Privacy Rights on the Internet: Self-Regulation or Government Regulation?

Abstract

Consumer surveys indicate that concerns about privacy are a principal factor discouraging consumers from shopping online. The key public policy issue regarding privacy is whether the US should follow its current self-regulation course (where the FTC encourages websites to obtain private "privacy web-seals"), or whether a European style formal legal regulation approach should be adopted in the US, We conclude that the use of assurance seals has worked reasonably well and websites should be free to decide whether they have a privacy seal or not. Given the narrow scope and the wide variety among these seals, we do argue that the seals should commit themselves to the key features of a good privacy policy and that an opt-in provision be required. We believe that insufficient evidence exists to propose formal Government mandated Internet privacy regulation.