Representatives of firms including Facebook, Yahoo and Google testified at the hearing, which was held jointly by the House of Representatives’ subcommittee on communications, technology and the internet, and the subcommittee on commerce, trade, and consumer protection.

Bobby Rush (pictured), chairman of the commerce subcommittee, said the hearing would help Congress answer the question: “Is federal privacy legislation necessary, or should companies be trusted to discipline and regulate themselves?”

Rick Boucher, chairman of the communications subcommittee, acknowledged the benefits to consumers of targeted advertising, but said that people are entitled to clear, concise and easy-to-find privacy policies setting out how their information will be used, and that they should be given the option to opt out of ad targeting.

Charles Curran of the Network Advertising Initiative, which has spearheaded self-regulation and resisted new privacy legislation, highlighted the economic benefits of online advertising and the NAI’s commitment to self-regulation. He announced that the organisation will introduce a browser plug-in to allow users to opt out of targeted advertising more easily and will launch a consumer education campaign on the use of personal data for ad targeting.

But Jeff Chester of privacy group the Center for Digital Democracy said industry self-regulation had failed to offer meaningful protections to consumer privacy and that Congress “must enact sensible policies to protect consumers”.

• Meanwhile the European Commission is looking into tighter regulation of the use of personal data by online social networks. The Financial Times reports that a paper circulated by the Commission’s working party on privacy is calling for better control of how sites such as Facebook share their users’ personal data with third-party app developers.