Gdpr to stars and stripes, the FTC starts the consultation

The Federal Trade Commission is exploring the possibility of introducing new rules to address the issue of data processing, in particular to give the agency the power to impose financial penalties.

12 Aug 2022

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The Federal Trade Commission has announced that it is looking into the possible introduction of new rules to address issues related to potentially harmful profiling activities and poor security of user data. Underscoring how mass surveillance has increased the risks and stakes of data breaches, the FTC proposed the Advance Notice of Proposed Rulemaking to publicly ask if new tools are needed to protect people's privacy and information. In practice, the discussion focuses on the possible creation of a sort of GDPR declined on the needs of the American market.

Index of topics

•             Data protection, the FTC still has its hands tied

•             Possible damages resulting from the incorrect processing of data

Data protection, the FTC still has its hands tied

Over the past two decades, the federal agency has used its authority under the FTC Act to initiate hundreds of enforcement actions against organizations that have violated data privacy and security. The FTC's past work, however, suggests that law enforcement alone may not be enough to protect consumers. The FTC's ability  to deter illegal conduct is limited because the agency generally does not have the authority to seek financial penalties for the violations found. On the contrary, rules that set out clear general data privacy and security requirements and give the Commission the authority to impose fines could incentivise all companies to invest more consistently in compliant practices.

"Companies now collect personal data about individuals on a large scale and in an extraordinary range of contexts," said Lina M. Khan, president of the FTC. "The increasing digitalization of our economy, coupled with business models that can incentivize the endless retrieval of sensitive user data and a vast expansion of the way this data is used, means that potentially illegal practices may be prevalent. Our goal today is to begin building a robust public ledger to inform whether the FTC should enact rules to address commercial surveillance and data security practices and how those rules should potentially look."

Possible damages resulting from incorrect data processing

Commercial surveillance activity, the FTC said  in a statement, can incentivize companies to collect vast amounts of consumer information, only a small fraction of which consumers proactively share. Companies also use algorithms and automated systems to analyze the information they collect. And they make money by selling information through the huge, opaque consumer data market, using it to run behavioral ads, or leveraging it to sell more products.

"Although very little is known about automated systems that analyze data collected by companies, research suggests that these algorithms are prone to errors, biases, and inaccuracies. As a result, trade surveillance practices can discriminate against consumers based on legally protected characteristics such as race, sex, religion, and age, harming their ability to obtain housing, credit, employment, or other critical needs," the Federal Trade Commission points out. "After users sign up, "companies may change their privacy terms in the future to allow for broader surveillance. Companies are increasingly using obscure models or marketing to influence or force consumers to share personal information."