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Khan outlines FTC’s plans to enforce privacy, data security

Privacy/Cyber Risk & Data Security Federal Issues FTC Data Collection / Aggregation Consumer Protection

Privacy, Cyber Risk & Data Security

On April 11, FTC Chair Lina Khan spoke at the Opening General Session of the IAPP Global Privacy Summit 2022, focusing on the Commission’s’ approach to privacy and data security enforcement strategy. In her remarks, Khan offered observations on “the new political economy” of how American consumers’ data is “tracked, gathered, and used,” and identified how the Commission is adjusting to address these “new market realities.” She also raised broad questions about the current framework for policing “the use and abuse of individuals’ data.” Khan observed that digital technology now allows firms to collect vast amounts of data on a “hyper-granular level,” tracking individuals as they carry out daily tasks. The information collected includes precise personal location, web browsing history, health records, and a complete picture of ones social network of family and friends. This data, analyzed and aggregated at a huge scale, yields “stunningly detailed and comprehensive user profiles that can be used to target individuals with striking precision.” She acknowledged that this data can be put towards adding value for consumers but that consumers are often unaware that companies are monetizing their personal data at huge profits leading to business models that “incentivize endless tracking and vacuuming up of users’ data.” These incentives have rendered today’s digital economy as, quoting a scholar, “probably the most highly surveilled environment in the history of humanity.”

Khan also outlined three key aspects of the FTC’s approach to addressing the above risks to consumers:

  • The FTC will focus on “dominant firms” causing “widespread harm.” This includes addressing conduct by the dominant firms themselves as well as “dominant middlemen” facilitating the conduct through unlawful data practices.
  • The FTC is taking an interdisciplinary approach by “assessing data practices through both a consumer protection and competition lens” because widescale commercial surveillance and data collection practices have the potential to violate both consumer protection and antitrust laws. The FTC will also increase reliance on technologists such as data scientists, engineers, user design experts, and AI researchers to augment the skills of their lawyers, economists, and investigators.
  • The FTC will focus on designing effective remedies “informed by the business strategies that specific markets favor and reward” and that are responsive to the new value that companies place on collected data. Such remedies may include bans from surveillance industries for companies and individuals, disgorgement, requiring updated security measures such as dual-factor authentication, and requiring the deletion of illegally collected data and any algorithms derived from the same.

Khan further indicated that the FTC is considering initiating rulemaking to address commercial surveillance practices and inadequate data security. She concluded by suggesting a paradigmatic shift away from the current framework used to assess unlawful data gathering. Specifically, she stated that “market realities may render the ‘notice and consent’ paradigm outdated and insufficient” – noting that users find privacy policies overwhelming and have no real alternatives to accepting their terms given the increasingly critical reliance on digital tools to navigate daily life. Khan called for new legislation to address these concerns, saying, “[W]e should approach data privacy and security protections by considering substantive limits rather than just procedural protections, which tend to create process requirements while sidestepping more fundamental questions about whether certain types of data collection and processing should be permitted in the first place. The central role that digital tools will only continue to play invites us to consider whether we want to live in a society where firms can condition access to critical technologies and opportunities on users surrendering to commercial surveillance.”