Congress Nearly Passed a Federal Data Privacy Standard. Here’s Where We Go Next.
Congress came remarkably close to setting a federal privacy standard in 2022, but fell just short of the finish line. That’s unfortunate, because consumer data underpins almost everything that happens in today’s global economy. The absence of a federal data privacy regime means the United States risks falling behind its economic peers.
However, with a few adjustments, the new Congress can pick up where its predecessors left off and make the United States a global leader in this space, ensuring data privacy alongside a seamless, tailored consumer experience.
Lawmakers made remarkable progress in July when the House Energy and Commerce Committee moved a bipartisan bill out of committee. The result made clear that Members of both parties, and in both chambers, want a federal standard for consumer privacy protections. What’s less clear is how we do this without degrading the digital experience consumers have come to expect.
Consumers are rightfully at the center of the data economy, with tremendous power to drive innovation. They don’t want to give that up, in part because their expectations have driven huge leaps forward in user interface, customer experience, and digital marketing.
A quick example: The demand-driven economy paved the way for an omni-channel experience that allows a consumer to begin a mobile transaction during their commute, then finish it on their computer when they get home.
Likewise, consumer demands drive innovations that defend against the growing threat of fraud. Protecting consumers was hard enough when transactions occurred in person at a bank counter. It’s much harder today, where a consumer might exchange sensitive financial and biometric information over an internet-connected device in a crowded café.
Meeting that challenge is essential. After all, trust underpins everything in the digital economy, and consumer data is the engine behind the anti-fraud technology that makes those protections possible.
That’s why federal privacy legislation must reject excessive limitations on the use or flow of data, as this could hinder the ability to protect consumers and businesses against fraud writ large. As Congress crafts fresh data privacy legislation, they should avoid any legislative or regulatory activity that would thwart the use of data necessary to identify consumers and their devices.
Next, Congress should set the tone by establishing a clear national framework for data privacy that’s based on consumer choice. Many consumers expect advertising to be tailored and relevant to them. Targeted marketing serves advertisers and consumers alike, to say nothing of the small and local businesses who depend on it to compete against bigger players with larger ad budgets.
With a clear national privacy framework based on choice, consumers who do not value targeted marketing can opt out, while the rest can continue to enjoy the online experience they have today. That includes an estimated $30,000 per year in free services — like email, mapping, and internet search — which depend on ad revenue to survive.
Strong data privacy legislation can achieve a better online experience, offering more options for how their data is used. Consumers deserve transparency, and they know what they want. Congress needs to trust consumers to decide what they do with that information.
Finally, Congress should work to deliver a data privacy standard that includes robust pre-emption standards. This would streamline the confusing patchwork of state laws that exists today, help businesses (as well as consumers) understand the rules of the road, and ensure all Americans enjoy the same rights and protections in every state.
Congress can deliver data privacy alongside the seamless, tailored experiences consumers demand, building trust along the way. The challenge is real, but it’s far outweighed by the cost of inaction.
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