Safe harbor provisions would likely enforce existing data collection and tracking practices that privacy groups have protested, Chester added.

Some of the privacy advocates suggested the report's recommendation for a privacy bill of rights may be helpful. The report may also help push Congress to act on privacy legislation next year, the Future of Privacy Forum said.

"The report is a sophisticated effort to advance consumer privacy without thwarting innovation," the group said in a statement. "Although it sets a framework that will influence legislation, it creates an alternate path for a mode of government initiated self-regulation, with advocates at the table and the FTC providing enforcement. If businesses respond by seriously engaging in efforts to advance fair information practices, the U.S. has the chance to take back the international privacy leadership role it once had."

Other people praised the .

The paper's call for a privacy policy office in the Commerce Department is important, said Peter Swire, chief privacy counselor during President Bill Clinton's administration. That office will serve as a "visible point of contact" for privacy policy in President Barack Obama's administration, he said.