Today we published our March 2011 “iAWFUL” list of bad Internet laws. We identified a surge in state and federal online privacy legislation that is threatening to tie the hands of online innovators. (iAWFUL was already picked-up in CNET, Politico, The Hill, and Siliconvalley.com)
Our Internet Advocates’ Watchlist for Ugly Laws (iAWFUL) tracks the 10 pieces of state and federal legislation that pose the greatest threat to the Internet and e-commerce.
This time around our number 1 offender on the iAWFUL list is a bill by Rep. Jackie Speier (D-CA). Rep. Speier wants to let the Federal Trade Commission create regulations to dramatically reduce the use of tracking data that drives Internet advertising, by enforcing a global opt-out preference by users.
As we discussed in our prior blog entries, the effect of a global opt-out will reduce the population of users for whom targeted ads can be delivered. If ads aren’t targeted, advertisers will pay less and sites may be forced to show a greater quantity of lower-paying ads. And if that doesn’t make up the lost revenue, sites will likely spend less on new features and services. Do Not Track will be bad both for users and for business.
At the state level, an avalanche of proposed legislation seeks to regulate everything from online speech (Tennessee’s SB 487), to sharing personal information (California’s SB 242), to a website’s ability to use consumer information to display relevant content and advertising (New York’s AB 4809)
All of these proposals threaten to swamp online retailers with an impossible patchwork of conflicting state laws. Rather than adding additional burdens on users and websites, state governments should educate consumers about Internet data collection while ensure that companies comply with their privacy policies.
Fortunately, several top threats identified in the 2010 iAWFUL list were defeated. Efforts to enact a Streamlined Sales Tax (SST) were turned back at the federal level after NetChoice joined a chorus of voices documenting harms the tax would impose on small online retailers. The SST will find a similar reception in the 112th Congress judging by a House Resolution offered by Representatives Dan Lungren (R-CA) and Zoe Lofgren (D-CA) that put States on notice this Congress won’t impose any new tax collection burdens on the nation’s small online businesses.
Another high-profile item on the last iAWFUL – a Colorado bill that required retailers to report consumer purchases to state tax collectors – was rejected by a Colorado judge on constitutional grounds. However, Hawaii and California legislators are threatening to follow in Colorado’s footsteps, and NetChoice remains vigilant on the issue.
The entire 2010 iAWFUL includes:
1. Congressional Do-Not-Track Privacy Bill
2. Social Network Micro Managing (California and Tennessee)
3. Affiliate Nexus Bills (California, Texas, Massachusetts, et al.)
4. Recurring Offer Restrictions Bills (Washington, Indiana, et al.)
5. Child Online Registry and Do-Not-Market Mandate (Indiana)
6. Behavioral Advertising Restrictions (New York)
7. Telemarketing Restrictions on Online Marketing (Missouri and Indiana)
8. Adolescents’ Online Privacy Protection Act (New Jersey)
9. Remote Purchaser Reporting Mandate (California and Hawaii)
10. Restrictions and Liability for Geo-Location Tracking (New Hampshire)