The Federal Trade Commission (FTC) has issued a report on big data that, while focusing primarily on how big data affects underserved populations, illustrates big data's connection to every industry and practice and recognizes its massive potential benefits to businesses and consumers.
Background
Several months ago, the FTC held a public workshop, Big Data: A Tool for Inclusion or Exclusion? Now, it has issued a report, Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues, that looked at how big data is used after being collected and analyzed.
The report observes that big data analytics can provide "numerous opportunities for improvements in society." Moreover, it says, in addition to more effectively matching products and services to consumers, big data can create opportunities for low-income and underserved communities. While big data can help target educational, credit, healthcare, and employment opportunities to low-income and underserved populations, it can also have a disparate impact upon those very same groups.
The Laws
There is no single law specifically applicable only to big data. The report outlines some of the various laws that can be applied to the use of big data, specifically the Fair Credit Reporting Act (FCRA), equal opportunity laws, and the FTC Act.
As the report explains, the FCRA applies to consumer reporting agencies (CRAs) that compile and sell consumer reports that contain consumer information that is used or expected to be used for credit, employment, insurance, housing, or other similar decisions about consumers' eligibility for certain benefits and transactions. The report points out that, among other things, CRAs must implement reasonable procedures to ensure the "maximum possible accuracy of consumer reports" and provide consumers with access to their own information, along with the ability to correct any errors.
There are a number of federal equal opportunity laws, including the Equal Credit Opportunity Act (ECOA), Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Fair Housing Act, and the Genetic Information Nondiscrimination Act that also can affect how companies use big data, as the report explains. Generally speaking, these laws prohibit discrimination based on protected characteristics such as race, color, sex or gender, religion, age, disability status, national origin, marital status, and genetic information. Of these laws, the FTC enforces the ECOA, which prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because a person receives public assistance.
Importantly, whether a practice is unlawful under the FCRA or under equal opportunity laws is a fact-specific inquiry. Companies should review their practices to ensure they are not deemed to be a CRA and should proceed with caution when their practices could result in disparate treatment or have a demonstrable disparate impact based on protected characteristics.
Section 5 of the FTC Act, which broadly prohibits unfair or deceptive acts or practices, also can apply to big data analytics. The report reminds companies engaging in big data analytics that they should consider whether they are violating any material promises made to consumers, whether they have failed to disclose material information to consumers, and whether they reasonably secure consumers' data. The report also states that, at a minimum, companies must not sell their big data analytics products to customers if they know or have reason to know that those customers will use the products for fraudulent or discriminatory purposes in violation of applicable law.
Commissioner Ohlhausen's Statement
It is worth noting that FTC Commissioner Maureen Ohlhausen issued a separate statement accompanying the report, despite support for the report.
In her statement, she declares that although concerns about the effects of inaccurate data are legitimate, policymakers "must evaluate such concerns in the larger context of the market and economic forces companies face."
Commissioner Ohlhausen observes that businesses "have strong incentives to seek accurate information about consumers" and that they use big data "specifically to increase accuracy." She also states that the FTC's "competition expertise" shows that if one company draws incorrect conclusions and misses opportunities, competitors with better analysis will strive to fill the gap. Therefore, according to Commissioner Ohlhausen, to the extent that companies misunderstand members of low-income, disadvantaged, or vulnerable populations, "big data analytics combined with a competitive market may well resolve these misunderstandings rather than perpetuate them."
Commissioner Ohlhausen's conclusion is worth citing in full:
To understand the benefits and risks of tools like big data analytics, we must also consider the powerful forces of economics and free-market competition. If we give undue credence to hypothetical harms, we risk distracting ourselves from genuine harms and discouraging the development of the very tools that promise new benefits to low income, disadvantaged, and vulnerable individuals.
Today's report enriches the conversation about big data. My hope is that future participants in this conversation will test hypothetical harms with economic reasoning and empirical evidence.
Bottom Line
Given how the battle lines have been drawn in the big data debate, privacy advocates will likely assert that the report does not go far enough in protecting the privacy rights of individuals, while commercial interests will assert that the FTC does not sufficiently recognize the substantial economic and societal benefits to be reaped from big data. Going forward, every business should carefully evaluate their collection and/or use of big data in light of these issues.
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