Proposed California Privacy Regs Violate First Amendment, Ad Groups Claim

A California proposal to require companies to honor global do-not-sell requests would violate the First Amendment, the ad industry says.

“Commercial speech is entitled to protections under the United States Constitution,” the Network Advertising Initiative, Association of National Advertisers, American Association of Advertising Agencies, Interactive Advertising Bureau, American Advertising Federation and Digital Advertising Alliance write in comments filed Friday with the California attorney general's office.

The ad associations add that a rule requiring companies to honor a global opt-out, as opposed to company-by-company opt-outs, "does not pass constitutional muster because it burdens commercial speech without appropriately balancing those burdens with benefits."

The groups are weighing in on the latest proposed regulations implementing California's landmark Consumer Privacy Act. That law, which took effect in January, gives consumers the right to learn what personal information has been collected about them by companies, have that information deleted, and prevent the sale of that data to third parties.

The most recent proposed regulations, unveiled earlier this month, would require companies to honor do-not-sell requests that consumers send through browser-based tools. Most of the major browser companies currently offer a do-not-track setting, which could potentially function as a global do-not-sell request. That type of request could effectively prevent all online companies from selling consumers' data -- though consumers would retain the ability to grant exceptions to individual companies.

The ad groups contend that a requirement to honor a global opt-out “does not further the goals of the existing framework, but it does needlessly restrict commercial speech."

The ad groups say they support a regime that would require them to honor opt-outs on a company-by-company basis. That type of system “enables businesses to assess specific preferences of users in the context of each unique consumer relationship, and it restricts commercial speech only if that speech is known to contravene consumer preferences,” the organizations write.

The ad associations aren't the only ones arguing that the First Amendment conflicts with privacy rules. Earlier this year, lobbying groups for Internet service providers sued to block a new law in Maine that prohibits broadband carriers from using people's web-browsing data for ad targeting, without opt-in consent. The organizations claim that broadband providers have a free speech right to access and use information about customers for advertising purposes.

Justin Brookman, director of consumer privacy and technology policy for Consumer Reports, suggests companies that argue against privacy rules on First Amendment grounds will face an uphill battle, noting that courts previously rejected a claim that the “do not call” system violated telemarketers' First Amendment rights.

“The argument that global opt-outs are constitutionally prohibited is especially flimsy given that regimes like Do Not Call have been upheld," he says.

The advertising groups also argue to Becerra that requiring them to honor a global opt-out tool would convert California's privacy law into an opt-in system.

“Individual businesses will ... be forced to ask consumers to opt in after receiving a global opt-out signal set by an intermediary, thereby thwarting the granular opt-out structure the California Legislature purposefully enacted,” the groups write.

But Brookman counters that global controls are necessary as a practical matter.

“The only way for an opt-out regime to really work is if there are global opt-out controls,” he says. “We have a national "Do Not Call" list for this reason --- it's just not feasible to opt out of every telemarketer on a piecemeal basis.”

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