U.S. Data Privacy Law & Consumer Control of Personally Identifiable Information: A Deeply Flawed Legal Framework

-- 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 structured to immunize private actors and prioritize business interests over empowering consumers, resulting in inconsistent protections and significant barriers to enforcement. This leaves consumers with limited control and is indicative of a broader shift away from regulatory governance toward a “no law” regime. The United States does not rely on expert agency assessment to adopt enforceable standards, as seen in post-war environmental law. Instead, the law treats privacy as a matter of individual choice, where it uses consent in a way that obscures collective harms of data misuse. While there are several reasons behind the United States’ failure to protect consumers, the primary obstacles to effective control over PII include the reliance on consent as a regulatory tool, the absence of a comprehensive federal privacy statute and agency enforcement, restrictive Article III standing requirements, and the broad immunity granted under Section 230 of the Communications Decency Act. To address this shortcoming and restore meaningful consumer protection, privacy law must shift toward a standard-based model grounded in public governance, agency rulemaking, and accountability.

I. Consent & the Myth of Consumer Choice

The prevailing legal model in U.S. privacy law relies on consent, and that’s the fundamental issue. The current structure falsely assumes that consumers can make rational and informed decisions about how their data is collected and used. In reality, users must often “agree” to dense, complex policies as a condition for accessing essential services. This model individualizes a systemic issue: harms like surveillance, discrimination, and commodification of personal data are distributed across society and affect communities, not just consenting individuals. 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 maintain consent as the chief regulatory tool, consumers will remain overburdened and under-protected.

II. Lack of a Comprehensive Federal Privacy Statute

The lack of a comprehensive federal privacy statute is a regulatory gap and reflects a deliberate political economy that prioritizes economic innovation over public welfare. Unlike environmental statutes such as the Clear Air Act or the National Environmental Policy Act (NEPA), which require agencies to assess risks and set enforceable standards, privacy law lacks an equivalent regulatory infrastructure. With no overarching, unified federal privacy statutes, consumers are vulnerable and left to navigate an assortment of inconsistent regulations. Industry-specific laws like the Health Insurance Portability and Accountability Act (HIPAA) and the Gramm-Leach-Bliley Act create fragmented rules that adopt “opt-out” systems and place the burden on individuals rather than institutions. 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” structure shifts costs to consumers while subsidizing data extraction as a form of economic development. As legal historian Morton Horwitz shares in his book, The Transformation of American Law 1780–1860¹, this kind of structure that grants selective legal immunity for private actors is not merely a regulatory absence, but a tool of wealth concentration.

III. Standing Doctrine & Procedural Barriers

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.

V. Conclusion

To address these systemic failures, U.S. privacy law must embrace a model based on public governance and enforceable standards. A robust federal privacy statute, similar to NEPA, would encourage more accountability from agencies and require them to conduct privacy impact assessments, evaluate technological risks, and engage in public rulemaking. This model would push privacy to be more of a collective interest. Adopting this approach would require overcoming Trump’s political landscape that is hostile to regulatory expertise and designed to disable government action. Today’s erosion of post-war administrative governance is a blatant attempt to prioritize private power over public accountability. The consequence is a legal order in which platforms operate with impunity, while consumers are burdened with responsibilities they cannot fulfill. Without this legal reformation, privacy will remain as a privilege for the informed and well-resourced, rather than a right enjoyed by all.

References

1. Morton J. Horwitz, The Transformation of American Law, 1780–1860 (Harvard Univ. Press 1977), https://www.jstor.org/stable/j.ctv1smjvd6.

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