Chairman of the Federal Trade Commission Jon Leibowitz recently spoke at a conference and said the agency is attempting to develop a "nutrition label" for data collection, similar to those found on food and beverages.

In lieu of the traditionally long and complicated privacy policy – which is rarely read by consumers – the nutrition label would provide a "disclosure mechanism that websites can customize to succinctly tell consumers what kind of data they are collecting and how they are using it," Leibowitz explained during a panel discussion at the Wired For Change privacy conference in New York City.

Chairman Leibowitz said the Bureau of Consumer Protection is working in conjunction with the agency's chief technologist to select "five essential terms" that each company would need to include on the label.

Inspiration for the nutrition label may have come from Carnegie Mellon University, where a team of researchers proposed the idea earlier this year. "The nutritional label is something that people use regularly to compare products," Lorrie Cranor, an associate professor of computer science, engineering and public policy, told the International Association of Privacy Professionals. "It wasn't something that everybody was comfortable with in the beginning, but now it's really part of our everyday experience as consumers."

The Carnegie Mellon team created a chart with rows and columns for various data-related issues which, according to studies that have been conducted, have helped users to read and understand privacy policies. "We put it out there in hopes that it will inspire others to come up with new ideas," she added.

While the idea of a nutrition label for data collection has been introduced before, critics argue that data differs from food in ways that make the use of the label challenging. Ingredients in food can be simplified to numbers, such as 56 calories or 5 mg saturated fat, while data collection may require a more detailed explanation of how the company shares data with third parties.

Why it matters: The agency's plan to provide consumers with simplified data collection information is but another indicator that privacy concerns remain high on the agency's agenda.