Fair Information Practice Principles for collection of personal information

A. Fair Information Practice Principles Generally

Over the past quarter century, government agencies in the United States, Canada, and Europe have studied the manner in which entities collect and use personal information -- their "information practices" -- and the safeguards required to assure those practices are fair and provide adequate privacy protection.(27) The result has been a series of reports, guidelines, and model codes that represent widely-accepted principles concerning fair information practices.(28) Common to all of these documents [hereinafter referred to as "fair information practice codes"] are five core principles of privacy protection: (1) Notice/Awareness; (2) Choice/Consent; (3) Access/Participation; (4) Integrity/Security; and (5) Enforcement/Redress.

1. Notice/Awareness

The most fundamental principle is notice. Consumers should be given notice of an entity's information practices before any personal information is collected from them. Without notice, a consumer cannot make an informed decision as to whether and to what extent to disclose personal information.(29) Moreover, three of the other principles discussed below -- choice/consent, access/participation, and enforcement/redress -- are only meaningful when a consumer has notice of an entity's policies, and his or her rights with respect thereto.(30)
While the scope and content of notice will depend on the entity's substantive information practices, notice of some or all of the following have been recognized as essential to ensuring that consumers are properly informed before divulging personal information:

• identification of the entity collecting the data;(31)
  
• identification of the uses to which the data will be put;(32)
  
• identification of any potential recipients of the data;(33)
  
• the nature of the data collected and the means by which it is collected if not obvious (passively, by means of electronic monitoring, or actively, by asking the consumer to provide the information);(34)
  
• whether the provision of the requested data is voluntary or required, and the consequences of a refusal to provide the requested information;(35) and
  
• the steps taken by the data collector to ensure the confidentiality, integrity and quality of the data.(36)

Some information practice codes state that the notice should also identify any available consumer rights, including: any choice respecting the use of the data;(37) whether the consumer has been given a right of access to the data;(38) the ability of the consumer to contest inaccuracies;(39) the availability of redress for violations of the practice code;(40) and how such rights can be exercised.(41)
In the Internet context, notice can be accomplished easily by the posting of an information practice disclosure describing an entity's information practices on a company's site on the Web. To be effective, such a disclosure should be clear and conspicuous, posted in a prominent location, and readily accessible from both the site's home page and any Web page where information is collected from the consumer. It should also be unavoidable and understandable so that it gives consumers meaningful and effective notice of what will happen to the personal information they are asked to divulge.

2. Choice/Consent

The second widely-accepted core principle of fair information practice is consumer choice or consent.(42) At its simplest, choice means giving consumers options as to how any personal information collected from them may be used. Specifically, choice relates to secondary uses of information -- i.e., uses beyond those necessary to complete the contemplated transaction. Such secondary uses can be internal, such as placing the consumer on the collecting company's mailing list in order to market additional products or promotions, or external, such as the transfer of information to third parties.
Traditionally, two types of choice/consent regimes have been considered: opt-in or opt-out. Opt-in regimes require affirmative steps by the consumer to allow the collection and/or use of information; opt-out regimes require affirmative steps to prevent the collection and/or use of such information. The distinction lies in the default rule when no affirmative steps are taken by the consumer.(43) Choice can also involve more than a binary yes/no option. Entities can, and do, allow consumers to tailor the nature of the information they reveal and the uses to which it will be put.(44) Thus, for example, consumers can be provided separate choices as to whether they wish to be on a company's general internal mailing list or a marketing list sold to third parties. In order to be effective, any choice regime should provide a simple and easily-accessible way for consumers to exercise their choice.
In the online environment, choice easily can be exercised by simply clicking a box on the computer screen that indicates a user's decision with respect to the use and/or dissemination of the information being collected. The online environment also presents new possibilities to move beyond the opt-in/opt-out paradigm. For example, consumers could be required to specify their preferences regarding information use before entering a Web site, thus effectively eliminating any need for default rules.(45)

3. Access/Participation

Access is the third core principle. It refers to an individual's ability both to access data about him or herself -- i.e., to view the data in an entity's files -- and to contest that data's accuracy and completeness.(46) Both are essential to ensuring that data are accurate and complete. To be meaningful, access must encompass timely and inexpensive access to data, a simple means for contesting inaccurate or incomplete data, a mechanism by which the data collector can verify the information, and the means by which corrections and/or consumer objections can be added to the data file and sent to all data recipients.(47)

4. Integrity/Security

The fourth widely accepted principle is that data be accurate and secure. To assure data integrity, collectors must take reasonable steps, such as using only reputable sources of data and cross-referencing data against multiple sources, providing consumer access to data, and destroying untimely data or converting it to anonymous form.(48)
Security involves both managerial and technical measures to protect against loss and the unauthorized access, destruction, use, or disclosure of the data.(49) Managerial measures include internal organizational measures that limit access to data and ensure that those individuals with access do not utilize the data for unauthorized purposes. Technical security measures to prevent unauthorized access include encryption in the transmission and storage of data; limits on access through use of passwords; and the storage of data on secure servers or computers that are inaccessible by modem.(50)

5. Enforcement/Redress

It is generally agreed that the core principles of privacy protection can only be effective if there is a mechanism in place to enforce them.(51) Absent an enforcement and redress mechanism, a fair information practice code is merely suggestive rather than prescriptive, and does not ensure compliance with core fair information practice principles. Among the alternative enforcement approaches are industry self-regulation; legislation that would create private remedies for consumers; and/or regulatory schemes enforceable through civil and criminal sanctions.(52)

a. Self-Regulation(53)

To be effective, self-regulatory regimes should include both mechanisms to ensure compliance (enforcement) and appropriate means of recourse by injured parties (redress).(54) Mechanisms to ensure compliance include making acceptance of and compliance with a code of fair information practices a condition of membership in an industry association;(55) external audits to verify compliance; and certification of entities that have adopted and comply with the code at issue.(56) A self-regulatory regime with many of these principles has recently been adopted by the individual reference services industry.(57)
Appropriate means of individual redress include, at a minimum, institutional mechanisms to ensure that consumers have a simple and effective way to have their concerns addressed.(58) Thus, a self-regulatory system should provide a means to investigate complaints from individual consumers and ensure that consumers are aware of how to access such a system.(59)
If the self-regulatory code has been breached, consumers should have a remedy for the violation. Such a remedy can include both the righting of the wrong (e.g., correction of any misinformation, cessation of unfair practices) and compensation for any harm suffered by the consumer.(60) Monetary sanctions would serve both to compensate the victim of unfair practices and as an incentive for industry compliance. Industry codes can provide for alternative dispute resolution mechanisms to provide appropriate compensation.

b. Private Remedies

A statutory scheme could create private rights of action for consumers harmed by an entity's unfair information practices. Several of the major information practice codes, including the seminal 1973 HEW Report, call for implementing legislation.(61) The creation of private remedies would help create strong incentives for entities to adopt and implement fair information practices and ensure compensation for individuals harmed by misuse of their personal information. Important questions would need to be addressed in such legislation, e.g., the definition of unfair information practices; the availability of compensatory, liquidated and/or punitive damages;(62) and the elements of any such cause of action.

c. Government Enforcement

Finally, government enforcement of fair information practices, by means of civil or criminal penalties, is a third means of enforcement. Fair information practice codes have called for some government enforcement, leaving open the question of the scope and extent of such powers.(63) Whether enforcement is civil or criminal likely will depend on the nature of the data at issue and the violation committed.(64)

B. Application of Fair Information Practice Principles to Information Collected From Children

The fair information practice codes discussed above do not address personal information collected from children. They are, however, applicable to parents, in light of the special status that children generally have been accorded under the law. This status as a special, vulnerable group is premised on the belief that children lack the analytical abilities and judgment of adults.(65) It is evidenced by an array of federal and state laws that protect children, including those that ban sales of tobacco and alcohol to minors, prohibit child pornography, require parental consent for medical procedures, and make contracts with children voidable. In the specific arenas of marketing and privacy rights, moreover, several federal statutes and regulations recognize both the need for heightened protections for children and the special role that parents play in implementing these protections.(66)

1. Parental Notice/Awareness and Parental Choice/Consent

It is parents who should receive the notice and have the means to control the collection and use of personal information from their children. The Commission staff set forth this principle in a July 15, 1997 letter to the Center for Media Education.(67) In addition, the letter identifies certain practices that appear to violate the Federal Trade Commission Act:

(a) It is a deceptive practice to represent that a site is collecting personal identifying information from a child for a particular purpose (e.g. to earn points to redeem a premium), when the information will also be used for another purpose that parents would find material, in the absence of a clear and prominent disclosure to that effect; and
(b) It is likely to be an unfair practice to collect personal identifying information, such as a name, e-mail address, home address, or phone number, from children and to sell or otherwise disclose such identifying information to third parties, or to post it publicly online, without providing parents with adequate notice and an opportunity to control the collection and use of the information through prior parental consent.

This letter applies the Commission's Section 5 authority for the first time to the principles of notice and choice in the online collection of information from children. The principles set out in the staff opinion letter form an appropriate basis for public policy in this area.
To assure that notice and choice are effective, a Web site should provide adequate notice to a parent that the site wishes to collect personal identifying information from the child,(68) and give the parent an opportunity to control the collection and use of that information. Further, according to the staff opinion letter, in cases where the information may be released to third parties or the general public, the site should obtain the parent's actual or verifiable consent(69) to its collection.(70)
The content of the notice should include at a minimum, the elements described above,(71) but, in addition, should take into account the fact that online activities may be unique and unfamiliar to parents. Thus, a notice should be sufficiently detailed to tell parents clearly the type(s) of information the Web site collects from children and the steps parents can take to control the collection and use of their child's personal information. Where a Web site offers children interactive activities such as chat, message boards, free e-mail services, posting of home pages and key pal programs, it should explain to parents the nature of these activities and that children's participation enables others to communicate directly with them. Such notice empowers parents to monitor their children's interactions and to help protect their children from the risks of inappropriate online interactions.

2. Access/Participation and Integrity/Security

Since parents may not be fully aware of what personal information a site has collected from their child, the access/participation principle is a particularly important one with respect to information collected from children. To provide informed consent to the retention and/or use of information collected from their children, parents need to be given access to the information collected from their children, particularly if any of the information is collected prior to providing notice to the parent. The principle of integrity, which addresses the accuracy of the data, is also important for children's information. Parents have an interest in assuring that whatever information Web sites collect from children or have otherwise obtained about their children is accurate. This is particularly important in contexts that involve decisions that impact on the child or family, such as educational or health decisions. In addition, since children's information is considered to be a more sensitive type of information, sites should take the same steps identified above to assure that children's data is secure from unauthorized uses or disclosures.

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