Group issues 'i-Awful' list for House privacy bills

Online privacy bills pending in Congress tops an Internet industry group's list of legislative proposals it says could hamper the growth of e-commerce and the Internet.

A draft privacy bill offered by House Energy and Commerce Communications Subcommittee Chairman Rep. Rick Boucher, D-Va., and a similar bill from Energy and Commerce Commerce Subcommittee Chairman Rep. Bobby Rush, D-Ill., are among the 10 federal and state legislative proposals on NetChoice's latest list of its "i-AWFUL" laws. NetChoice includes firms such as AOL, eBay and Yahoo as well as industry groups, including the Internet Alliance and the Electronic Retailing Association.

In a conference call today, NetChoice Executive Director Steve DelBianco said both measures conflate personally sensitive information such as financial or medical data with marketing data collected about Internet users for the purpose of targeted ads. As a result, they would constrain online advertising, "one of the few growth industries," he added.

Among the provisions the group finds particularly onerous is language from Rush that would provide users with a private right of action and language from Boucher that would require consumer consent before a company could send follow-up e-mails to consumers. It also opposes provisions in both measures giving the Federal Trade Commission rulemaking authority.

"If the bills move forward, they will make [Internet] advertising more expensive," DelBianco said.

But even Boucher has acknowledged it is unlikely Congress will act on his privacy legislation this year. He said he plans to try to merge his draft measure with Rush's bill.

In addition, privacy groups argue that Boucher's bill, in particular, is too weak and would do little to change the status quo.

Other proposals on the NetChoice list of "awful" laws include a bill offered by Rep. Bill Delahunt, D-Mass., that would allow states to force online and catalog merchants to collect sales taxes from customers in states where the merchants do not have a physical presence. The bill would close a loophole from a 1992 Supreme Court decision that said retailers are not required to collect sales taxes from customers in states where they do not have a physical presence.

The Delahunt bill would allow states who joined a multistate compact known as the Streamlined Sales Tax initiative aimed at simplifying state tax rates and rules to mandate that online and catalog retailers collect sales taxes from remote sales. Delahunt and other supporters say the current situation gives online retailers an unfair advantage over brick-and-mortar stores who collect sales taxes, costing states billions of dollars in lost tax revenues.

NetChoice argues the bill would hamper Internet commerce and small online businesses by defining small businesses too narrowly for the purposes of being exempt from tax collection requirements. In addition, DelBianco said, the Streamlined Sales Tax initiative has not delivered on its promise to negotiate more uniform rules and tax rates at the state level to make tax collection easier for merchants.

NetChoice instead supports a nonbinding resolution offered by Rep. Paul Hodes, D-N.H., that calls for opposing any efforts to impose new taxes on online merchants.