THE BLOG
04/10/2012 01:32 pm ET | Updated Jun 10, 2012

A Privacy Right to Believe In

Unless you've spent the new millennium on another planet, you've
noticed that details of your personal life are circulating more
and more freely. Like water in those inscrutable underground
rivers, data on your family
circumstances -- or buying patterns, website visits or finances -- disappear at
one point, only to surface in utterly different contexts. Typically
these data-flows are the work of highly interested parties, bent on using
your data to fine-tune their dealings with you.

These uses often bring rude surprises. Kevin Johnson of Atlanta, for
example, recently received a letter from American Express informing him of
a sharp reduction in the credit available on his card. "Other customers
who have used their card at establishments where you recently shopped,"
the letter stated, "have a poor repayment history with American Express."

At least American Express drew the damning information from its own files.
Companies can just as readily target customers on the basis of purchases
or website visits with other organizations altogether. As law professor
Lori Andrews recently noted in the New York Times, "If guitar players or
divorcing couples are more likely to renege on their credit-card bills,
then the fact that you've looked at guitar ads or sent an e-mail to a
divorce lawyer may cause a data aggregator to classify you as less
credit-worthy."

Practices like this offend elementary instincts of privacy. In
everyday
transactions, we willingly furnish information we believe needed to
deliver what we're seeking -- our address, on taking out a subscription;
medical history, when seeking care; or information about past credit use,
to open a new credit account. When we disclose such data, we don't
expect it to be captured and redirected for new and unintuitive
purposes -- especially unfriendly ones.

But as more and more crucial relationships and transactions unfold
over
the internet, such expectations ring increasingly quaint. Big
organizations troll cyberspace operating on the opposite principle: that
personal information, once released for any purpose, belongs to whoever
can capture it. Fabulous profits beckon to those who succeed in
mobilizing just the right personal data to shape the "right" treatment
for each consumer -- the right ads, the right terms for insurance or credit,
or the right price for a given item, judged by what the consumer has been
willing to pay in the past. In this quest, personal data are often most
valuable in contexts farthest removed from where they are captured. If
companies can make just the right connections, all they need to worry
about is public indignation.

In nearly all the world's prosperous democracies, anticipation of such
indignation has inspired adoption of privacy codes -- legislation and policy
to establish personal rights in the treatment of data on one's self.
These laws have achieved significant successes. But a salient
disappointment has been failure to foster broad public understanding or
engagement, with most citizens remaining vague on what protections the
laws provide. As a result, struggles over who can do what with personal
information have become the province of bureaucrats and specialists.

Now the Obama administration has weighed in with its own
initiative. In
February, it promulgated a Framework for a Consumer Privacy Bill of
Rights
, aiming at "clearer protection for consumers" against internet
misuse of personal data. Privacy advocates publicly welcomed the spirit
of the initiative. Off the record, they wondered whether it could
succeed where other efforts have failed against pressures from industries
fixated on personal information as their essential raw material.

The Framework is a wonkish document -- its more than fifty dense pages
ensuring that few non-specialists will read it. Still, many of its
stated goals are heartening. For example: companies should make it easy
for consumers to block use of data they provide on the internet to target
ads directed at them. Consumers should be able to withdraw permission
for release of their personal data granted earlier. Companies
aggregating and selling personal data without actually dealing directly
with the public should be encouraged to disclose their policies. Worthy
aims, all.

But interlarded with such statements are repeated affirmations of the
value of activities supported by the very same privacy-eroding practices.
The "reuse" (i.e., unauthorized capture) of personal information, the
Framework states, represents "an important source of innovation."
Targeted ads -- those based on data on the consumer -- "are worth significantly
more than non-targeted ads." Available privacy-protecting mechanisms
should be adapted to "... strike a balance with innovative uses of personal
data...". Here one senses a quest for compromise between widespread
public desires for control over one's own personal data, and industry
appetites for precisely the opposite.

With such sharply conflicting principles in play, everything turns
on the
measures adopted to reconcile them. Here the Framework proposals do not
inspire confidence. Rather than proclaiming broad and binding rights
for consumers, they call for complex and indeterminate efforts at
self-regulation -- new codes of conduct fashioned in "multistakeholder
processes" bringing together industry representatives, technologists,
privacy advocates, law enforcement agencies and others.

Different industry sectors are to constitute separate "stakeholder"
groups, each framing its own privacy code. Individual companies, we are
told, "may choose to adopt multiple codes of conduct to cover different
lines of business." Once approved by the Federal Trade Commission, each
code will be binding, though only on the companies explicitly adopting it.
The FTC, the ultimate regulator, will be expected to look favorably on
the activities of industry members who adhere to these codes.

Thus, a far-flung policy machine with countless moving parts. Taken at
its word, the Framework could spawn dozens of codes -- different ones for
social networking sites, presumably, or for vendors of personal data to
advertisers, or for internet service providers. In each of these
domains, no doubt, some players will reject the codes. Both these
outliers and subscriber groups will remain subject to the oversight of the
FTC. This is a vast agenda for any regulator.

Nor is it at all clear how strong the consumer options decreed by the
"stakeholder" processes will be. Would companies like American Express
be prevented from using data on where its customers use their cards to
reduce the credit extended to them -- as in Kevin Johnson's case? Would
companies remain free to supplement their own account data with personal
data purchased from outside brokers to determine what treatment their
customers will receive? At times the authors of the Framework imply
that their aim is simply to put privacy-invading practices on record,
leaving customers to assume what they call "responsibilities to protect
their privacy as they engage in an increasingly networked society." In
context, this suggests that companies may be free to pursue the most
high-handed uses of consumers' data -- if only the latter are duly warned in
advance.

Such strategies of encouraging consumers to protect their privacy
piecemeal, by foregoing otherwise attractive uses of the internet, are
extremely inauspicious. American consumers are indeed on record as
desiring protection for their data. But few are prepared to stop each
individual transaction in its tracks, research the detail of their options
under the applicable privacy code, and scrap the transaction if those
options appear unsatisfactory. Retailers, creditors, website operators
and the like exploit this impatience by requiring customers to acquiesce
to draconian warnings and "terms of service" at the last moment before
transactions can go ahead. When was the last time you actually read one
of these statements in detail before clicking on with your internet
business?

In fact, the administration's complex and demanding regulatory project has
things backwards. Instead of relying on industry self-restraint and
intensive regulation from above to manage personal data once it has
"escaped," we should reconsider who owns such information in the first
place.

Imagine that everyone enjoyed property rights over commercial
exploitation of his or her information -- as with mineral rights or water
rights. Without explicit consent from the rights-holder, no party could
trade in personal data, or use it to add value to their product or
service -- e.g., for targeting ads on the internet. Such consent could be
withheld categorically, granted indiscriminately, or predicated on
payment of royalties. A right to punitive damages for unauthorized
commercial use would provide ample incentive for compliance.

Here the enforcers of privacy obligations would be the rights-holders
themselves, or their designated representatives. Establishment of the
right would likely trigger formation of new companies dedicated to
monitoring both authorized and unauthorized uses of personal data, and
claiming compensation where the owner imposes this as a condition for
use.

Who could fail to see the virtues of such an elegant and
self-activating
formula for privacy protection? Only the vast industries that now
flourish by appropriating personal information without consent. For
them, prospects of people's having an easy option to block
commercialization of data on themselves will be about as appealing as a
proposal for Steak Tartar at the Vegans' annual banquet. Creation of
real, enforceable rights of this kind, industry interests will warn, will
spoke the wheels of "innovation" -- crimping the cornucopia from which flow
jobs, fortunes and a steady stream of contributions to electoral
politics.

But establishing property in personal information would hardly
have such
drastic effects. What it would do would be to require all commercial
users of personal data to make their activities acceptable to those whose
privacy they compromise -- if those activities are to go ahead at all.

Best of all would be the effect on public consciousness. The notion
that everyone owns the right to commercial exploitation of data on one's
self is something that everyone could understand -- unlike the complex array
of options likely to issue from the Obama Framework. Poll data suggest
that the idea of ownership of one's own data would be hugely popular,
rewarding any politician who seriously proposes it. The new right would
make all citizens the ultimate judges of whether new uses of their
data -- which now would really be "theirs" -- represented life-enhancing
technological progress, or unwarranted invasion of personal space.