Congress to Crack Down on Facebook

Given the growing hue and cry about online privacy concerns, look for lawmakers to crack down on Facebook, Google and other firms that gather data about individuals. But though legislation -- likely to be passed next year -- is aimed at large aggregators of personal information, it threatens to also affect midsized and possibly even small companies.

H.R. 5777, dubbed the “Best Practices Act,” calls for new regulation by the Federal Trade Commission, ordering it to require any entity -- or person -- that collects or stores information on individuals to inform them that they’re collecting the data and to provide them with a way to bar such collection.

It is prompted to a large extent by publicity surrounding the revelation of personal data obtained by Facebook, which collects individual information on over 500 million users. Recently, data including names, addresses, e-mail information and so forth pertaining to 100 million Facebook users was posted to a database open to everyone. Since the users had provided the information publicly, it was considered public record information. But many customers felt exposed and queasy about their information circulating freely in the public domain.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

While there is an exemption for small businesses, the legislation -- as written -- applies to any entity that stores more than 15,000 names. That threshold would snare many local and regional merchants and tradespeople that keep data for direct mail advertising and other communications with customers. Employee records are not covered by the bill.

The measure would seek fines of up to $5 million for companies that don’t offer users a clear opt-out provision.The bill “speaks to a host of issues affecting consumer privacy, including consumers’ expectations as to how their personal information should be handled, shared and disclosed to third parties,” says Rep. Bobby Rush (D-Ill.), who introduced the bill in the House of Representatives.

“I know there is no free lunch when I go to an Internet Web site to read or view content -- especially when I am not paying for that content,” he says, adding that he realizes such information has value to its aggregators as it can be sold to others. At the same time, Rush says it’s important to understand “some of the actual harms that befall individual users through no fault of their own.”