Commerce Dept weighs privacy policy guidelines

The Commerce Department has drafted broad recommendations for Internet privacy oversight in a widely anticipated report that could set the stage for tighter regulation of Web firms.

Among its 10 policy recommendations, the report calls for strengthening the Federal Trade Commission's rule-making powers and enacting legislation requiring Internet companies to inform customers of data breaches.

The report, prepared by the Commerce's National Telecommunications and Information Administration -- which advises the White House on communications policy - also recommends voluntary codes of conduct for Web firms and advertisers, an idea that has drawn sharp criticism from privacy advocates.

The report recommends legislation that establishes a "baseline privacy framework" for the Internet and advertising industry. The draft specifically calls for baseline principles on fair data collection practices on the Web. It questions whether the FTC should have expanded authority to create rules to implement Internet privacy legislation. The report also calls on the White House to review the Electronic Communications Privacy Act (ECPA), in which companies such as Microsoft want to include privacy protections for cloud computing and location-based services.

"The Commerce Department is more interested in protecting companies collecting data than consumers," said Jeffrey Chester, executive of the Center for Digital Democracy, a public interest group.