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German Regulator Calls for Termination of U.S. Safe Harbor

July 26, 2010

By Jennifer L. Saunders

Ten years ago today, the European Commission agreed to recognize the U.S. Department of Commerce (DOC) “safe harbor” principles, and that anniversary has prompted Schleswig-Holstein Data Protection and Privacy Commissioner Thilo Weichert to call for an end to the agreement.

In a press release issued in the days leading up to the 10th anniversary, Germany’s Independent Centre for Privacy Protection (ULD) raised questions about safe harbor as cited in a study by Australian privacy researcher Chris Connolly due to be formally released in August.

According to the information included in the release, Connolly found that “2,170 U.S. companies claim to be safe harbor privileged; whereof 388 were not even registered with the Department of Commerce (DOC). Among the registered companies, 181 certificates were found to be not current due to lapse of time. The check on the seventh principle concerning enforcement alone showed that 940 out of the 2,170 U.S. companies do not provide information on how to enforce individuals’ rights. 314 companies provide a dispute resolution scheme that costs between $2,000 and $4,000. Thus, it is hardly surprising that not a single complaint procedure has been carried out. Despite the more than 2,000 annual complaints about noncompliance with the safe harbor principles, the Federal Trade Commission (FTC) has prosecuted only seven organizations for falsely claiming safe harbor self-certification."

The ULD contends that authorities in the U.S. have not done enough to stop the “misuse of safe harbor” by U.S. companies and organizations.

“From a privacy perspective, there is only one conclusion to be drawn from the lessons learned-–to terminate safe harbor immediately,” Weichert said, continuing on to suggest, “The least that should be done is to demand from the U.S. short-term positive evidence concerning enforcement of the safe harbor principles.”

Dan Caprio, managing director at McKenna Long & Aldridge LLP and former chief privacy officer for the DOC, offered a different perspective.

“In spite of an inauspicious beginning, many on both sides of the Atlantic point to the safe harbor program as a success story,” Caprio said. ”There have been numerous instances over the years where disputes have been resolved obviating the need for formal enforcement actions.”

As the European Commission’s adequacy decision related to safe harbor is legally binding for all 27 EU member states, Weichert is urging that body “to immediately reopen negotiation to revise the principles and to make them effective” suggesting that in their current form, they allow U.S. companies to “bustle about claiming safe harbor and thus declaring themselves empowered to process the data of millions of European citizens and earning a lot of money without anyone-–neither individuals nor data protection authorities--being able to check on them.”