David L. Baumer1, Julia B. Earp2 and J.C. Poindexter3

College of Management, North Carolina State University, Raleigh, NC 27695-7229
1David_Baumer@ncsu.edu 2Julia_Earp@ncsu.edu 3JC_Poindexter@ncsu.edu

Internet Privacy Law: A Comparison between the United States and the European Union

Abstract The increasing use of personal information in web-based applications has created privacy concerns worldwide. This has led to awareness among policy makers in several countries regarding the desirability of harmonizing privacy laws. The challenge with privacy legislation from an international perspective is that the Internet is virtually borderless but legislative approaches differ between countries. This paper presents a functional …show more content…

In particular, the regulatory statutes in the United States lacked adequate privacy protection by the standards set forth in the EU Privacy Directive, and as a result, U.S. businesses were adversely affected by its restrictions [2]. To prevent an imminent information embargo, in November 1, 2000 the U.S. Department of Commerce created Safe Harbor Principles that addressed privacy concerns of the EU relative to U.S. laws and commercial practices. The Safe Harbor Principles provide privacy procedures that are consistent with EU privacy law, but according to a recent study, only 135 organizations in the U.S. had complied with the Safe Harbor Principles [4]. As of August 2003, however, 369 organizations had taken the steps necessary to qualify for the Safe Harbor Principles (see the Department of Commerce website at http://web.ita.doc.gov/safeharbor), suggesting that the Safe Harbor program is working and is increasingly being used by industry. This paper presents a functional comparison of current online privacy law in the European Union (EU) and in the United States. In addition, we discuss a recent proposal for comprehensive online privacy reform in the U.S. and compare it to the recently enacted, but not implemented, 2002 EU Directive on Privacy and Electronic Communications. In particular, we articulate