EU Consumer Commissioner focuses on online privacy

The EU's Commissioner for Consumer Affairs, Meglena Kuneva, yesterday turned her attention to matters of online data collection and profiling.

"We are here to talk about one of the most important and most controversial issues in the fast evolving world of digital communications: the explosion in the volume of collected personal data and its use for commercial purposes.

I feel there is a much needed discussion on the new generation of practices and business models built on the ability to profile consumers and then use their profile to target them for commercial purposes...

Internet is an advertisement supported service and the development of marketing based on profiling and personal data is what makes it go round. Personal data is the new oil of the internet and the new currency of the digital world...

Tools must now be developed that balance the interests of business with that of the consumers. This means two things: the respect of users' right to control their public exposure; and the obligation to protect them against abusive and risky practices targeted at them.

We have already well established consumer policy principles, articulated in regulations and tools that bring confidence in the traditional world of goods and services. These are principles of transparency, clear information, choice, fair commercial communications and fair contract terms. We do not need to reinvent the wheel. What we need now is a debate on how we apply these tested principles in digital world, in particular in the activity of collecting consumers' personal data for the purpose of commercially targeting them...

Our research shows that young people between the ages of 15-25, the most confident of internet users, use the internet in spite of the fact that they generally don’t trust it. Using internet under these conditions is like drinking your water while thinking it might be slightly toxic. We would not allow such a situation to exist in the market for water, or cosmetics or toys. We do not tolerate this lack of confidence in any consumer commercial setting because in the long run lack of confidence damages markets. In our toxic water example, you will drink the toxic water but you will drink just enough and no more. And the water market will not thrive.

There are three particular strands of actions we must address: privacy policies, commercial communications and commercial discrimination...

More than 4 out of 5 young internet users believe that their personal information is somehow used without their knowledge and shared with third parties without their agreement. They are right...

The status quo is not an option. Currently, consumers have little awareness of what data is being collected, how and when it is being collected and what it is used for. And they are also not able to control this process. The current opt-out systems are partial, sometimes nowhere to be found, they are difficult or cumbersome and most of all, they are unstable. Avoiding tracking is currently technically difficult if not impossible...

We must establish the principles of transparency, clear language, opt-in or opt-out options that are meaningful and easy to use. I am talking about the right to have a stable contract and the right to withdraw. And I am also talking about fair clauses and the right to participate in economic activity without selling your whole self indiscriminately as commercial fodder to the entire world...

No one in the digital space really cares about our actual names or exact physical addresses. What traders want is a description of who we are and a way to reach us. They want to know that the person behind the number 1234 is young, sporty, drives fast cars and travels frequently and that as a trader you can show up on his screen at your convenience. This is fine. But what about the person behind number 456, unemployed, in debt and about to lose his home? He is a target for predatory loans and fraudulent financial and yes, personal, advice...

But we must ensure that commercial communications comply with the law. This means they cannot deceive, mislead or amount to excessive pressure. What is the implication of these principles in a world of personal information?

...

This actually brings us the really tricky matter of the blurring of commercial and non commercial communications. A recent experiment in neuroscience suggests that individuals might abdicate their own valuation of risks when given individual advice by an expert and just follow the expert's advice. ^[1] This only reinforces the need to enforce the principle of identifying commercially sponsored messages and, even more importantly, the principle of identifying commercially sponsored messengers.

The situation becomes even trickier in the world of social sites and viral marketing. Young people and even children are being particularly targeted as conduits for advertisement. If a toy company incites a little girl to share with her friends she got a brand new doll, is the message she sends an advertisement? Does receiving a sponsored message that your best friend got a doll amount to pressure selling if you are 7 years old?

Our current legislation forbids advertisements that ask children to pester their parents but we say nothing of the ones that ask them to pester their friends...

If this personal information is used to extract the maximum price possible from you or to block your access to some services altogether, then commercial discrimination can damage the confidence in digital trade and services. People may resent a world where they would have to systematically pay for who they are or the risks they personally incur.

Excessive targeting in the form of price or commercial discrimination can also inhibit the ability of users to predict and compare prices which seriously harms competitiveness in a market.

We have some way to go to understand the full consequences of this commercial practice but we must start thinking about the parameters for legitimate discrimination. What type of commercial discrimination, if any, is damaging to consumer trust and market efficiency?

...

I invite industry to develop a framework that applies consumer policy principles and that will establish the principles of acceptable behaviour...

The regulatory protection we have in Europe is extensive and far-reaching. There is a huge task ahead of us in terms of enforcement of the rules that already exist both regarding privacy and consumer protection. Some progress has been made but it is not nearly enough...

Behavioural targeting on the internet will become increasingly pervasive and consumers understandably feel uncomfortable.

Today I want to send one very clear message to those involved in all aspects of the digital world - Consumer rights must adapt to technology, not be crushed by it. The current situation with regard to privacy, profiling and targeting is not satisfactory.

The central issue is to transpose the principles of consumer policy to this new technological reality so that we maintain our traditional boundaries of what is right and what is not, what damages people and markets and what favours and nurtures them...

If we fail to see an adequate response to consumers concerns on the issue of data collection and profiling, as a regulator, we will not shy away from our duties nor wait for a cataclysm to wake us up."

I wonder what she means by the phrase "Consumer rights must adapt to technology"? Surely whoever wrote her speech really meant to say that technology should be used in ways that respect consumer rights?