Obama administration calls for online privacy bill of rights

NEW YORK (CNNMoney.com) -- The Obama administration on Thursday unveiled a proposed new framework for protecting consumers' privacy online.

The plan centers around a "Privacy Bill of Rights" that would encourage better transparency about data collection online, according to the Commerce Department's report on its policy recommendations. It would promote "informed consent" for consumers through simple notices that clearly state what personal information will be collected and what will be done with it.

The Commerce Department's proposal would be voluntary -- companies would be able to choose whether or not they want to participate. But for those that do, their commitment would be enforceable by the Federal Trade Commission.

That agency came out with its own, more drastic proposal earlier this month, calling for a "do not track" option that would let Web surfers opt out of all data collection.

The Commerce Department was quick to point out in its report that global online transactions generate roughly $10 trillion of sales every year, and U.S. information technology jobs are growing at a pace that's four times faster than all other domestic jobs.

Reluctant to upset the apple cart, the Obama administration decided against creating a set of "disfavoring prescriptive rules." Translation: It doesn't want to issue mandates.

Instead, it proposed that the government "enlist the expertise and knowledge of the private sector" to create "voluntary codes of conduct that promote informed consent and safeguard personal information."

The report said that the agency would try not to create procedural hurdles, or "impose undue burdens on commerce and on commercial actors."

Still, the Commerce Department sees a role for the government in steering online privacy practices. It proposed the creation of a Privacy Policy Office within the Commerce Department, which would coordinate privacy initiatives with Internet companies.

The new office would work with the Federal Trade Commission in developing a Privacy Bill of Rights and enforcing compliance with it among companies that volunteer to adopt it.

There is a clear demand for enhanced privacy controls online, the department noted: Nearly two-thirds of American adults have changed their privacy settings on their social network profiles in order to limit what they share online.

"America needs a robust privacy framework that preserves consumer trust in the evolving Internet economy while ensuring the Web remains a platform for innovation, jobs, and economic growth," Commerce Secretary Gary Locke said in a prepared statement. "Consumers must trust the Internet in order for businesses to succeed online."

The Commerce Department considers the report a "road map for considering a new framework that is good for consumers and businesses." It would likely need congressional approval to be enacted.