Inside 1to1:Privacy

How will the EU cookie crumble for U.S. businesses?

July 15, 2011

By Dennis Dayman, CIPP  

As many know, the European Union (EU) adopted new changes to the EU Privacy Directive at the end of December 2009 requiring businesses to receive consumer consent before placing tracking devices such as a cookie, flash or beacon onto someone's computer. According to the regulation, EU member states must enact this change by May 2011, yet it's still unknown how each of the 28 nations will enact these laws individually.

So far there is little consistency among countries' implementation of do-not-track regulations in the EU. Many of the EU-based companies have been working diligently to ensure their Web platforms can handle the basic requirement of the EU Directive as it stands today, but this only means they've attempted to get opt-in via an action from a Web visitor vs. relying on browser control consent.

To date, only Denmark and Estonia have implemented sufficient regulation. In the UK, if an individual's browser settings allow companies to put a cookie on their computer, many businesses may consider that to be affirmative consent; however, this has yet to be deemed sufficient. Many other nations may choose to enact a stricter version of the regulation that requires companies to obtain consent from individuals for each site visited, regardless of browser settings.

But what does all of this mean for American businesses? While compliance for EU states is inevitable, the biggest question to be answered for many is, do non-EU businesses need to comply with these regulations? Customers, partners and online publications are asking this question.

The world and our economies rely heavily upon one another and the digital communications channels we use every day. During the first days working on the Internet, countries largely handled their own issues within their borders and, at times, would ignore issues streaming in from other countries, hoping they'd deal with them or, in hard cases, blocking e-mail from certain countries. We have seen, however, that the best work is produced when countries work in tandem, as exemplified in the U.S.-EU Safe Harbor Frameworks.

So, the question still remains, should a U.S.-headquartered company adhere to these changes? The answer is yes. Why? Many companies, like Eloqua, have multiple business presences throughout the world. In all cases, the company is probably a "registered company" in these regions, which means it is responsible for ensuring any laws that govern in the regions are followed. This is a business reality in the Internet world; it's a unified market for all intents. Companies must be prepared to meet diverse regulations and take a country-by-country approach when navigating the various laws and legal and business environments.

What if you don't have a registered business in those countries? What if you're primarily headquartered out of the U.S.? Companies as such must become even more hyper-transparent about notice, consent and choices. And since these companies are probably marketing to users in those countries, compliance needs to be ensured. Many U.S. companies are using multiple websites--one for EU citizens, where they can fill out a form giving explicit permission for the company to place cookies on machines, and another for U.S. citizens to opt out of cookie placement. When looking at self-regulatory methods, companies should think about the end-user. If your company is located in the U.S., consider an explicit opt-in for third-party cookies and other data-sharing practices.

One of the better ways this has been implemented to date is on the UK Information Commissioner's Office (ICO) website, on which it states,

"On 26 May 2011, the rules about cookies on websites changed. This site uses cookies. One of the cookies we use is essential for parts of the site to operate and has already been set. You may delete and block all cookies from this site, but parts of the site will not work. To find out more about cookies on this website and how to delete cookies, see our privacy notice."

It's simple, in-your-face and explains why they want it. The ICO might have gone a bit further to explain how cookies can improve users' Web experience by allowing the site owner to provide more personalized, targeted content, but again, the ICO is not a vendor.

Using opt-in language that's right for the market, product and intended customer base will help. Use multivariate testing to see which statement or message works best. Until internal policies at companies are perfected and it becomes clear how these laws will be enforced, it will be best to maintain separate websites for the U.S. and EU.

In the current market, where privacy is of the utmost importance, companies should consider talking with general counsel or compliance teams about the tracking permission requirements for their businesses. If companies have internal systems or a SaaS-based marketing product, they should also discuss the "hows" and "whats" of tracking. Also, don't be too surprised if in the near future we see governments working hand-in-hand on cross-border enforcement actions.

The Internet doesn't understand borders or bounds, which is why it's not surprising that countries are discussing how they can help one another with issues such as spam and hackers. As we continue to move towards an increasingly interconnected business and social world, companies and Internet users must consider their actions in regards to privacy.

For those interested in learning more about the new EU laws, the full text of the amended EU Directive can be found here; the new amended tracking section is on page 34 in Recital 66.

For more information on the new EU cookie consent rules, tune in to the IAPP Web conference, "The New EU Cookie Consent Rules--What is Required?"  

Dennis Dayman, CIPP, is chief privacy and security officer for Eloqua, where he helps customers maximize their delivery rates and compliance. He is a member of the IAPP's Certified Information Privacy Professional (CIPP) Advisory Board, among other professional boards and working groups.Twitter: ddayman

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