Consumer Privacy: Changes to Legal Framework Needed to Address Gaps

Published by the Government Accountability Office on 2019-06-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States Government Accountability Office
                            Before the Committee on Banking,
                            Housing, and Urban Affairs, U.S. Senate

                            CONSUMER PRIVACY
For Release on Delivery
Expected at 10:00 a.m. ET
Tuesday, June 11, 2019

                            Changes to Legal
                            Framework Needed to
                            Address Gaps
                            Statement of Alicia Puente Cackley, Director
                            Financial Markets and Community Investment

                                                  June 2019

                                                  CONSUMER PRIVACY
                                                  Changes to Legal Framework Needed to Address
Highlights of GAO-19-621T, a testimony before
the Committee on Banking, Housing, and Urban
Affairs, U.S. Senate

Why GAO Did This Study                            What GAO Found
Information resellers—companies that              In recent years, GAO issued reports that relate to information resellers and
collect and resell information on                 consumer privacy issues. Two central findings from a 2013 GAO report remain
individuals—have dramatically                     current:
increased the collection and sharing of
personal data in recent years, raising            •   No overarching federal privacy law governs the collection and sale of
privacy concerns. Increasing use of                   personal information among private-sector companies, including
social media, mobile applications, and                information resellers (data brokers). Instead, a variety of laws are tailored to
other technologies have intensified                   specific purposes, situations, or entities. For example, the Fair Credit
these concerns.                                       Reporting Act limits use and distribution of personal information collected or
                                                      used to help determine eligibility for such things as credit or employment.
This statement is primarily based on
                                                      Other laws apply to health care providers, financial institutions, or to online
findings from GAO’s 2013 report on
                                                      collection of information about children.
information resellers (GAO-13-663). It
also discusses a 2015 report on facial
recognition technology (GAO-15-621), a            •   Gaps exist in the federal privacy framework. With regard to data that
2018 report on financial technology                   private-sector entities use for marketing, no federal statute provides
(GAO-18-254), and two 2019 reports on                 consumers the right to learn what information is held about them and who
internet privacy and consumer data                    holds it. In many cases, consumers also do not have the legal right to control
protection (GAO-19-52 and GAO-19-                     the collection or sharing with third parties of sensitive personal information
196, respectively). GAO discusses (1)                 (such as their shopping habits and health interests) for marketing purposes.
existing federal laws related to the                  In 2013 and in 2015, GAO also reported that the statutory framework for
privacy of consumer information held by               consumer privacy did not fully address new technologies—such as online
information resellers and (2) any gaps in             tracking and facial recognition—and the vastly increased marketplace for
this legal framework. For the prior work,             personal information, including the proliferation of information sharing among
GAO analyzed relevant laws,                           third parties.
regulations, and enforcement actions
and interviewed representatives of                    In two 2019 reports, GAO found additional gaps in the federal privacy
federal agencies, trade associations,                 framework and potential limitations in regulatory authority under current
consumer and privacy groups, and                      privacy law. Internet content providers and internet service providers collect,
                                                      use, and share information from customers to enable their services, support
What GAO Recommends                                   advertising, and for other purposes. Although the Federal Trade Commission
                                                      (FTC) generally has addressed internet privacy through its unfair and
In 2013, GAO recommended that                         deceptive practices authority, and other agencies have used industry-specific
Congress consider strengthening the                   statutes, there is no comprehensive federal privacy statute with specific
consumer privacy framework to reflect                 internet privacy standards for the private sector. GAO also reported that the
the effects of changing technologies and              Gramm-Leach-Bliley Act, a key law governing the security of consumer
markets. In 2019, GAO recommended
                                                      information, does not provide FTC with civil penalty authority for violations of
that Congress consider comprehensive
                                                      the privacy and data security provisions of the act. New and more advanced
internet privacy legislation. Legislation
on these issues has not been enacted to               technologies and changes in the marketplace for consumer information have
date.                                                 vastly increased the amount and nature of personal information collected and
                                                      the number of parties using or sharing it. Such changes warrant
                                                      reconsideration of how well the current privacy framework protects personal

View GAO-19-621T. For more information,
contact Alicia Puente Cackley at (202) 512-8678
or cackleya@gao.gov.
                                                  ______________________________________ United States Government Accountability Office

         Chairman Crapo, Ranking Member Brown, and Members of the

         I am pleased to be here today to discuss our prior work on privacy,
         personal information, and information resellers. Information resellers (also
         known as data brokers) are companies that collect and resell information
         on individuals. Privacy concerns about resellers stem, in part, from
         consumers not always knowing what personal information is collected
         and how it is used. Moreover, growing use of the internet, social media,
         and mobile applications has intensified privacy concerns because these
         media make it much easier to gather personal information, track online
         behavior, and monitor individuals’ locations and activities.

         My remarks today are primarily based on our September 2013 report on
         privacy issues related to the consumer data that information resellers
         collect, use, and sell, and on our 2015 and 2019 High Risk Reports. 1 In
         2013, we found that the framework of federal laws relating to the privacy
         of consumer information had gaps. We recommended that Congress
         consider strengthening the consumer privacy framework to reflect
         changes in technology and the marketplace. In our 2015 High Risk
         Report, we expanded an area of concern—cybersecurity—to include
         protecting the privacy of personally identifiable information. 2 We also
         conducted more recent work in the consumer privacy area on facial
         recognition technology, financial technology, internet privacy, and
         consumer data protection. 3 In our 2019 High Risk Report, we reiterated
         our recommendation that Congress consider what additional actions are
         needed to protect consumer privacy. 4 My statement will focus on the (1)

          GAO, Information Resellers: Consumer Privacy Framework Needs to Reflect Changes in
         Technology and the Marketplace, GAO-13-663 (Washington, D.C.: Sept. 25, 2013).
          Every 2 years, we report on federal programs and operations that are vulnerable to
         waste, fraud, abuse, and mismanagement, or that need broad reform—our High Risk List.
         See GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: Feb. 11, 2015).
          GAO, Facial Recognition Technology: Commercial Uses, Privacy Issues, and Applicable
         Federal Law, GAO-15-621 (July 30, 2015); Financial Technology: Additional Steps by
         Regulators Could Better Protect Consumers and Aid Regulatory Oversight, GAO-18-254
         (Mar. 22, 2018); Internet Privacy: Additional Federal Authority Could Enhance Consumer
         Protection and Provide Flexibility, GAO-19-52 (Jan. 15, 2019); and Consumer Data
         Protection: Actions Needed to Strengthen Oversight of Consumer Reporting Agencies,
         GAO-19-196 (Washington, D.C.: Feb. 21, 2019).
          GAO, High-Risk Series: Substantial Efforts Needed to Achieve Greater Progress on
         High-Risk Areas, GAO-19-157SP (Washington, D.C.: Mar. 6, 2019).

         Page 1                                                                    GAO-19-621T
             existing federal laws and regulations related to the privacy of consumer
             information held by information resellers and (2) any gaps that may exist
             in this legal framework.

             For our September 2013 report (GAO-13-663), we reviewed and
             analyzed relevant laws, regulations, and enforcement actions. We
             interviewed representatives of federal agencies, trade associations,
             consumer and privacy groups, and resellers to obtain their views on data
             privacy laws related to resellers. The work for our 2015 report on facial
             recognition technology (GAO-15-621), 2018 report on financial
             technology (GAO-18-254), and January and February 2019 reports on
             internet privacy and consumer data protection (GAO-19-52 and
             GAO-19-196) included analyzing laws and regulations and interviewing
             representatives of federal agencies, regulators in other countries, market
             participants, consumer advocacy groups, and academia. For this
             statement, we verified that findings of our previous reports about gaps in
             the statutory framework for consumer information privacy remain relevant.
             More details about our scope and methodology can be found in our
             published reports.

             We conducted the performance audit on which the majority of this
             statement is based from August 2012 through September 2013, in
             accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.

             Resellers maintain large, sophisticated databases with consumer
Background   information that can include credit histories, insurance claims, criminal
             records, employment histories, incomes, ethnicities, purchase histories,
             and interests. As shown in figure 1, resellers largely obtain their
             information from public records, publicly available information (such as
             directories and newspapers), and nonpublic information (such as from
             retail loyalty cards, warranty registrations, contests, and web browsing).

             Page 2                                                           GAO-19-621T
Figure 1: Typical Flow of Consumer Data through Resellers to Third-Party Users

                                        Consumer information can be derived from mobile networks, devices
                                        (including smartphones and tablets), operating systems, and applications.
                                        Resellers also may obtain personal information from the profile or public
                                        information areas of websites, including social media sites, or from
                                        information on blogs or discussion forums. Depending on the context,
                                        information from these sources may be publicly available or nonpublic.

                                        In 1973, a U.S. government advisory committee first proposed the Fair
                                        Information Practice Principles for protecting the privacy and security of
                                        personal information. While these principles are not legal requirements,
                                        they provide a framework for balancing privacy with other interests. In
                                        2013, the Organisation for Economic Co-operation and Development
                                        (OECD) developed a revised version of the principles (see table 1). 5

                                         Organisation for Economic Co-operation and Development, Guidelines on the Protection
                                        of Privacy and Transborder Flow of Personal Data (Paris, France: Sept. 23, 1980).
                                        OECD’s 30 member countries include the United States. OECD has been considering
                                        whether to revise or update its privacy guidelines to account for changes in the role of
                                        personal data in the economy and society.

                                        Page 3                                                                      GAO-19-621T
Table 1: Fair Information Practice Principles

Principle                                            Description
Collection limitation                                The collection of personal information should be limited, obtained by lawful and fair means, and,
                                                     where appropriate, with the knowledge or consent of the individual.
Data quality                                         Personal information should be relevant to the purpose for which it is collected, and should be
                                                     accurate, complete, and current as needed for that purpose.
Purpose specification                                The purposes for the collection of personal information should be disclosed before collection
                                                     and upon any change to those purposes, and the use of the information should be limited to
                                                     those purposes and compatible purposes.
Use limitation                                       Personal information should not be disclosed or otherwise used for purposes other than a
                                                     specified purpose without consent of the individual or legal authority.
Security safeguards                                  Personal information should be protected with reasonable security safeguards against risks
                                                     such as loss or unauthorized access, destruction, use, modification, or disclosure.
Openness                                             The public should be informed about privacy policies and practices, and individuals should have
                                                     ready means of learning about the use of personal information.
Individual participation                             Individuals should have the following rights: to know about the collection of personal
                                                     information, to access that information, to request correction, and to challenge the denial of
                                                     those rights.
Accountability                                       Individuals controlling the collection or use of personal information should be accountable for
                                                     taking steps to ensure the implementation of these principles.
Source: Organisation for Economic Co-operation and Development. | GAO-19-621T

                                                              The Fair Information Practice Principles served as the basis for the
                                                              Privacy Act of 1974—which governs the collection, maintenance, use,
                                                              and dissemination of personal information by federal agencies. 6 The
                                                              principles also were the basis for many Federal Trade Commission (FTC)
                                                              and Department of Commerce privacy recommendations and for a
                                                              framework for consumer data privacy the White House issued in 2012. 7

                                                               See Pub. L. No. 93-579, 88 Stat. 1896 (1974) (codified as amended at 5 U.S.C. § 552a).
                                                              The act generally prohibits (with a number of exceptions) the disclosure by federal entities
                                                              of records about an individual without the individual’s written consent and provides U.S.
                                                              persons with a means to seek access to and amend their records.
                                                               The framework included a consumer privacy bill of rights and encouraged Congress to
                                                              provide FTC with enforcement authorities for the bill of rights. The White House,
                                                              Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and
                                                              Promoting Innovation in the Global Digital Economy (Washington, D.C.: Feb. 23, 2012).

                                                              Page 4                                                                         GAO-19-621T
                        As we reported in 2013 and as continues to be the case, no overarching
Several Laws Apply in   federal privacy law governs the collection, use, and sale of personal
Specific                information among private-sector companies, including information
                        resellers. There are also no federal laws designed specifically to address
Circumstances to        all the products sold and information maintained by information resellers.
Consumer Data That      Federal laws addressing privacy issues in the private sector are generally
                        narrowly tailored to specific purposes, situations, types of information, or
Resellers Hold          sectors or entities—such as data related to financial transactions,
                        personal health, and eligibility for credit. These laws include provisions
                        that limit the disclosure of certain types of information to a third party
                        without an individual’s consent, or prohibit certain types of data collection.
                        The primary laws include the following:

                        Fair Credit Reporting Act (FCRA). 8 FCRA protects the security and
                        confidentiality of personal information collected or used to help make
                        decisions about individuals’ eligibility for credit, insurance, or
                        employment. 9 It applies to consumer reporting agencies that provide
                        consumer reports. 10 Accordingly, FCRA applies to the three nationwide
                        consumer reporting agencies (commonly called credit bureaus) and to
                        any other information resellers that resell consumer reports for use by
                        others. FCRA limits resellers’ use and distribution of personal data—for
                        example, by allowing consumers to opt out of allowing consumer
                        reporting agencies to share their personal information with third parties for
                        prescreened marketing offers.

                        Gramm-Leach-Bliley Act (GLBA). 11 GLBA protects nonpublic personal
                        information that individuals provide to financial institutions or that such
                        institutions maintain. 12 GLBA sharing and disclosure restrictions apply to
                        financial institutions or entities that receive nonpublic personal information

                         Pub. L. No. 91-508, Tit. VI, 84 Stat. 1114, 1128 (1970) (codified as amended at 15
                        U.S.C. §§ 1681-1681x).
                        See 15 U.S.C. §§ 1681-1681x.
                          For the definition of “consumer reporting agency,” see 15 U.S.C. § 1681a(f). For the
                        definition of “consumer report,” see 15 U.S.C. § 1681a(d).
                          Pub. L. No. 106-102, 113 Stat. 1338 (1999) (codified as amended in scattered sections
                        of 12 and 15 U.S.C.).
                          See 15 U.S.C. §§ 6801-6802. Subtitle A of Title V of the act contains the privacy
                        provisions relating to the disclosure of nonpublic personal information. 15 U.S.C. §§ 6801-

                        Page 5                                                                        GAO-19-621T
from such institutions. 13 For example, a third party that receives nonpublic
personal information from a financial institution to process consumers’
account transactions may not use the information or resell it for marketing

Health Insurance Portability and Accountability Act of 1996
(HIPAA). 14 HIPAA establishes a set of national standards to protect
certain health information. The HIPAA privacy rule governs the use and
disclosure of an individual’s health information for purposes including
marketing. 15 With some exceptions, the rule requires an individual’s
written authorization before a covered entity—a health care provider that
transmits health information electronically in connection with covered
transactions, health care clearinghouse, or health plan—may use or
disclose the information for marketing. 16 The rule does not directly restrict
the use, disclosure, or resale of protected health information by resellers
or others not considered covered entities under the rule.

Children’s Online Privacy Protection Act of 1998 (COPPA). 17 COPPA
and its implementing regulations apply to the collection of information—
such as name, email, or location—that would allow someone to identify or
contact a child under 13. 18 Covered website and online service operators
must obtain verifiable parental consent before collecting such information.
COPPA may not directly affect information resellers, but the covered
entities are potential sources of information for resellers.

  15 U.S.C. § 6802. A “financial institution” is any institution the business of which is
engaging in financial activities as described in section 4(k) of the Bank Holding Company
Act (12 U.S.C. § 1843(k)). 15 U.S.C. § 6809(3)(a).
  Pub. L. No. 104-191, 110 Stat. 1936 (1996) (codified as amended in scattered sections
of 18, 26, 29, and 42 U.S.C.).
  45 C.F.R. Parts 160, 164.
  For the definition of “marketing,” including exceptions, see 45 C.F.R. § 164.501.
  Pub. L. No. 105-277, Div. C, Tit. XIII, 112 Stat. 2681-728 (1998) (codified at 15 U.S.C.
§§ 6501-6506).
  FTC issued regulations implementing COPPA at 16 C.F.R. Part 312.

Page 6                                                                         GAO-19-621T
Electronic Communications Privacy Act of 1986 (ECPA). 19 ECPA
prohibits the interception and disclosure of electronic communications by
third parties unless an exception applies (such as one party to the
communication consenting to disclosure). For example, the act would
prevent an internet service provider from selling the content of its
customers’ emails to a reseller for marketing purposes, unless the
customers had consented to disclosure. However, ECPA provides more
limited protection for information considered to be “non-content,” such as
a customer’s name and address.

Federal Trade Commission Act (FTC Act), Section 5. 20 The FTC Act
prohibits unfair or deceptive acts or practices in or affecting commerce.
Although the act does not explicitly grant FTC the specific authority to
protect privacy, FTC has interpreted it to apply to deceptions or violations
of written privacy policies. For example, if a retailer’s written privacy policy
stated customers’ personal information would not be shared with resellers
and the retailer later sold information to such parties, FTC could bring an
enforcement action against the retailer for unfair and deceptive practices.

Some states also have enacted laws designed to regulate resellers’
sharing of personal information about consumers. For example, in 2018,
Vermont passed a law that contains, among other requirements,
consumer protection provisions related to data brokers. 21 Among other
things, the law requires data brokers to register annually and prohibits the
acquisition and use of brokered personal information through certain
means and for certain uses.

  Pub. L. No. 99-508, 100 Stat. 1848 (1986) (codified as amended in scattered sections of
18 U.S.C.).
 15 U.S.C. § 45. Section 5 of the FTC Act, as originally enacted, only related to “unfair
methods of competition.” The Wheeler-Lea Act, passed in 1938, expanded the
Commission’s jurisdiction to include “unfair or deceptive acts or practices.” Wheeler-Lea
Amendments of 1938, Pub. L. No. 75-447, 52 Stat. 111 (1938).
   VT. STAT. ANN. tit. 9, §§ 2430, 2433, 2446 and 2447. Data broker means a business, or
unit or units of a business, separately or together, that knowingly collects and sells or
licenses to third parties the brokered personal information of a consumer with whom the
business does not have a direct relationship. 9 V.S.A. § 2430(4).

Page 7                                                                        GAO-19-621T
                              The scope of consumer privacy protections provided under federal law
Gaps Exist in the             has remained narrow in relation to (1) individuals’ ability to access,
Consumer Privacy              control, and correct their personal data; (2) collection methods and
                              sources and types of consumer information collected; (3) new
Framework                     technologies; and (4) some regulatory authorities. The examples in the
                              following sections are drawn from our earlier reports and remain pertinent

Federal Law Provides          In our 2013 report, we found that no federal statute that we examined
Individuals Limited Ability   generally requires resellers to allow individuals to review personal
                              information (intended for marketing purposes), control its use, or correct
to Access, Control, and
                              it. The Fair Information Practice Principles state that individuals should be
Correct Their Personal        able to know about and consent to the collection of their information and
Data                          have the right to access the information, request correction, and
                              challenge the denial of those rights.

                              We also reported in 2013 that no federal statute provides consumers the
                              right to learn what information is held about them and who holds it for
                              marketing or look-up purposes. FCRA provides individuals with certain
                              access rights, but only when information is used for credit eligibility
                              purposes. And GLBA’s provisions allowing consumers to opt out of
                              having their personal information shared with third parties apply only in
                              specific circumstances. Otherwise, under federal law, individuals
                              generally cannot require that their personal information not be collected,
                              used, and shared. Also, no federal law we examined provides correction
                              rights (the ability to have resellers and others correct or delete inaccurate,
                              incomplete, or unverifiable information) for marketing or look-up

Laws Largely Do Not           Our 2013 report also found that federal privacy laws are limited in
Address Data Collection       addressing the methods by which, or the sources from which, resellers
                              collect and aggregate personal information, or the types of information
Methods, Sources, and
                              collected for marketing or look-up purposes. The Fair Information Practice
Types                         Principles state that personal information should be relevant, limited to
                              the purpose for which it was collected, and collected with the individual’s
                              knowledge or consent.

                              Federal laws generally do not govern the methods resellers may use to
                              collect personal information. For instance, resellers, advertisers, and
                              others use software to search the web for information about individuals
                              and extract and download bulk information from websites with consumer

                              Page 8                                                             GAO-19-621T
                                information. Resellers or retailers also may collect information indirectly
                                (by combining information from transactions).

                                Current federal law generally allows resellers to collect personal
                                information from sources such as warranty registration cards and surveys
                                and from online sources such as discussion boards, social media sites,
                                blogs, and web browsing histories and searches. Current federal law
                                generally does not require disclosure to consumers when their
                                information is collected from these sources.

                                The federal laws that address the types of consumer information that can
                                be collected and shared are not comprehensive. Under most
                                circumstances, information that many people may consider very personal
                                or sensitive can be collected, shared, and used for marketing. This can
                                include information about physical and mental health, income and assets,
                                political affiliations, and sexual habits and orientation. For health
                                information, HIPAA rule provisions generally apply only to covered
                                entities, such as health care providers.

Privacy Framework               The current privacy framework does not fully address new technologies
Largely Has Not Kept            such as facial recognition technology, privacy issues raised by online
                                tracking and mobile devices, and activities by financial technology firms.
Pace with Changes in
                                The original enactment of several federal privacy laws predates these
Technology                      trends and technologies. But in some instances existing laws have been
                                interpreted to apply to new technologies. For example, FTC has taken
                                enforcement actions under COPPA and revised the statute’s
                                implementing regulations to account for smartphones and mobile

Facial Recognition Technology   One example of how privacy law has not kept pace with changes in
                                technology is the use of facial recognition technology, which involves the
                                collection of facial images and may be employed in a wide range of
                                commercial applications. In our 2015 report we concluded that the future
                                trajectory of this technology raised questions about consumer privacy. 22
                                We found that federal law does not expressly address the circumstances
                                under which commercial entities can use facial recognition technology to
                                identify or track individuals, or when consumer knowledge or consent
                                should be required for the technology’s use. Furthermore, in most


                                Page 9                                                            GAO-19-621T
                          contexts federal law does not address how personal data derived from
                          the technology may be used or shared. The privacy issues stakeholders
                          raised about facial recognition technology and other biometric
                          technologies in use at the time of our 2015 report served as yet another
                          example of the need to adapt federal privacy law to reflect new
                          technologies. As such, we reiterated our 2013 recommendation that
                          Congress strengthen the current consumer privacy framework to reflect
                          the effects of changes in technology and the marketplace.

Activities by Financial   The rise of financial services provided by nonfinancial firms—often
Technology Firms          referred to as fintech—is another example of how new technology may
                          create privacy concerns. For example, fintech lenders offer a variety of
                          loans such as consumer and small business loans and operate almost
                          exclusively online. In our 2018 report, we noted that while these lenders
                          may still assess borrowers’ creditworthiness with credit scores, they also
                          may analyze large amounts of additional or alternative sources of data to
                          determine creditworthiness. 23 We also found that some fintech firms may
                          collect more consumer data than traditional lenders. For example, fintech
                          lenders may have sensitive information such as consumers’ educational
                          background or utility payment information, and according to certain
                          stakeholders, these data may contain errors that cannot be disputed by
                          consumers under FCRA.

                          Furthermore, some data aggregators may hold consumer data without
                          disclosing what rights consumers have to delete the data or prevent the
                          data from being shared with other parties. A leak of these or other data
                          held by fintech firms may expose characteristics that people view as
                          sensitive. GLBA generally requires fintech firms and traditional financial
                          institutions to safeguard nonpublic personal information about
                          customers. 24 Our 2018 report discussed that some fintech firms use new
                          technologies or mobile device features to mitigate data privacy risks and
                          that some regulators have issued guidance to consumers publicizing
                          practices that help maintain privacy when using online products and
                          services, including those provided by fintech firms. Regulators also have
                          issued GLBA guidance to businesses, including fintech firms,
                          recommending that they adopt policies and procedures to prevent, detect,
                          and address privacy threats.

                            GLBA restricts, with some exceptions, the disclosure of nonpublic information by
                          companies defined as financial institutions. See 15 U.S.C. §§ 6801-6802.

                          Page 10                                                                      GAO-19-621T
Internet Privacy Issues   Online tracking. In our 2013 report, we found that no federal privacy law
                          explicitly addresses the full range of practices to track or collect data from
                          consumers’ online activity. Cookies allow website operators to recall
                          information such as user name and address, credit card number, and
                          purchases in a shopping cart. Resellers can match information in cookies
                          and their databases to augment consumer profiles. Third parties also can
                          synchronize their cookie files with resellers’ files. Advertisers can use
                          third-party cookies—placed on a computer by a domain other than the
                          site being visited—to track visits to the websites on which they advertise.
                          While current federal law does not, with some exceptions, explicitly
                          address web tracking, FTC has taken enforcement actions related to web
                          tracking under its authority to enforce the prohibition on unfair or
                          deceptive acts. For example, in 2011, FTC settled charges with Google
                          for $22.5 million after alleging that Google violated an earlier privacy
                          settlement with FTC when it misrepresented to users of Apple’s Safari
                          web browser that it would not track and serve targeted advertisements to
                          Safari users. 25 Google agreed to disable its advertising tracking cookies.

                          Mobile devices. In 2013, we also explained that no federal law
                          comprehensively governs applications software for mobile devices.
                          Application developers, mobile carriers, advertisers, and others may
                          collect an individual’s information through services provided on a mobile
                          device. However, FTC has taken enforcement action against companies
                          for use of mobile applications that violate COPPA and FCRA. 26 The
                          agency also has taken action under the FTC Act. 27 We and others have
                          reported that the capability of mobile devices to provide consumer’s
                          location engenders privacy risks, particularly if companies use or share

                            United States v. Google Inc., No. CV 12-04177-SI, 2012 WL 5833994 (N.D. Cal. Nov.
                          16, 2012).
                            FTC settled charges that a social networking service deceived consumers when it
                          collected information from children under 13 through its mobile application in violation of
                          COPPA. See United States v. Path, Inc., No. C13-0448 (N.D. Cal. Jan. 31, 2013). FTC
                          also settled charges that a company compiled and sold criminal record reports through its
                          mobile application and operated as a consumer reporting agency, in violation of FCRA.
                          See In the Matter of Filiquarian Publishing, LLC, FTC File No. 112 3195 (Apr. 30, 2013).
                            In addition to the alleged COPPA violation, Path allegedly deceived users by collecting
                          personal information from their mobile address books without their knowledge and
                          consent. See United States v. Path, Inc., No. C13-0448 (N.D. Cal. Jan. 31, 2013).

                          Page 11                                                                        GAO-19-621T
                         location data without consumers’ knowledge. 28 ECPA might not apply if
                         location data were not deemed content and would not govern entities that
                         are not covered by ECPA. But FTC could pursue enforcement action if a
                         company’s collection or use of the information violated COPPA.

                         More recently, in January of this year, we issued a report on internet
                         privacy that reinforces what we reported in 2013. 29 To varying extents,
                         internet content providers and internet service providers collect, use, and
                         share information from their customers to enable their services, support
                         advertising, and for other purposes. Consumers access such services
                         through mobile phones and tablets, computers, and other internet-
                         connected devices. However, there is no comprehensive federal privacy
                         statute with specific standards. FTC has been addressing internet privacy
                         through its unfair and deceptive practices authority, among other statutes,
                         and other agencies have been addressing this issue using industry-
                         specific statutes. We concluded that recent developments regarding
                         internet privacy suggest that this is an appropriate time for Congress to
                         consider comprehensive internet privacy legislation. To address such
                         privacy concerns, states and other countries have adopted privacy rules.
                         For example, the European Union’s General Data Protection Regulation,
                         which came into force in May 2018, is a set of privacy rules that give
                         consumers control over the collection, use, and sharing of their personal
                         information, and California passed its own privacy law in June 2018 that
                         becomes effective in 2020. 30

Regulatory Authorities   In February of this year, we reported that FTC does not have civil penalty
under Current Law May    authority for initial violations of GLBA’s privacy and safeguarding
                         requirements, which, unlike FCRA, includes a provision directing federal
Be Limited
                         regulators and FTC to establish standards for financial institutions to

                           Risks included disclosure to third parties for unspecified uses, tracking of consumer
                         behavior, and identity theft. See GAO, Mobile Device Location ID: Additional Federal
                         Actions Could Help Protect Consumer Privacy, GAO-12-903 (Washington, D.C.: Sept. 11,
                         2012). A Federal Communications Commission report also noted privacy risks. See
                         Federal Communications Commission, Location-Based Services: An Overview of
                         Opportunities and Other Considerations (Washington, D.C.: May 2012).
                           California’s law generally will require companies to report to customers, upon their
                         request, the categories of personal information they collected about the customer, the
                         business or commercial purpose for collecting and selling such personal information, and
                         what categories of third parties received it.

                         Page 12                                                                     GAO-19-621T
protect against any anticipated threats or hazards to the security of
customer records. 31 To obtain monetary redress for these violations, FTC
must identify affected consumers and any monetary harm they may have
experienced. However, harm resulting from privacy and security violations
(such as a data breach) can be difficult to measure and can occur years
in the future, making it difficult to trace a particular harm to a specific
breach. As a result, FTC lacks a practical enforcement tool for imposing
civil money penalties that could help to deter companies from violating
data security provisions of GLBA and its implementing regulations. We
recommended that Congress consider giving FTC civil penalty authority
to enforce GLBA’s safeguarding provisions.

Additionally, in our January 2019 report, we found that FTC had not yet
issued regulations for internet privacy other than those protecting financial
privacy and the internet privacy of children, which were required by law.
FTC uses its statutory authority under the FTC Act to protect consumers
from unfair and deceptive trade practices. For FTC Act violations, FTC
may promulgate regulations but is required to use procedures that differ
from traditional notice-and-comment processes and that FTC staff said
add time and complexity. In addition, under this authority, FTC can
generally only levy civil money penalties after a company has violated an
FTC final consent order. In our recommendation that Congress consider
developing comprehensive internet privacy legislation, we also suggested
that such legislation consider providing rulemaking and civil money
penalty authorities to the proper agency or agencies.

In summary, new technologies have vastly changed the amount of
personal information private companies collect and how they use it. But
our current privacy framework does not fully address these changes.
Laws protecting privacy interests are tailored to specific sectors and uses.
And, consumers have little control over how their information is collected,
used, and shared with third parties for marketing purposes. As a result,
current privacy law is not always aligned with the Fair Information
Practice Principles, which the Department of Commerce and others have
said should serve as the foundation for commercial data privacy. Thus,
the privacy framework warrants reconsideration by Congress in relation to
consumer interests, new technologies, and other issues.


Page 13                                                           GAO-19-621T
               Chairman Crapo, Ranking Member Brown, and Members of the
               Committee, this concludes my statement. I would be pleased to respond
               to any questions you may have.

               For further information on this statement, please contact Alicia Puente
GAO Contacts   Cackley at 202-512-8678 or cackleya@gao.gov. Contact points for our
               offices of Congressional Relations and Public Affairs may be found on the
               last page of this statement. In addition to the contact above, Jason
               Bromberg (Assistant Director), William R. Chatlos, Rachel DeMarcus, Kay
               Kuhlman (Assistant Director), Christine McGinty (Analyst in Charge),
               Barbara Roesmann, and Tyler Spunaugle contributed to this statement.
               Other staff who made key contributions to the reports cited in the
               testimony are identified in the source products.

               Page 14                                                       GAO-19-621T
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