The Federal Trade Commission Wants In On Big Data Regulation

The FTC has a tendency to see a role anywhere it wants to see a role.

As described on its website, the FTC has a very broad mandate. Among other things, the FTC has the authority to investigate and prosecute cases of “unfair or deceptive acts or practices in or affecting commerce.”  As a practical matter, “unfair or deceptive acts or practices” means whatever the FTC says it means.

Apparently the FTC is now looking for “unfair or deceptive acts or practices” in the Big Data world.  

The FTC gave clues about where it is looking in its recent event – “Big Data: A Tool for Inclusion or Exclusion?”

The FTC Chairwoman explained the purpose of the event as such:

“A growing number of companies are increasingly using big data analytics techniques to categorize consumers and make predictions about their behavior,” said FTC Chairwoman Edith Ramirez. “As part of the FTC’s ongoing work to shed light on the full scope of big data practices, our workshop will examine the potentially positive and negative effects of big data on low income and underserved populations.”

It’s not clear what “underserved” means in this context, but certainly Big Data can be used to discriminate (unfairly) in a number of different ways. Example discussions of this here and here.  On the other hand, as suggested in the quote above, (and as discussed here) Big Data might be useful in combating discrimination.                                                   

These are real concerns, and it’s great that the FTC wants to keep up with changing technology. Unfortunately, if this event is any indication, the FTC has a lot of catching up to do.

Consider this from the FTC’s event notice:

The FTC has found that, in some cases, companies are targeting ads based on racial or other assumptions, said Latanya Sweeney, the agency’s CTO. At a website for members of Omega Psi Phi, an African-American fraternity, the agency found ads for defense lawyers and for users to check their own criminal backgrounds, she said. The site also had a large number of ads for poorly rated credit cards, she said.

This is not a particularly current issue. Targeted advertising has been talked about for a long time – certainly long before we started talking about Big Data. 

That said, it is true that the FTC has a role to play in privacy law and in some data-related matters. To the extent that role extends to Big Data when the data includes personal information, the FTC has a role to play in Big Data.

However – the FTC is not very good at recognizing the limits of its jurisdiction. Consider data security breach issues.

As FTC Chairwoman Edith Ramirez stated in testimony before Congress that:

Under current laws, the FTC only has the authority to seek civil penalties for data security violations involving companies that fail to protect children’s information provided online in violation of the COPPA Rule or credit report information in violation of the FCRA. The Commission also recommends data security legislation that would provide the agency with jurisdiction over non-profits, which have been the source of a substantial number of breaches.

In light of this statement, it’s difficult to understand how the FTC decided it has the authority to prosecute enforcement actions with respect to data breaches.

(Note also that the FTC’s self defined jurisdiction in this regard, as well as the manner in which the FTC presumes to exercise that jurisdiction, have been challenged in currently active litigation, although not successfully yet.)

Obviously, it’s good that the FTC wants to increase its understanding of relevant issues. But government agencies should not be looking for a role in the latest cool thing just because it wants one.

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