Europeans attack U.S. Internet privacy policies

Journal Record, The (Oklahoma City), Nov 9, 1998 by Hiawatha Bray The Boston Globe

Not content with denouncing Americans' concern with the president's sex life, our European friends are now sniping at our Internet privacy policies. While I generally sneer at advice from across the pond, they're onto something this time.

Almost every time you buy something on the Internet, or in the real world, the seller files away a range of information about you -- name, address, the items you bought, stuff like that. This info can be used to figure out new goodies to sell to you. Firms also make a profit by reselling customer data to other companies with products to sell.

Internet-based firms are especially eager to collect data about shoppers. You think the free e-mail at many Web sites is really free? You're paying for it by providing personal information that may be used to sell you something. But Europeans with memories of Hitler, Stalin and Mussolini are repulsed by the idea that every shoe store and supermarket might have a dossier on its customers. So in 1995, the member nations of the European Community adopted a set of rules that restrict the collection of personal information by businesses. Those rules went into effect in October, and they've thrown a scare into U.S. firms doing business overseas. Under the European rules, firms not only need your permission to sell your data to another firm, they must also tell you who's getting the data, and exactly what information is being provided. And firms must give you full access to all information they possess about you, so you can make corrections if necessary. American companies would howl like wounded hounds if such rules were imposed upon them. "It's virtually impossible" for big companies to open up their customer databases for inspection, says Bob Wientzen, president of the Direct Marketing Association in New York. "And even if it were possible, it would be very costly." Well, the marketers might want to dig out their checkbooks, because the European rules hold foreign firms to the same standards. If L.L Bean's Web site sells a plaid shirt to a Scottish farmer, L.L. Bean would be expected to comply with European data-privacy rules, under pain of being barred from doing business in Europe. It probably won't get this bad. European and American trade negotiators have agreed to delay enforcement of the rules against U.S. firms, pending a compromise. The Europeans want the United States to adopt federal laws compelling at least certain basic data- privacy rules, even if they don't completely meet European standards. This country prefers a voluntary approach, with companies joining organizations like TrustE, a nonprofit group that sets privacy standards for Internet firms. But even if a deal is reached in Washington, American firms could still be on the hook. Peter Swire, a law professor at Ohio State who specializes in data privacy, told me the European rules let any citizen sue a foreign company for perceived violations of data privacy. So even if the Scottish government doesn't sue L.L. Bean for its Web site policies, the customer might. Something similar happened in 1995. American Airlines was successfully sued by Swedish travel agents after the airline demanded to know if passengers were Jewish. The airline just wanted to have kosher meals on hand, but Swedish law, rooted in bitter experience, barred even asking the question. There'll be more such suits. The London-based watchdog group Privacy International is keeping an eye on 24 major U.S. firms, as well as our FBI, for its data-gathering practices. They're hoping to find violations of European rules, so they can sue and force American firms to toughen up their data-privacy policies. Solveig Singleton of the libertarian Cato Institute says companies should have a near-absolute right to sell information collected from customers. Earth to Cato: Get real. Buying a nine-volt battery at Radio Shack doesn't entitle it to the story of my life. While the European restrictions are excessively tough, they've got the right general idea. And with half a trillion dollars in U.S.-Europe trade at stake, the Europeans may have enough leverage to make American firms see things their way.