Nov. 19 (Bloomberg) -- Americans “falsely believe” the information they share through purchases, surveys, sweepstakes and elsewhere will remain private and aren’t aware how much data is collected by businesses, a law professor told U.S. lawmakers.

Marketers sell data including unlisted telephone numbers obtained from pizza-delivery services, said Chris Hoofnagle, director of information privacy programs at the University of California, Berkeley’s school of law. He spoke today at a hearing on privacy for consumers engaged in commerce on the Internet and offline.

“American privacy law allows most offline business to sell customer data without giving the consumer notice or the opportunity to object,” Hoofnagle told U.S. House members. “Americans falsely believe they enjoy a right of confidentiality with most businesses.”

Lawmakers are considering whether legislation is needed to balance consumers’ rights to privacy and businesses’ use of customers’ information, such as addresses, telephone numbers and purchase history. The hearing was held jointly by two panels of the Energy and Commerce Committee: the Subcommittee on Commerce, Trade, and Consumer Protection and the Subcommittee on Communications, Technology, and the Internet.

“We have to protect against businesses that think we’re all products,” said Massachusetts Representative Edward Markey, a Democrat. Markey said consumers should be able to “say no” to businesses seeking to use personal information.

Representative Henry Waxman, the California Democrat who chairs the Energy and Commerce Committee, said in a statement he wanted “solutions that can better inform consumers and enable them to safeguard their privacy.”

Informed Choices

“Congress cannot and should not make the decision for consumers,” said Florida Representative Cliff Stearns, the ranking Republican on the communications subcommittee. He said Congress should help make sure consumers have enough information to make “an informed choice” about sharing personal information.

Companies should offer notices “in a clear and conspicuous manner” so consumers know what information is collected, how it is used and how people can opt out of the process, Stearns said.

Legislation may be introduced in “several weeks” said Representative George Radanovich, a California Republican.

Lawmakers considering legislation should “take the time to fully understand the impact to consumers that have both online and offline relationships with companies,” said Zoe Strickland, chief privacy officer for Wal-Mart Stores Inc.

Representative Rick Boucher, a Virginia Democrat who chairs the communications subcommittee, asked whether consumer confidence would be bolstered if lawmakers required extensive disclosure, the ability to opt into and out of databases and limits on how long companies could retain records.

‘Culture of Respect’

Jennifer Barrett, global privacy and public policy executive for Little Rock, Arkansas-based Acxiom Corp., said the database marketing company has “a culture of respect for consumer privacy.”

Barrett said Acxiom has 20 to 40 pieces of data for the average person, and finds information in public databases, consumer surveys and from retailers. Under questioning from Representative Mike Doyle, a Pennsylvania Democrat, she said Acxiom doesn’t tell consumers which marketers have bought information about them.

George Pappachen, chief privacy officer for the Kantar Group, a unit of the London-based media, advertising and public relations company WPP Plc, told lawmakers that “catering to consumer preferences on a continuous basis is simply not possible without the ability to collect, to have access to reliable data.”

Representative Doris Matsui, a California Democrat, said that “most Americans simply do not trust that their personal information is being protected.”

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

Last Updated: November 19, 2009 16:55 EST