The FTC says its proposals, which have the backing of all five commissioners, aim “to balance the privacy interests of consumers with innovation that relies on consumer information”.

Industry efforts to address privacy through self regulation, the commission said, had been “too slow, and up to now have failed to provide adequate and meaningful protection”.

The introduction of a ‘do not track’ option in web browsers would help consumers control what information is collected about them, the commission said. It also recommends that “companies should adopt a ‘privacy by design’ approach, building privacy protections in to their business practices and procedures, for example by ensuring better data security and limiting the collection and retention of data.

The announcement comes as a House of Representatives’ subcommittee meets to discuss the possibility of introducing ‘do not track’ legislation.

The FTC also said consumers’ choices could be simplified by agreeing that companies don’t have to seek consent to use data for “commonly accepted practices” such as product and service fulfilment, fraud prevention or first-party marketing.

The FTC said it will “take action against companies that cross the line with consumer data and violate consumers’ privacy – especially when children and teens are involved”.

Chairman Jon Leibowitz said: “The FTC wants to ensure that the growing, changing, thriving information marketplace is built on a framework that promotes privacy, transparency, business innovation and consumer choice. We believe that’s what most Americans want as well.”

Members of the public have until 31 January 2011 to comment on the commission’s report.