The two federal agencies that have a stake in regulating consumer privacy issues, the Department of Commerce and the Federal Trade Commission, are expected to issue recommendations for a privacy regulatory framework.
Mortgage originators have had problems in this area, including one defunct originator having files found in a dumpster.
Failure to properly safe guard information could lead to criminal and civil penalties under current federal and state law.
Coming out with these rulings "is a rare development, especially for Commerce, which has never before taken such a public position on privacy,” says Lisa Sotto, head of the privacy and information management practice at Hunton & Williams LLP, New York. “It is clear these agencies take the issue seriously, and are acting now against a backdrop of sweeping policy recommendations in the EU and growing consumer unease regarding the use of their personal data.”
She says that the Commerce and FTC documents will likely take different approaches to the issue of appropriate privacy policy, but with corresponding objectives.
“These recommendations will essentially lay the regulatory railroad track that will bring order and predictability to the ‘Wild West’ approach to privacy we currently have,” says Sotto. “Commerce will focus on removing obstacles in the path of companies that now rely heavily on the smooth and efficient transfer of data between jurisdictions. In the coming months, the FTC will want to add teeth to its enforcement powers.”
She believes Commerce’s policy document will likely call for the enactment of comprehensive federal privacy legislation and the creation of a privacy policy office.
“Whatever their final form, the FTC and Commerce policy documents will drive Congress to act and that will be good news for both business and consumers,” says Sotto. “Companies will finally see action from the federal government that puts an end to the current mind-numbing maze of federal, state and local privacy rules. And consumers should be encouraged by a government that is concerned about their privacy rights.”
