The FTC recently published an advance notice of proposed rulemaking to discuss harms associated with the collection, processing, and selling of personal data. The FTC is inviting public comments on whether it should implement new rules on how companies:
- collect, protect, analyze, and retain personal data; and
- transfer, sell, share, or otherwise monetize data in unfair or deceptive manners.
This includes companies that use personal data for behavioral advertising, to curate newsfeeds, to set prices, and to research individuals’ behaviors and preferences. The FTC has flagged such uses of personal data to increase the risk of deceptive use and security incidents.
The FTC also expressed concerns of discrimination in algorithms used for automated systems. For example, the FTC has found discrimination on the basis of protected classifications such as gender, age, and race in automated processes for obtaining housing, employment, and other critical areas. The FTC anticipates by establishing clear privacy and security requirements, alongside the ability to enforce this with financial penalties, companies would be incentivized to comply.
Comments may be submitted by the public for 60 days following the publication of the notice, as further noted here.
Putting It Into Practice: The FTC’s proposed rule is one of several recent agency initiatives related to the safeguarding consumer data. Last month, the CFPB clarified liability under for bank and nonbank financial companies that fail to safeguard consumer data and later issued an interpretive rule stating that digital marketing providers that are involved in the identification or selection of prospective customers or the selection or placement of content to affect consumer engagement including purchase or adoption behavior, are subject to the CFPB’s authority to prohibit UDAAPs (we cover both initiatives in previous blog posts here and here). Companies should have a heightened awareness that the FTC and CFPB plan to continue their focus on any activities involving the business of collecting and analyzing consumer data.