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Privacy Proposal Draws Opposition From Ad Groups

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Advertising lobby groups are preparing to fight a proposed Internet privacy bill that would fine companies, including ad agencies, that mishandle personally identifiable data.

The bill, introduced last Thursday by Senate Commerce Committee Chairman Ernest "Fritz" Hollings, D-S.C., would allow individuals to sue a company and collect $5,000 if that firm used or disclosed "sensitive" information, such as Social Security numbers, financial or health data, and political affiliations, without permission, according to the bill. A hearing on the legislation is scheduled in Congress for this week.

The American Association of Advertising Agencies argues that the bill exposes agencies to liability unnecessarily, as the Federal Trade Commission already has the authority to regulate privacy. "This could be devastating to small and midsize agencies," said Adonis Hoffman, 4A's svp and counsel.

Currently, restrictions exist if a firm collects personally iden tifiable financial data. Under the Graham-Leach-Bliley Act, companies must get permission first to give such data to any third party, but not its own subsidiaries. The Hollings proposal would require permission to share any sensitive information.

Some online ad companies said the bill would not affect them too greatly, because they already get permission for personal data. "This bill goes after the spammers," said Mark Naples, privacy officer and vp of marketing and investor relations at 24/7 Real Media in New York.

But Dan Jaffe, evp of the Association of National Advertisers, said the bill could create a one-size-fits-all privacy policy that may cause more harm than intended. "It is important to operate with a laser, not a broadsword," he said.

This is the second piece of proposed legislation dealing with online privacy that would potentially increase marketing costs and liabilities for advertisers and agencies. Lobby groups also oppose online-privacy legislation in Minnesota [Adweek, April 15].