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FTC Chair Edith Ramirez Outlines Agenda on “Big Data”

| Jun 11, 2014 | News

Federal Trade Commission (FTC) Chair Edith Ramirez recently gave a major speech on consumer privacy before the Media Institute, focusing on the challenges and opportunities that “big data” presents for companies and consumers.

Data Security 2 Ramirez defined big data as “the ability to aggregate and analyze massive data sets, which can be parsed to identify previously undetectable patterns.” She gave the speech one week after the White House released a comprehensive report on the same topic.

Ramirez noted that big data will become increasingly integral to our lives. The Internet is already incorporated with our phones and appliances; she predicted that big data will soon be in our clothes.

Ramirez viewed the spread of big data as an inevitability that can be used for good, ill, or something in between.

For example, Google has used aggregate search data of flu symptoms to track and prevent outbreaks. Although some researchers question how accurate the predictions from Google’s flu tracking have been, the goal is undoubtedly beneficial for society.

On the other hand, using search algorithms to determine creditworthiness is a more debatable big data application. Ramirez cautioned against the “possibility that facially neutral algorithms may be used to discriminate against low-income and economically vulnerable consumers” – or so-called “discrimination by algorithm.” She further expressed concern that such policies could exacerbate socioeconomic disparities by “segmenting consumers with regard to the customer service they receive, the prices they are charged, and the types of products that are marketed to them.”

Similarly, the Obama Administration has worried “that big data technologies could be used to ‘digitally redline’ unwanted groups, either as customers, employees, tenants, or recipients of credit,” just as the use of neighborhoods to determine creditworthiness could lead to discrimination.

These concerns notwithstanding, in other contexts conservative and libertarian commentators have contended that laws preventing banks from considering all available information to determine creditworthiness forces them to make bad loans, which harms the intended beneficiaries and the national economy. For example, the Cato Institute has argued that laws against traditional redlining are misplaced because “it is clear that competition and just good business sense have been effective in encouraging most, if not all, banks to offer loans to creditworthy mortgagors without regard to their race.”

Some aspects of big data, like its vulnerability to hackers, will no doubt prove categorically harmful.

Ramirez also used her speech to announce her agency’s settlement with the mobile application Snapchat. Snapchat allows users to send “ephemeral” video and photo messages that the company claimed would “disappear forever” after the receiver viewed the message for a designated time period.

However, the FTC alleged that users could easily circumvent the protections and take screenshots of the messages. Further, it has been reported that hackers exploited a security breach in Snapchat to gain access to 4.6 million confidential usernames and phone numbers. Because of the promise of security and privacy, many users have used Snapchat to send indiscrete messages. Thus, privacy breaches may prove to be even more problematic with this application than with others.

Ramirez said the Snapchat case “vividly illustrates” that there can be “no data privacy without data security.” She noted that the FTC has unanimously urged Congress to pass legislation to compel companies to notify their consumers of data breaches and to empower the agency to enact civil penalties against those companies who fail to “implement reasonable data security safeguards.”

Ramirez also urged data brokers, which are third parties that acquire and sell private data about consumers, to provide greater transparency about data protection policies. She expressed concern that consumers may not know who has access to their personal data, as well as the possibility that data brokers could violate the Fair Credit Reporting Act by giving the information to improper parties. She stated that the FTC is currently studying data brokers and will soon release a report that she hopes will lead to new legislation.

In the absence of new legislation, Ramirez encouraged the private sector to develop more tools that give consumers control over and information about their data. Mozilla’s Do Not Track application, which prevents content providers from obtaining personal information from consumers, may be one example.

Ramirez views the massive amount of information reflected in the “big data” transformation as a great opportunity that nevertheless has some pitfalls. Still, she expressed optimism that society “can realize the benefits of our connected future while mitigating the privacy and security challenges that it brings.”



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