FTC Looking Closely at Impact on Consumers of ‘Big Data’

Manufacturers and marketers know that the more consumer data they have, the more they can tailor and direct their advertising, their products, and their product placement. This helps them to maximize sales and minimize costs. Thanks to the combination of cheap data storage and ubiquitous data capturers (e.g., smart phones, credit cards, the Web), the amount of consumer data out there to mine is astounding. Hence the recently-popularized term, “Big Data.”

But the misuse of data could result in government enforcement actions and, more importantly, serious privacy violations that can affect everyone.

Some of the practical challenges and concerns flowing from the use of big data were addressed recently by FTC Commissioner Julie Brill at the 23rd Computers, Freedom and Privacy conference on June 26. Issues raised include noncompliance with the Fair Credit Reporting Act and consumer privacy matters such as transparency, notice and choice, and deidentification (scrubbing consumer data of personal identifiers).

The FCRA: Those whose business includes data collection or dissemination should determine whether their practices fall within the boundaries of the FCRA. As Brill pointed out, “entities collecting information across multiple sources and providing it to those making employment, credit, insurance and housing decisions must do so in a manner that ensures the information is as accurate as possible and used for appropriate purposes.” If Brill’s comments are any indication of enforcement actions to come, businesses should be aware that the FTC is on the lookout for big data enterprises that don’t adhere to FCRA requirements.

Consumer Privacy: Brill gave some credit to big data giant Acxiom for its recent announcement that it plans to allow consumers to see what information the company holds about them, but she noted that this access is of limited use when consumers have no way of knowing who the data brokers are or how their information is being used. Brill highlighted how consumer data is being (questionably) used by national retailer Target: the somewhat funny yet disturbing news story about Target Stores identifying a teen’s pregnancy. It is a classic example of why consumers ought to have notice of what data is being collected on them and how that information is being used.

Consumers also need to have, as Brill suggested, the opportunity to correct information about themselves. This makes sense. Data collection is imperfect – different individuals’ information may be inaccurately combined; someone’s information may have been hacked; someone could be the victim of cyber-bullying, and other mishaps and errors can occur. Consumers should be able to review and correct information for errors. Finally, Brill highlighted concerns that current efforts to scrub consumer data may be ineffective, as companies are getting better at taking different data points and still being able to accurately identify the individual. “Scrubbed” data in the wrong hands could be as harmful as a direct security breach.

Brill encouraged companies to follow the “privacy by design” recommendations issued by the FTC in order to build more protections into their products and services. She further emphasized her initiative “Reclaim Your Name,” which is set to promote consumer knowledge and access to data collection. Companies that are in the business of data collection, mining and analytics should take note of the FTC’s efforts to empower the consumer against the overuse or misuse of consumer data. If you want to stay on the good side of the FTC – and on the good side of the informed consumer – work with the consumer, and provide meaningful notice, choice and consent.