Internet Privacy Policies
By Eric Goldman, Esq.
Cooley Godward LLP, Palo Alto, CA
· User agreement vs. marketing representations
· Best practices in the industry
· Overcome an obvious privacy issue with your product/site
· Comfort users with third party validation
· Required by a potential advertiser (e.g., IBM, Microsoft, Intel) or site where you advertise (e.g., Disney)
· You deal with kids under 13
· You have European operations
3. Why Are Privacy Policies Such a Pain To Do?
· The three-headed hydra of marketing, engineering and legal
· There are no “off-the-shelf” forms
· Policies are difficult to amend, so plan for the future
· Multiple audiences: users, reporters, investors, judges, plaintiff lawyers, government enforcement agencies
· FTC and TRUSTe rules are out of sync with state-of-the-art business practices
· Companies actually get busted (GeoCities, Real Networks, Liberty Financial, ReverseAuction) and the remedies can REALLY hurt!!
4. The FTC’s Latest: COPPA
· Takes effect April 21, 2000
· Applies to sites (or portions thereof) that market to kids 12 and under or know that they are collecting information from kids 12 and under
· The summary: don’t do it if you don’t have to!!
(2) Obtain verifiable parental consent. If you are collecting personal information for internal marketing, you can use unauthenticated email. Otherwise, you need consent through mail, fax, toll-free phone number, credit card authentication, or authenticated email.
(3) Allow parents to review the personal information collected
(4) Give parents the opportunity to restrict collection/use of their kids’ information
(5) Not condition participation in an activity on the kid disclosing more info than necessary
(6) Have reasonable security procedures
· Bottom line: compliance is likely to require significant changes to existing business practices.
5. European Union Privacy Directive.
· The directive took effect in October 1998, but not yet implemented in all member states.
· The general rule: obtain express consent for use and disclosure of personal information [not limited to Internet collection]
· If you have no presence in Europe, do you need to comply?
· Data sharing with EU-based companies is tricky.
6. Grandma Goldstein’s 15 Step Recipe for Deploying Privacy Policies.
Step 1: Determine why you are doing a policy and which audience is most important
Step 2: Determine if COPPA applies. If so, sell!!!
Step 3: Determine if the EU Directive applies. If so, call European counsel.
Step 4: Determine if you are going to use one or more third party validators
· Options include TRUSTe, BBBOnline and PWC’s BetterWeb
· These validators all have their own substantive rules
Step 5: Review your site
· Look for existing data collection points, and consider future ones
Step 6: Review existing practices
· Look at existing obligations to turn data over to third parties
· Look for other places where personal data is turned over anyway (e.g., email delivery outsourcing)
· Look at ISP/hosting agreements
· Look for situations where you have voluntarily agreed to limit your use/disclosure of information (e.g., distribution agreements or sponsorships)
Step 7: Determine how the policy will become a binding user agreement
Step 8: Determine how the policy will be amended in the future
Step 9: Draft the policy and get internal/external blessing
Step 11: Scrub the site to remove all contrary statements
Step 12: Upload the policy
Step 13: As applicable, follow the procedures to amend the existing policy
Step 14: Keep archives of prior policies and segregate databases as necessary
Step 15: Establish a procedure for handling site changes
About the Speaker: Eric Goldman (formerly Eric Schlachter) is an attorney practicing cyberspace law with Cooley Godward LLP, Palo Alto, CA. He also is an adjunct professor of Cyberspace Law at Santa Clara University School of Law. Cooley Godward’s web page is located at http://www.cooley.com, and Eric’s personal home page is located at http://eric_goldman.tripod.com/. Eric can be reached at firstname.lastname@example.org.