Consumer groups worry as internet privacy rules face the axe

Consumer groups worry as internet privacy rules face the axe
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Republicans are close to killing off Obama-era privacy rules on internet service providers, a move that critics warn could have major implications for customers' personal information.

The rules approved by the Federal Communications Commission (FCC) in October would have prevented companies providing internet access from using and sharing "sensitive" data for advertising purposes without their customers' permission. Sensitive data included the apps customers use and websites they visit, their location, and financial and medical information.

The rules sparked fierce opposition from broadband companies such as AT&T and Verizon. But privacy and consumer groups hailed them as crucial privacy protections for the public, in an era when they say companies are collecting reams of data on their customers.

Now, broadband companies will likely be able to continue to use and sell that information to advertisers to create targeted ads for consumers.

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On Thursday, the Senate voted 50 to 48 along party lines to scrap the regulations under the Congressional Review Act (CRA). The House could do the same as early as next week, sending the resolution to President Trump, who is expected to sign it.

Republicans and industry critics of the rules argue that the FCC should not be regulating privacy in the first place. They say that's the responsibility of the Federal Trade Commission (FTC), which has long had its own privacy framework.

The FTC polices how internet companies such as Google and Facebook handle customer data. Those companies are able to use that data and sell it to advertisers.

But the FCC rules covered internet providers and subjected them to harsher standards, critics said, by requiring them to get customer permission. Broadband companies said that cut them off from a source of revenue and pointed out that web companies regularly profit from consumer data.

Though web companies would not be affected by the FCC rules, their trade groups opposed them out of concern they could be exposed to similar regulations.

The FCC changed how they classified broadband providers under the 2015 net neutrality rule, which also bars them from discriminating against internet traffic from competitors' websites. The reclassification paved the way for tougher regulations, like the privacy rules.

Republicans at the FCC and in Congress have already signaled they hope to roll back the broader net neutrality rules.

Now with the FCC privacy rules facing elimination, consumer watchdogs say broadband companies are poised for a windfall.

"I think really what's going to happen is there's going to be a free pass if the CRA goes all the way through, they're going to be able to double dip profit-wise into their consumers," Gaurav Laroia, policy counsel at Free Press, told The Hill.

"We're paying a significant amount of money each month for internet access, and now they're going to be able to have access to all of our web browsing history and sell it off to insurance companies, advertisers and whomever."

And Laroia noted that once the FCC rules are out of the way, the FTC won't be able to jump in with its own privacy protections.

Because broadband is treated like a public utility, a federal court said the FTC didn't have jurisdiction over internet providers.

Privacy and consumer groups say they worry that means no one is on guard enforcing the public's privacy rights.

Laroia said he wonders "if we can expect enforcement of any kind of privacy regime on [service providers] at all."

Still, critics of the rules insist that service providers should not be subject to tougher rules than websites, which also collect tons of user data and are essentially free to target ads at consumers.

“These regulations overreached what is necessary to protect consumers’ legitimate privacy interests,” Randolph May, president of the conservative Free State Foundation, said in a statement Thursday.

May said the rules "disadvantaged — competitively — Internet providers" versus other companies that he said "in fact, collect far more personal information."

He also argued that consumers would benefit from companies having access to their data and giving them "targeted information."

Congress isn't alone in acting against the rules.

At the FCC, Chairman Ajit Pai in February blocked a portion of the privacy rules that would have required service providers to take "reasonable" steps to secure their customers' data from taking effect.

But Republican chiefs of both agencies at the center of the debate — the FCC and FTC — say protecting consumers' privacy is a priority.

Pai has said he wants to work with his counterpart at the FTC, acting Chairman Maureen Ohlhausen, to implement a less intrusive privacy framework.

“The FTC has a long track record of protecting consumers’ privacy and security throughout the Internet ecosystem,” the two GOP chairs said in a joint February statement. “It did not serve consumers’ interests to abandon this longstanding, bipartisan, successful approach.”

But they insist that authority over "broadband providers’ privacy and data security practices should be returned to the FTC.”

Critics of this approach are quick to point out that the FTC does not have the authority to make rules governing what companies can and cannot do with their consumer data.

They warn that leaves the door open to more targeted ads, which polls show consumers find invasive.

A 2016 Pew Research poll asked respondents if they would be willing to participate in a social media platform to reconnect with old friends if that platform used their online activity to provide them with targeted ads.

Fifty-one percent said that would be unacceptable, 33 percent said they were open to it and 15 percent said “it depends.”

With the FCC rules on the chopping block, watchdogs hope regulators will fill the gap.

"There's actually a lot of evidence that consumers don't like the way data is being handled online right now," said Open Technology Institute policy counsel Eric Null.

"A lot of people are very unhappy that companies are allowed to collect all sorts of data and use it in any way they want, however they want, target people any way they want — put them into groups based on income or race or gender or whatever."

"And that's under the FTC's regime," he added.