(AP) -- The Commerce Department is calling for the creation of a "privacy bill of rights" for Internet users to set ground rules for companies that collect consumer data online and use that information for marketing and other purposes.
The proposal, outlined in a Commerce Department report Thursday, is intended to address growing unease about the vast amounts of personal information that companies are scooping up on the Net - from Web browsing habits to smart phone locations to Facebook preferences. That data is often mined to target advertising.
The Commerce Department proposal is intended to guide lawmakers, industry and a White House group looking at issues of privacy and Internet policy.
It comes two weeks after the Federal Trade Commission recommended the creation of a "Do Not Track" tool to let consumers stop or restrict advertisers from studying their online activity - including the websites they visit, the links they click, their Internet searches and their online purchases - in order to target ads.
The new Commerce Department report proposes the creation of a broad framework for industry behavior to ensure that companies give consumers clear notice about what personal data they are collecting and exactly how they are using it.
It would give consumers the opportunity to "opt out" of, or decline, some or all of that data collection and to correct errors in the information. It would also set clearer limits on the use of this information and would require companies to secure the data they gather.
These so-called "fair information principles" would require legislation to become binding.
In addition to these broad principles, the Commerce Department also envisions specific codes of conduct for particular segments of the Internet ecosystem. Those could include social network sites, services that deliver location-based pitches to mobile devices and Web publishers and marketers that target ads based on a consumer's browsing activity and other online behavior.
Those codes of conduct would be voluntary, but enforceable. The FTC could take actions against companies that commit to abiding by the codes and then don't comply.
In what could become one of the more controversial elements of the Commerce Department proposal, the codes would be developed by Internet advertising networks, Web publishers and marketers, social networking sites and other online services, as well as government officials, consumer groups, privacy watchdogs and others concerned about Internet privacy.
Those groups would work together under the guidance of a federal privacy office to be created in the Commerce Department. The office would work with the FTC, the White House and other federal entities.
The Commerce Department report, which has been approved by the White House, is intended to guide Internet companies and marketers as well as lawmakers and policy makers as they develop a new framework to safeguard consumer privacy on the Internet without stifling Internet commerce.
It also will inform the work of a group on privacy and Internet policy, which was created inside the White House's National Science and Technology Council in October and shares the same goal.
"America needs a robust privacy framework that preserves consumer trust in the evolving Internet economy while ensuring the Web remains a platform for innovation, jobs, and economic growth," Commerce Secretary Gary Locke said in a statement. "Consumers must trust the Internet in order for businesses to succeed online."
Commerce officials hope their report will also lay the groundwork for discussions with foreign governments to align global standards for acceptable industry behavior. The European Union, for one, has said it plans to update its privacy regulations to give consumers more control over their online data.
The Commerce Department report does not take a position on the FTC's Do Not Track proposal, which is at the center of a debate over how to give consumers more control over their online information. The tool would most likely take the form of a browser setting that would let consumers signal to websites that they do not want to be tracked or want only limited tracking.
Although privacy watchdogs have welcomed the FTC proposal, the online advertising industry has warned that allowing consumers to turn off all online tracking could have unintended consequences because tracking is used to deliver all sorts of personalized Web content - from sports scores to stock prices - and not just Internet ads.
The Commerce Department also recommended national standards on data breaches requiring companies to adopt strong measures to protect electronic records and notify consumers in the event of a breach.
The report also called for a review of the Electronic Communications Privacy Act, a 1986 law that extended wiretapping restrictions to e-mail messages and other data files, but is now considered out of date.
Explore further: Kim Dotcom slams Megaupload 'data massacre'