House Privacy Bill Endangers Privacy Competition, E-Commerce

Ryan Radia, 202-331-2281
Richard Morrison, 202-331-2273

House Privacy Bill Endangers Privacy Competition, E-Commerce 
Government Itself Is Greatest Threat to Privacy & Anonymity
Washington, D.C., July 21, 2010 – Tomorrow, the U.S. House Energy Subcommittee on Commerce, Trade, and Consumer Protection will hold a hearing on legislation introduced this week by Rep. Bobby Rush (D-Ill.). The bill, known as the BEST PRACTICES Act (PDF), aims to enhance online privacy by imposing stringent new rules on companies that collect and store individual data. But information policy scholars at the Competitive Enterprise Institute warned that legislation would actually undermine privacy technologies and distort the dynamic Internet economy.
“Natural competitive outcomes in the online privacy arena cannot properly emerge in a world in which government policies discourage responsible data collection altogether,” argued Wayne Crews, CEI vice president for policy. “Today, businesses increasingly compete to deliver technologies that enhance our privacy and security. At the same time, information sharing also enables firms to sell us the things we want. This seeming tension is perfectly natural – privacy is a complex relationship that varies from person to person, not a ‘thing’ for governments to specify for anyone beforehand.”
“The competitive marketplace already provides a great deal of privacy, and firms must compensate users harmed by private violations. The real question policy makers should be asking on privacy is whether government will allow individuals to remain anonymous when they so choose.  In today’s Homeland Security culture, anonymity is under attack by government, and Rep. Rush’s legislation is a distraction from this crucial issue. Policy makers need to board a different train entirely if they truly intend to advance our privacy in the information age,” stated Crews.
“Compliance costs stemming from the bill’s onerous mandates will seriously harm Internet entrepreneurs who rely on smart, responsible data collection to better market their products and cater to their customers’ needs,” argued Ryan Radia, CEI associate director of technology studies. “In the dynamic information economy, saddling the private sector with byzantine rules is no recipe for fostering growth and innovation. Hypocritically, the legislation exempts America’s worst privacy violators – federal and state agencies.”
“The BEST PRACTICES Act’s exemption for entities that store information on fewer than 15,000 individuals is practically meaningless. Many small businesses and nonprofits across the nation routinely store basic details, such as phone numbers and email addresses, about tens of thousands of people, yet incidents of resulting data breaches or other wrongdoing are few and far between,” Radia added.

CEI is a nonprofit, nonpartisan public interest group that studies the intersection of regulation, risk, and markets. For more about CEI, visit