Consumer Trust Key to Success of Digital Economy, Says FTC Chief Ramirez
There is no doubt the digital revolution has transformed people's lives, but the technologies also created significant privacy risks that will likely become only more complex, said FTC Chairwoman Edith Ramirez during an FCBA luncheon Thursday. A key part in addressing the global privacy challenges associated with the digital economy, the IoT and big data is consumer trust, Ramirez said. Consumers must have control and companies must address privacy challenges head on, she said.
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Businesses that collect, compile, consolidate or use data must give consumers transparency and choice; take responsible steps to safeguard consumer personal information with reasonable security practices; and use big data responsibly in ways that don’t discriminate or adversely affect consumers, Ramirez said. The FTC will continue to urge Congress to pass comprehensive privacy and data security legislation, Ramirez said. Following Tuesday's European Court of Justice decision in the Schrems case (see 1510060001">1510060001), the agency will work with the Commerce Department and its European counterparts to protect privacy and enable cross-border data transfers, she said.
The big data industry is complex, Ramirez said, saying it's often “virtually impossible” to determine where data originated. Data brokers rely on algorithms and analytics to make assumptions about people and sell that information to marketers, retailers, governments and educational institutions, among others, Ramirez said. Companies must consider discriminatory practices and uses of big data, she said, to ensure they are not engaging in “discrimination by algorithm.” For example, there is a concern data obtained from a smart car that sends emergency responders to the scene of an accident also will be shared with an insurance company, or an individual’s TV viewing habits will be shared with an educational institution or prospective employer, Ramirez said.
“Big data can increase access to education and healthcare,” but it's potentially harmful if it’s used to draw inferences about consumers, Ramirez said. A lack of transparency and loss of consumer control will perpetuate discriminatory data practices, she said, especially with the use of sensitive data.
Historically, data was collected via tracking cookies, but now there are other means to collect data, like cross-device tracking, Ramirez said. It has been estimated there will be 25 billion connected devices by the end of 2015, but some have called that a conservative estimate and hypothesize trillions of devices will be connected to one another in the next decade. The amount of data generated by the devices doesn’t even factor in the brick-and-mortar data collection like enrollment in loyalty programs, sweepstakes entries and credit card purchases, which all leave a data trail, Ramirez said. The FTC is hosting a workshop on cross-device tracking Nov. 16, she noted.
Consumer knowledge is important for data security, Ramirez said. Security vulnerabilities in medical devices and smart cars can be exploited, she said. These aren't hypothetical concerns, she said. Using its authority under Section 5 of the FTC Act, the commission will bring enforcement action against companies that don’t focus on security or offer security patches, Ramirez said.
Since the FTC doesn’t have authority over common carriers, which Ramirez said the agency is continuing to ask Congress to address, she said the FTC is working with agencies including the FCC, Consumer Financial Protection Bureau, Health and Human Services Department and Transportation Department on privacy. “The FTC is prepared to lend its expertise to its partners navigating this new landscape,” Ramirez said. It has become increasingly important to collaborate with other agencies to address privacy, she said.