John Mogg
Director, DG XV
European Commission
Office C 107-6/72
Rue de la Loi, 200
1049 Brussels
BELGIUM
Dear Director General Mogg:
I am providing you this letter at the request
of the U.S. Department of Commerce to explain the role of the Department
of Transportation in protecting the privacy of consumers with respect to
information provided by them to airlines.
The Department of Transportation encourages
self-regulation as the least intrusive and most efficient means of ensuring
the privacy of information provided by consumers to airlines and accordingly
supports the establishment of a "safe harbor" regime that would enable
airlines to comply with the requirements of the European Union's privacy
directive as regards transfers outside the EU. The Department recognizes,
however, that for self-regulatory efforts to work, it is essential that
the airlines that commit to the privacy principles set forth in the "safe
harbor" regime in fact abide by them. In this regard, self-regulation should
be backed by law enforcement. Therefore, using its existing consumer protection
statutory authority, the Department will ensure airline compliance with
privacy commitments made to the public, and pursue referrals of alleged
non-compliance that we receive from self-regulatory organizations and others,
including European Union member states.
The Department's authority to take enforcement
action in this area is found in 49 U.S.C. 41712 which prohibits a carrier
from engaging in "an unfair or deceptive practice or an unfair method of
competition" in the sale of air transportation that results or is likely
to result in consumer harm. Section 41712 is patterned after Section 5
of the Federal Trade Commission Act (15 U.S.C. 45). However, air carriers
are exempt from Section 5 regulation by the Federal Trade Commission under
15 U.S.C. 45(a)(2).
My office investigates and prosecutes cases
under 49 U.S.C. 41712. (See, e.g., DOT Orders 99-11-5, November
9, 1999; 99-8-23, August 26, 1999; 99-6-1, June 1, 1999; 98-6-24, June
22, 1998; 98-6-21, June 19, 1998; 98-5-31, May 22, 1998; and 97-12-23,
December 18, 1997.) We institute such cases based on our own investigations,
as well as on formal and informal complaints we receive from individuals,
travel agents, airlines, and U.S. and foreign government agencies.
I would point out that the failure by a
carrier to maintain the privacy of information obtained from passengers
would not be a per se violation of section 41712. However, once
a carrier formally and publicly commits to the "safe harbor" principles
of providing privacy to the consumer information it obtains, then the Department
would be empowered to use the statutory powers of section 41712 to ensure
compliance with those principles. Therefore, once a passenger provides
information to a carrier that has committed to honoring the "safe harbor"
principles, any failure to do so would likely cause consumer harm and be
a violation of section 41712. My office would give the investigation of
any such alleged activity and the prosecution of any case evidencing such
activity a high priority. We will also advise the Department of Commerce
of the outcome of any such case.
Violations of section 41712 can result
in the issuance of cease and desist orders and the imposition of civil
penalties for violations of those orders. Although we do not have the authority
to award damages or provide pecuniary relief to individual complainants,
we do have the authority to approve settlements resulting from investigations
and cases brought by the Department that provide items of value to consumers
either in mitigation or as an offset to monetary penalties otherwise payable.
We have done so in the past, and we can and will do so in the context of
the safe harbor principles when circumstances warrant. Repeated violations
of section 41712 by any U.S. airline would also raise questions regarding
the airline's compliance disposition which could, in egregious situations,
result in an airline being found to be no longer fit to operate and, therefore,
losing its economic operating authority. (See, DOT Orders 93-6-34, June
23, 1993, and 93-6-11, June 9, 1993. Although this proceeding did not involve
section 41712, it did result in the revocation of the operating authority
of a carrier for a complete disregard for the provisions of the Federal
Aviation Act, a bilateral agreement, and the Department's rules and regulations.)
I hope that this information proves helpful.
If you have any questions or need further information, please feel free
to contact me.
Sincerely,
Samuel Podberesky
Assistant General Counsel for
Aviation Enforcement and Proceeding