I don't believe that telling the user what use will be made of their data will be in any way effective. Many companies are very honest and up front about it. The problem is that the information is just too technical for a user to understand, so they ignore. They have no choice because there's no way for them to understand it anyway.

Even if all companies were required to and did comply with a law like that and fully disclosed the information, the collected data would just be laundered through a third party in some way so that the terms of service were technically correct, but they could still get away with business as usual.

I think these companies just need to be barred from using data in this way period. It's the only way to ensure users are protected in my opinion.