The Federal Trade Commission's staff report released Wednesday on ways to improve online consumer privacy calls for the creation of a "do-not-track" system that would allow consumers to opt out of being tracked when surfing online.
The report, which was the result of round table discussions and other input, said consumers need more streamlined choices on whether information should be collected about them for advertising purposes. Currently, many companies track consumers' Web activities so ads can be targeted to them based on their preferences.
The staff report said consumers should have a "uniform and comprehensive" way to decide whether they want their activities to be tracked and suggested a "do not track" system would provide the most "practical" way to implement this.
"The most practical method of providing such universal choice would likely involve the placement of a persistent setting, similar to a cookie, on the consumer's browser signaling the consumer's choices about being tracked and receiving targeted ads," the report said. "Commission staff supports this approach, sometimes referred to as 'Do Not Track.'"
While a "do-not-track" system has been compared with the Do-Not-Call registry, the FTC staff recommended a different approach. The Do-not-call registry requires consumers to sign up on a list to opt out of receiving most telemarketing calls.
The FTC report, however, recommends that the do-not-track system should be a Web browser-based mechanism "through which consumers could make persistent choices." The report, however, said it wants comment on whether this system should include an option that allows consumers to allow for some information collection about them and to receive some types of advertising.
In addition, the report said a do-not-track system should not "undermine the benefits that online behavioral advertising has to offer, by funding online content and services and providing personalized advertisements that many consumers value."
The report said a do-not-track system could be implemented through legislation or "potentially through robust, enforceable self-regulation." Either way, the report said there must be an enforceable requirement that sites honor" a consumer's choice on whether to be tracked.
Some industry officials have argued that a do-not-call system would be difficult to implement. But David Vladeck, director of the FTC's Consumer Protection Bureau, said at a privacy conference Wednesday morning that the FTC believes such a system is technologically feasible.
The report argues that the current notice-and-choice and harm-based approaches to privacy protection have failed to keep track with technological changes. They said notice-and-choice has led to "long, incomprehensible privacy policies" that most consumers don't read and may not understand.
"While recent announcements of privacy innovations by a range of companies are encouraging, many companies - both online and offline - do not adequately address consumer privacy interests," the report argued. "Industry must do better. For every business, privacy should be a basic consideration - similar to keeping track of costs and revenues, or strategic planning."