Legislation for Effective Self-Regulation: A New Approach to Protecting Personal Privacy on the Internet

How can we best reap the benefits of online profiling while avoiding the privacy pitfalls plaguing the e-commerce community? Experts advocate legislation, civil litigation, or self-regulation to provide the ideal solution. Analyzing these proposals reveals a conflict between two basic principles: the need to preserve personal privacy and the desire to foster a thriving Internet-based industry. This Note argues that each approach tends to favor one principle at the expense of the other. This Note also proposes a new solution which creates incentives for effective self-regulation backed with legal enforcement. This scheme strikes an appropriate balance between privacy and e-commerce principles and brings a flexible standard to address future innovation. Tracking a user\u27s Internet activity seems intrusive because companies can exploit intimate information. For example, Sir Tim Berners-Lee, inventor of the World Wide Web, worries that searching for books on cancer could result in increased health insurance premiums because companies can track consumers\u27 online activity and then sell this information to the insurance industry. This apprehension will only increase as technology enables greater data collection and more accurate profiling. For instance, breakthroughs in deep packet inspection have opened the door to surveillance by Internet Service Providers (ISPs), which can now track everything a user does online. Advanced processing power then swiftly sorts this data into individually tailored profiles to be used or sold at the ISP\u27s will. At the same time, online profiling brings users considerable prosperity. Credit reporting is cited as one of the best benefits of information sharing, saving consumers as much as $80 billion a year on mortgage loans because of the liquidity that credit bureau information makes possible. Online profiling also creates more advertising opportunities which then fund much of the content users currently access for free. The dilemma posed by online profiling is further discussed in Part I of this Note, which concludes that the optimal solution to the profiling problem must prevent privacy harms without smothering e-commerce. Part II then evaluates solutions which create a private cause of action and determines that using civil litigation to balance these interests is less than ideal. Part I examines existing self-regulatory efforts and legislative options. While self-regulation and legislation offer important advantages, each solution, by itself, suffers from considerable defects that render a single policy tool unlikely to satisfactorily resolve the profiling dilemma. Meanwhile, a frenzy of political action over ISP surveillance suggests that privacy problems are pressing enough to create broad support for legislation. Part IV proposes a solution to the profiling problem--a modified legislative approach which incorporates aspects of self-regulation. It then argues that this solution is ideal because it capitalizes on existing political momentum to create flexible and functioning standards that will increase personal privacy and nurture e-commerce