The Federal Government’s Appropriate Role in Internet Privacy Regulation

The growth of the Internet economy has highlighted the costs associated with the unauthorized use of personal information transmitted online. The federal government’s consumer protection agency, the Federal Trade Commission (FTC), has taken enforcement actions for online privacy violations based on its authority to proscribe “unfair or deceptive” practices affecting commerce. The FTC’s economically influenced case-by-case approach to privacy violations focuses on practices that harm consumers. The Federal Communications Commission (FCC) has proposed a rule that would impose intrusive privacy regulation on broadband Internet service providers (but not other Internet companies), without regard to consumer harm. If implemented, the FCC’s rule would impose major economic costs and would interfere with neutral implementation of the FTC’s less intrusive approach, as well as the FTC’s lead role in federal regulatory privacy coordination with foreign governments.

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