Opt-in Costly, no Added Consumer Protection: NRF Study
Proposed opt-in privacy legislation is bad public policy that would be a costly burden to businesses and most likely provide consumers no greater privacy protection than opt-out policies, according to a newly released report from the National Retail Federation in Washington.
The report, Protecting Privacy in the New Millennium: The Fallacy of “Opt- In,” was written for NRF by academics Fred Cate, Ph.D. Indiana University School of Law, and Michael Staten, Ph.D. Director of the Credit Research Center at Georgetown University and is the first of a series of white papers on various privacy issues.
The report studies the new push by state and federal legislators for opt-in policies. It takes issue with those advocating opt-in as a cure-all for data privacy and argues, “Opt-in provides no greater privacy protection than opt-out, but imposes significantly higher costs with dramatically different legal and economic implications.”
The paper highlights the severe economic impact that would result from forcing an opt-in requirement on retailers and consumers. It also points out that opt-in would reduce competition and could increase unsolicited contacts. Among the findings:
* Opt-in does not increase privacy protections.
* Opt-in is more expensive for consumers and businesses than opt-out. Increased costs are passed on to consumers through higher prices or a decline in customer service.
* In most cases, opt-in is contrary to consumer expectations. Opinion polls have shown that consumers do not object to having personal information used for direct marketing purposes; and
* Opt-in rules may be unconstitutional. The Supreme Court has ruled in numerous cases that laws requiring affirmative consent are unconstitutional.
Finally, the reports finds that, “Opt-in is an exceptional tool that imposes high costs and harmful unintended consequences, and should therefore be reserved for exceptional situations where the risk of those costs and consequences is justified.”
