FTC Warns Businesses About Misusing Big Data

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The Federal Trade Commission (FTC) has issued an extensive report summarizing a number of areas that businesses need to consider when making use of Big Data to ensure that outcomes with consumers aren't discriminatory. The report, entitled Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues, takes a careful look at how Big Data is used after it has been collected and analyzed. This includes some of the potential risks that can result from biases or inaccuracies about low-income and underserved customer segments as well as exposing sensitive consumer data.
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The Federal Trade Commission (FTC) has issued an extensive report summarizing a number of areas that businesses need to consider when making use of Big Data to ensure that outcomes with consumers aren't discriminatory. The report, entitled Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues, takes a careful look at how Big Data is used after it has been collected and analyzed. This includes some of the potential risks that can result from biases or inaccuracies about low-income and underserved customer segments as well as exposing sensitive consumer data.As the federal government's top watchdog for consumer interests, the FTC raises a number of concerns about the use of Big Data and the impact it can have on consumers. During a 2014 workshop it held on Big Data, the FTC identified concerns it had about companies potentially using Big Data to exclude low-income and underserved populations from credit and employment opportunities.

The FTC also used the report to underscore its authority and how companies should be using Big Data in order to comply with consumer protection laws such as the Fair Credit Reporting Act (FCRA), the Federal Trade Commission Act, and the Equal Credit Opportunity Act (ECOA) which prohibits creditors from discriminating against applicants based on factors including race, religion, marital status, and age.

This isn't the first set of warnings that the FTC has issued regarding Big Data, nor is it likely to be the last. In a separate May 2014 report, the FTC outlined legislation it wanted Congress to consider to make data brokerages more transparent as to how they handle consumer data. In March 2015, four U.S. senators resurrected a bill that would allow consumers to see and correct personal information held by data brokers. The bill was assigned to a congressional committee where it was eventually scuttled.

Still, the FTC's concerns about the use - and potential misuse - of Big Data will continue and may eventually take the shape of punitive actions. As the FTC notes in its report, "the Commission will continue to monitor areas where big data practices could violate existing laws, including the FTC Act, the FCRA, and ECOA, and will bring enforcement actions where appropriate."

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