US firms are attacking proposed new laws that would provide more data protection for online shoppers.
Last week, a new bill was introduced into the US Senate that would require companies to obtain explicit permission from individuals before collecting and sharing information about them.
Poor privacy policies were holding back the development of ecommerce, bill sponsor Senator Ernst Hollings said.
Hollings' bill would split personal data between sensitive and non-sensitive information. Anything relating to any personal finance, medical, ethnic, religious affiliation, sexual orientation or political data would be classified as sensitive and would require users to authorise, or opt-in, to datsharing by companies.
Non-sensitive information includes online purchases and would be okay unless users contacted companies to opt-out.
The federal bill would pre-empt any individual state regulations and emulates a European Union privacy directive.
"Privacy fears are stifling the development and expansion of the internet as an engine of economic growth," Hollings, chairman of the Senate Commerce Committee, said in a statement.
But opponents, such as the US Chamber of Commerce, claim it would do just the opposite and that self-regulation is working.
"Businesses know they must protect their customers in order to maintain consumer confidence, said Bruce Josten, executive vice president of the US Chamber of Commerce. "That's why we see that more than 99 per cent of the most popular websites already have privacy policies to protect consumers.
"We must not legislate privacy laws that are ineffective or hinder the growth of online commerce."
The trade group also fears the bill may trigger a new wave of class action lawsuits against companies.
Hollings maintains that closer regulation would instead increase consumer confidence and ease concerns about the security of personal data in online shopping.
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