to innovate while respecting consumer privacy. These best practices include considering privacy at every stage of the development process, allowing consumers to choose to opt out of tracking and greater transparency about how information is collected.

Many analysts believe that allowing consumers to opt out of tracking would have a negligible effect on the telematics and insurance industries. Still, both industries would need to carefully watch both state and local pronouncements on the topic of tracking consumer behavior.

Edited by Jennifer Russell
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