Chamber Proposes Curbs on Consumer Lawsuits Over Data Privacy

(Bloomberg) -- The U.S. Chamber of Commerce on Thursday released a set of policy positions on internet privacy, including a proposal that companies be shielded from lawsuits if they violate laws governing how they collect and use data on their customers.

The legislative blueprint from a powerful business lobby allied with Republican lawmakers will serve as an opening gambit as Congress, the White House and the tech industry prepare a push for privacy legislation that could affect the workings of the whole digital economy.

The group’s proposal, which would also override stricter state regulations such as ones put in place by California, is all-but-certain to anger consumer advocates who have argued that people should be able to control data about themselves.

In addition to calling for the preemption of state law “to provide certainty and consistency to consumers and businesses alike,” the 10-point framework says consumers should not be given a right to sue “for privacy enforcement, which would divert company resources to litigation that does not protect consumers.”

In lieu of a consumer right to sue, the Chamber suggested a “reasonable opportunity for businesses to cure deficiencies in their privacy compliance practices before government takes punitive action.”

The plan also urges companies to be transparent on their data “collection, use and sharing” while calling for “privacy innovation” and saying that protections “should be considered in light of the benefits provided and the risks presented by data.”

“The Chamber truly believes that consumer privacy must be respected and that companies should live up to their promises, and to ensure that consumers’ privacy is in fact protected -- first and foremost,” said Tim Day, senior vice president of the Chamber’s Technology Engagement Center. “It’s important that we have consumers and companies have one set of rules and a regulatory framework by which to operate.”

While federal law already governs privacy in sectors such as health care or financial services, drives for broad-based digital privacy regulation have largely stalled in the last two decades. In recent months, though, Europe put in place tough new privacy rules and high-profile lapses such as the Cambridge Analytica scandal prompted calls for privacy legislation in the U.S. In June, California worried a range of industries when it enacted a privacy law that contained several items on the consumer advocates’ wish-lists.

The Chamber’s proposal is likely to run into those advocates’ efforts. Some activists have argued, for instance, that companies should be bound by strict state statutes, and have pushed for consumers to be able to sue. They have also sought blanket provisions allowing consumers to opt out of or into data collection or request its deletion.

The Chamber’s plan instead urges a single national standard that industry can help shape.

“We need to have a clear, one set of rules and regulations form which to operate, both for consumers and for businesses,” Day said. 

The push to turn the framework into legislation, which likely wouldn’t come before next year, will not be easy: Democrats appear increasingly likely to take control of the House, giving a greater voice to lawmakers who want strict regulation.

Despite the framework’s call for “industry neutrality,” the Chamber’s plan must also contend with sectors that have spent years fighting each other on the specifics of privacy. The application of privacy to ad-targeting practices has set Facebook Inc. and Alphabet Inc.’s Google against telecom companies such as AT&T Inc. and even technology services companies, while the question of responsibility for notification of data breaches spurred a long-running feud between banks and retailers. The current framework represents a cross-industry agreement.

Still, if privacy momentum gains in Congress, the Chamber, which is routinely a top lobbying spender and campaign donor, could be a powerful legislative force.

The Chamber has said it plans to bring the framework to legislators, several of whom have proposed their own privacy legislation, in coming days. It has also been working with the White House, which has said it “aims to craft a consumer privacy protection policy that is the appropriate balance between privacy and prosperity.”

“This should not be a short-term how do we get the fastest legislation enacted and try to understand these issues,” Day said. “They’re very difficult, and there have been numerous attempts of getting privacy legislation across the finish line in the past.”

The Information Technology Industry Council and the Internet Association, both tech lobbying groups, have said they’re pursuing their own privacy proposals.

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