Global E-Commerce Regulation - Privacy

PRIVACY

Elsewhere, the United States and the European Union clashed over the EU Commission's stringent Data Privacy Directive, which the EU initially wanted to impose on U.S. businesses as well. In the end, however, a compromise was reached when U.S. businesses agreed to regulate themselves and stand accountable to the U.S. Federal Trade Commission (FTC), which pledged to punish any lapses in protecting and securing the personal and financial information of EU consumers.

This form of regulation was still voluntary, though businesses that failed to sign on could suffer consequences in the market. Consumers might lack confidence in those companies' ability or willingness to safeguard their private information, and such lack of confidence was, in turn, one of the largest impediments to consumer e-commerce. Participating companies agreed to abide by the U.S. Department of Commerce's Safe Harbor Privacy Framework, which called for firms to notify customers of the reasons they are collecting consumer data; allow customers the option of withdrawing their information should it be disclosed to a third party; allow customers to access their own data stored in companies' records; and make serious efforts to protect that information from unauthorized access and use.