Caveat Vendor

FTC Workshop on Big Data: Lots of Questions & a Few Answers

September 18, 2014

Mary-Elizabeth M. Hadley

This past Monday, September 15th, the Federal Trade Commission (“FTC” or “Commission”) hosted a public workshop entitled “Big Data: A Tool for Inclusion or Exclusion?” at which business and industry representatives, consumer advocates and academics gathered to explore the use of “big data” and its impact on American consumers.

The workshop highlighted the benefits of big data insights, including improved product offerings and more effectively tailored advertisements as well as advances in healthcare, education and transportation.  The Commission also, however, raised concerns that big data will be used as a tool of exclusion, negatively impacting underserved and low income customers.

Although the immaturity of thinking about big data – including the absence of a precise definition of the term – was a recurring theme, the workshop offered some useful insights for companies going forward.
Key Takeaways

  • FTC Committed to Enforcement Actions: According to FTC Chairwoman Edith Ramirez, the FTC will continue actively to identify areas where big data practices may violate current laws and intends to bring enforcement actions wherever appropriate.

  • Application of Existing Legal Framework to Big Data: The workshop included a discussion of several federal laws that can be applied to the collection and use of big data, including:

  • The Equal Credit Opportunity Act (“ECOA”): Although the ECOA’s Regulation B contains no express prohibition against using social media profiles, one panelist warned companies to proceed with caution since using that type of information could trigger allegations that they considered the information in making credit decisions.

  • The Civil Rights Act:  EEOC Assistant Legal Counsel Carol Miaskoff emphasized that the basic principles of the Civil Rights Act – currently in its 50th anniversary year – can be translated to the big data space.  According to Miaskoff, the key inquiry in the context of recruiting and screening job applicants turns on whether an analytical tool that creates a “disparate impact” can be justified by a business necessity.

  • No Indication New Legislation Is Forthcoming: FTC Chairwoman Ramirez emphasized the need to enforce current regulations and to ensure that fair information practices remain applicable and relevant.  Panelists such as Pamela Dixon, Founder & Executive Director of the World Policy Forum, agreed that existing fairness structures should play an important role going forward.

  • Importance of Self-Regulation: Although panelists disagreed about the existence of gaps under current laws, the workshop highlighted the potential role of self-regulatory guidelines. 

    • For example, Jeanette Fitzgerald, General Counsel & Chief Privacy Officer of Epsilon, cited the Direct Marketing Association (“DMA”) as evidence that individual groups can play a large role in getting individual actors to act ethically. 

    • As Danah Boyd of Microsoft Research noted, many companies are eager to “do the right thing” and hold data in a responsible way but do not always know the best way to do so.  Characterizing regulation as a “strong-armed approach,” she championed the opportunity for cross-sector collaboration.

    • FTC Commissioner Julie Brill encouraged all members of industry to identify and address any ways the data in their hands could be used to create disparate treatment.

  • Need to Better Educate Consumers: Panelists agreed that finding ways to better inform consumers about the uses to which their data may be put was an important goal.  However, in the “big data” context, where uses are often not known at the time the data are collected and the devices collecting them are not always apparent, how to accomplish that in a user-friendly and intelligible way is not clear.

  • Danger of Regulatory Burdens:  One issue not addressed at the workshop is the fear that increasing regulatory restrictions and obligations on the collection and use of data may force out the smallest innovators, who are unable to afford the legal advice and compliance resources necessary to avoid violation.  Already in the health-care space, some app developers and others stay away from HIPAA-covered activity because they are unable to shoulder those requirements.  While that may benefit user privacy (depending on the regulation), it also risks slowing innovation and growth – features that have distinguished the U.S. technology industry among its global peers.

As many workshop participants agreed, big data is here to stay.  The increasing amounts of data collected create both risks and rewards.  The FTC’s approach to navigating that minefield will play a large role in shaping the big data landscape.
Caveat Vendor is Paul Hastings’ Consumer Issues blog. We welcome your feedback. Please contact our blog editor with any thoughts or suggestions.

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