"The era of big data has arrived," begins the Federal Trade Commission's report released on January 6, entitled "Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues." The report demonstrates that the FTC and industry will continue to draw lines on the use of data analytics into 2016.
The phrase "big data," according to the FTC, "refers to a confluence of factors, including the nearly ubiquitous collection of consumer data from a variety of sources, the plummeting cost of data storage, and powerful new capabilities to analyze data to draw connections and make inferences and predictions." The expanding use of online technologies today has greatly increased the amount of consumer data that flows throughout the economy and enables companies to collect specific information about consumers' individual characteristics and choices.
The report outlines various potentially applicable laws, including the Fair Credit Reporting Act, the Equal Credit Opportunity Act, and the Federal Trade Commission Act. It also provides a range of questions for businesses to consider when they examine their big data programs' compliance with these laws.
According to the FTC, while this information is highly valuable to companies, and can guide the development of innovative products and services and individualized marketing, big data may also be used to categorize consumers in ways that can result in the exclusion of certain low-income and underserved populations. The FTC alleges that particular uses of big data may result in more individuals mistakenly being denied opportunities based on the actions of others with whom they share some characteristics. The FTC also alleges that other reports have shown that companies can use big data to promote scams to the most vulnerable prospects. The FTC argues that still other research has demonstrated that online companies may charge consumers in poorer neighborhoods more for online products than consumers in affluent communities.
Much of the FTC's argument, however, is based on aggressive interpretation of current case law and its own prior decisions. For example, although the FTC cautions that companies should not use data analytics to engage in profiling and transactions to the detriment of the poorer classes, it is unable to cite authority outside the very limited application of the FCRA and a few statutorily protected classes. As for the FTC Act, whether the FTC can use it to set new policies remains to be seen. If its recent loss in the LabMD decision is any indication, there are limitations on what it may indiscriminately term "unfair" practices.
Perhaps just as importantly, contrary to the FTC's declarations, the era of "big data" did not just "arrive." It has instead been an impetus for technology growth in the United States for the past two decades. Indeed, e-commerce and mobile applications continue to grow due to the clever use of data – just ask the companies in Silicon Valley.
The report shows that the FTC and industry will continue to draw the lines on the use of data analytics in 2016. Hopefully, the FTC will continue to take into consideration the need to continue to let technology lead economic growth in the United States.
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