Online privacy is a hot topic and on everyone's lips these days, but until today, little had been done about it at the federal legislative level. That changed today when two U.S. senators from different parties, Senator John Kerry (D-MA) and Senator John McCain (R-AZ), introduced an online privacy bill that seeks to “strike a balance between protecting the personal information of Web users and the needs of businesses to conduct electronic commerce,” said the AFP news service.

Good news for consumers who value privacy? Maybe, but digital privacy rights activists are less than thrilled with the bill, which they believe to be weak, partly because it puts the onus on the consumer, leaves too many loopholes open and doesn't allow for consumer redress of violations.

Senators Kerry and McCain said the bipartisan legislation would require companies gathering data to allow a consumer to “opt-out” of having their information collected (as opposed to the stronger tactic of making customers who wish for their information to be shared to “opt in.”)

“Protecting Americans' personal, private information is vital to making the Information Age everything it should be,” said Senator Kerry.

Kerry, who chairs the Senate Subcommittee on Communications, Technology, and the Internet, said, “Americans have a right to decide how their information is collected, used, and distributed and businesses deserve the certainty that comes with clear guidelines.”

The legislation, called the Commercial Privacy Bill of Rights Act of 2011 “makes fair information practices the rules of the road, gives Americans the assurance that their personal information is secure, and allows our information driven economy to continue to thrive in today's global market,” said Senator Kerry.

Senator McCain, for his part, said “consumers want to shop, browse and share information in an environment that is respectful of their personal information.”

“Our legislation sets forth a framework for companies to create such an environment and allows businesses to continue to market and advertise to all consumers, including potential customers,” said McCain.

“However, the bill does not allow for the collection and sharing of private data by businesses that have no relationship to the consumer for purposes other than advertising and marketing,” he said. “It is this practice that American consumers reject as an unreasonable invasion of privacy.”

The bill would direct state attorney generals and the Federal Trade Commission (FTC) to enforce its provisions and put a cap on fines for violations.

While digital privacy groups have welcomed the sentiment behind the bill, they are criticizing it for not going far enough.

“This is an important step toward the enactment of a comprehensive privacy law for this country,” said Justin Brookman, director of the Center for Democracy & Technology's Consumer Privacy Project. “With the proliferation of tracking technologies in recent years, consumers need basic protections to allow them to see how their data is being used, and to give them control over their own information,” Brookman said.

A coalition of consumer groups and privacy advocates welcomed the bipartisan effort but said in a letter to the senators that the legislation needs to be “significantly strengthened if it is to effectively protect consumer privacy rights in today's digital marketplace.”

“Consumers need strong baseline safeguards to protect them from the sophisticated data profiling and targeting practices that are now rampant online and with mobile devices,” they said.

“We cannot support the bill at this time,” said the letter signed by the Center for Digital Democracy, Consumer Action, Consumer Watchdog, Privacy Rights Clearinghouse and Privacy Times.

The consumer advocacy groups object to the preferential treatment given to Facebook and other social networking companies, the fact that the bill will prevent states from enacting stronger data privacy laws, and the fact that it doesn't provide consumers with the right to hold companies that violate their privacy accountable. A full copy of the letter may be found here.