Recently, a group of Republican senators announced they plan to introduce the COVID-19 Consumer Data Protection Act of 2020 to address privacy concerns related to contact-tracing and other pandemic-related apps. This new bill will reinvigorate many of the ongoing concerns regarding a potential federal data privacy framework.
Even before the bill has been officially introduced, it has faced criticism from some groups for failing to sufficiently protect consumers. But a more regulatory approach that might appear protective on the surface also has consequences. The European Union’s (EU) General Data Protection Regulation (GDPR) has made it more complex to develop compliant contact-tracing apps and to run charitable responses that might need personal information. Ideally, data privacy policy around the specific COVID-19 concerns should have enough certainty to enable innovative responses while preserving civil liberties. Policymakers should approach this policy area in a way that enables consumers to choose which options work best for their own privacy preferences and not dictate a one-size-fits-all set of privacy standards.
A quick review of the current landscape of the data privacy policy debate
Unlike the EU, the United States has taken an approach that only creates privacy regulation for specific types of data. Specific frameworks address those areas that consumers would likely consider the most sensitive and expect increased protection, such as financial information, health information, and children’s information. In general, this approach has allowed new and innovative uses of data to flourish.
Following various scandals and data breaches and the expansive regulatory requirements of the EU’s GDPR, policymakers, advocates, consumers, and tech companies have begun to question if the United States should follow Europe’s lead, or instead create a different federal data protection framework, or even maintain the status quo. In the absence of federal action, states such as California have passed their own data privacy laws. The California Consumer Privacy Act (CCPA) became effective in January (you may remember a flurry of emails notifying you of privacy policy changes) and is set to become enforceable July 1. The lack of a federal framework means, with various state laws, the United States could go from an innovation-enabling hands-off approach to a disruptive patchwork, creating confusion for both consumers and innovators. A patchwork means that some beneficial products might not be available in all states because of differing requirements or that the most restrictive parts of a state’s law might become the de facto rule. To avoid this scenario, a federal framework would provide certainty to innovators creating beneficial uses of data such as contact-tracing apps (and the consumers that use them) while also clarifying the redress and any necessary checks to prevent harm.
Questions of Enforcement in the Data Privacy Debate
One key roadblock in achieving a federal privacy framework whether is the question of how such rules should be enforced. Some of the early criticism of the potential COVID-19 data privacy bill has been about the anticipated lack of additional enforcement.
Often the choices for data privacy enforcement are portrayed as a false dichotomy between the status quo or an aggressive private right of action, with neither side willing to give way. In reality, as I discuss in a new primer, there are a wide range of options for potential enforcement. Policymakers should build on the advantages of the current flexible approach that has allowed American innovation to flourish. This also provides a key opportunity to improve the certainty for both innovators and consumers when it comes to new uses of data. More precautionary and regulatory approaches could increase the cost and discourage innovation by burdening innovative products with the need for pre-approval. Ideally, a policy framework should preserve consumers and innovators’ ability to make a wide range of privacy choices but still provides redress in the case of fraudulent claims or other wrongful action.
There are tradeoffs in all approaches. Current Federal Trade Commission (FTC) enforcement has led to concerns around the use of consent decrees and the need for clarity. A new agency to govern data privacy could be a massive expansion of the administrative state. State attorneys general might interpret and enforce federal privacy law differently if not given clear guidance from the FTC or Congress. A private right of action could deter not only potentially harmful innovation but prevent consumers from receiving beneficial products out of concerns about litigation risks. I discuss each of these options and tradeoffs in more detail in the new primer mentioned earlier.
Policymakers should look to the success of the current approach and modify and increase enforcement to improve that approach, rather than pursue other options that could lead to some of the more pronounced consequences of intervention.
Conclusion
As we are seeing play out during the current crisis, all privacy regulation inevitably comes with tradeoffs. We should be cautious of policies that presume that privacy should always be the preferred value and instead look to address the areas of harm while allowing a wide range of preferences. When it comes to questions of enforcement and other areas of privacy legislation, policymakers should look to preserve the benefits of the American approach that has given rise to a great deal of innovation that could not have been predicted or dictated.
Margaret Talbot has written an excellent New Yorker essay entitled, “
There are few things more exciting to innovation policy geeks that than the week a new Matt Ridley book drops. Thankfully, that time is upon us once again. This week, Ridley’s latest book, How Innovation Works: And Why It Flourishes in Freedom, is being released. I can’t wait to dig in.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.