The Flawed Legal Framework Surrounding U.S. Data Privacy Law & Consumer Control of Personally Identifiable Information

-- By CliftonMartin - 14 Apr 2025

The ability of consumers to assert control over their personally identifiable information (PII) is incredibly limited by the flawed and industry-centric nature of U.S. privacy law. The current legal framework is designed more to prioritize business interests than to empower consumers, resulting in inconsistent protections and significant barriers to enforcement. The law treats privacy as a matter of individual choice rather than a collective concern; it fails to address the broader, ecological nature of data harms, which ultimately extends beyond the consenting individual and affects communities, institutions, and social systems. There are a number of reasons for the United States’ failure of consumer protection, however, the primary obstacles stopping people from effectively controlling their PII include the fact that consent is viewed as a regulatory tool, the absence of an overarching federal privacy statute, restrictive Article III standing requirements, and the sweeping immunity offered under Section 230 of the Communications Decency Act. In order to address this shortcoming, privacy law and legislators should move beyond the consent based model that currently dictates the law to robust privacy standards, stronger enforcement, broader criteria for legal standing, and systemic accountability.

I. Consent as a Regulatory Tool & the Problem

U.S privacy law is over reliant on consent, and that’s the foundational issue here. Within the current structure, the consent model assumes that consumers can make rational, informed decisions about how their data is collected and used. But in reality, privacy policies are nuanced, complex, and nebulous, and users often lack genuine autonomy if they want to access essential services. What exacerbates this problem is that the harms from data misuse (i.e. algorithmic bias, surveillance, commodification) are simply not confined to the individual who selects "accept," but are distributed across society. As a result, privacy is an issue that’s not personal, but ecological; it cannot be managed solely through individual transactions. As long as lawmakers treat consent as the primary mechanism of control, consumers will continue to be overburdened and under-protected.

II. Lack of a Comprehensive Federal Privacy Statute

Without an overarching, unified federal privacy statute, consumers are vulnerable and left to navigate an assortment of inconsistent industry-specific regulations that provide slim protections and prioritizes businesses and their operations over consumer control (i.e. The Health Insurance Portability and Accountability Act (HIPAA) for healthcare information and the Gramm-Leach-Bliley Act for financial statistics). These laws often adopt opt-out systems, placing the burden on individuals to prevent their data from being shared. The Gramm-Leach-Bliley Act exemplifies this priority misplacement as the act lets financial institutions share PII with third parties unless consumers actively opt out. This "default sharing" approach is a long way from being consumer friendly; consumers are blind to and lack knowledge of their rights and the technical understanding to navigate these opt-out measures. Ultimately, the absence of a federal privacy statute reflects a broader trend where the law expects individuals to protect themselves in a landscape they can’t control.

III. Article III Standing Requirements and an Unrealistic Burden of Proof

The doctrine of standing under Article III of the United States Constitution restricts consumer privacy enforcement by requiring plaintiffs to demonstrate “a concrete and particularized damage,” creating an unrealistic standard for plaintiffs. This requirement disproportionately benefits defendants who control access to evidence needed to show harm, which only complicates litigation and discourages plaintiffs.

The TransUnion LLC v. Ramirez case illustrates this undue burden of proof as the Supreme Court ruled that consumers whose faulty credit reports were not disseminated to third parties lacked standing because they had not suffered a “tangible injury.” Additionally, in Spokeo, Inc. v. Robins, the Court held that merely violating a statute was not enough to confer standing without concrete harm. These Supreme Court decisions created procedural barriers that complicate consumers’ ability to seek recourse and hold companies accountable for privacy violations, especially when the data misuse doesn’t immediately manifest in economic harm.

IV. Immunity and Legal Loopholes for Platforms Under Section 230 of the Communications Decency Act

Section 230 of the Communications Decency Act provides broad immunity to online platforms for content created by third parties, which shields them from liability for privacy violations unless they explicitly misrepresent their practices. Though the provision was originally intended to foster innovation and free expression, it has inadvertently created a legal loophole that enables platforms to avoid responsibility for privacy breaches by claiming immunity.

Under Section 230, platforms are not considered "speakers" and are insulated from liability even when their systems facilitate the unauthorized collection, dissemination, or misuse of personal information. This legal shield disincentivizes companies to adopt robust privacy safeguards, which adversely affects consumer trust and limits opportunities for redress. Thus, consumers are left with little to no recourse when their data is mishandled, and fall victim to a power imbalance between individuals and corporations. The inability to hold platforms accountable weakens data security standards and normalizes laxed privacy practices, further challenging consumer control over their personal information.

Conclusion

To effectively address the flawed nature of U.S. privacy law and the limitations of a consent-based approach, lawmakers should seek a standards-based model of privacy protection. Within this system, there would be clear, enforceable rules that apply across industries and don't overly and unfairly rely on consumers to understand, manage, and opt-in to complex agreements and terms. A genuine consumer-focused strategy would involve universal standards that could be captured in a federal privacy statute, broader standing requirements that recognizes data misuse as a harm, and platform accountability that eliminates loopholes that grant providers sweeping immunity. Without this reformation, privacy will remain as a privilege for the informed and well-resourced, rather than a right enjoyed by all.

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