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  • FTC holds fourth annual PrivacyCon to address hot topics

    Privacy, Cyber Risk & Data Security

    On June 27, the FTC held its fourth annual PrivacyCon, which hosted research presentations on a wide range of consumer privacy and security issues. Following opening remarks by FTC Chairman Joseph Simons, the one-day conference featured four plenary sessions covering a number of hot topics:

    • Session 1: Privacy Policies, Disclosures, and Permissions. Five presenters discussed various aspects of privacy policies and notices to consumers. The panel discussed current trends showing that privacy notices to consumers have generally become lengthier in recent years, which helps cover the information regulators require, but often results in information overload for consumers more generally. One presenter advocated the concept of a condensed “nutrition label” for privacy, but acknowledged the challenge of distilling complicated activities into short bullets.
    • Session 2: Consumer Preferences, Expectations, and Behaviors. This panel addressed research concerning consumer expectations and behaviors with regard to privacy. Among other anecdotal information, the presenters noted that many consumers are aware that personal data is tracked, but consumers are generally unaware of what data collectors ultimately do with the personal data once collected. To that end, one presenter advocated prescriptive limits on data collection in general, which would take the onus off consumers to protect themselves. Separately, with regard to the Children’s Online Privacy Protection Act (COPPA), one presenter noted that the law generally aligns with parents’ privacy expectations, but the implementing regulations and guidelines are too broad and leave too much room for implementation variations.
    • Session 3: Tracking and Online Advertising. In the third session, five presenters covered various topics, including privacy implications of free versus paid-for applications to the impact of the EU’s General Data Protection Regulation (GDPR). According to the presenters, current research suggests that the measurable privacy benefits of paying for an app are “tenuous at best,” and consumers cannot be expected to make informed decisions because the necessary privacy information is not always available in the purchase program on a mobile device such as a phone. As for GDPR, the panel agreed that there are notable reductions in web use, with page views falling 9.7 percent in one study, although it is not clear whether such reduction is directly correlated to the May 25, 2018 effective date for enforcement of GDPR.
    • Session 4: Vulnerabilities, Leaks, and Breach Notifications. In the final presentation, presenters discussed new research on how companies can mitigate data security vulnerabilities and improve remediation. One presenter discussed the need for proactive identification of vulnerabilities, noting that the goal should be to patch the real vulnerabilities and limit efforts related to vulnerabilities that are unlikely to be exploited. Another presenter analyzed data breach notifications to consumers, noting that all 50 states have data breach notification laws, but there is no consensus as to best practices related to the content or timing of notifications to consumers. The presenter concluded with recommendations for future notification regulations: (i) incorporate readability testing based on standardized methods; (ii) provide concrete guidelines of when customers need to be notified, what content needs to be included, and how the information should be presented; (iii) include visuals to highlight key information; and (iv) leverage the influence of templates, such as the model privacy form for the Gramm-Leach-Bliley Act.

    Privacy/Cyber Risk & Data Security FTC Research COPPA GDPR Gramm-Leach-Bliley

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  • CFPB studies geographic patterns in credit invisibility

    Consumer Finance

    On September 19, the CFPB released a new Data Point report from the Office of Research titled, “The Geography of Credit Invisibility,” which examines geographic patterns in the prevalence of “credit invisible” consumers, a term for those who do not have a credit record maintained by a national credit reporting agency, or have a credit record that is deemed to have too little or too old of information to be treated as “scorable” by widely used credit scoring models. The report studies whether the geographic location of a consumer’s residence is correlated with the likelihood of remaining credit invisible and aims to “aid policymakers and advance the conversation around potential causes and solutions.” Among other things, the report found:

    • credit invisibility may be higher for geographic tracts near universities due to their concentration of adults under 25 who may not have established a credit record yet;
    • rural areas have the most credit invisibility per capita;
    • consumers are less likely to use a credit card as an entry product to establishing a credit record in rural and low-to-moderate income areas;
    • credit invisibility was more prevalent in areas with less internet access as many products are originated through online services; and
    • there is little relationship between distance to the nearest bank branch and the occurrence of credit invisibility.

    The CFPB previously published two other Data Point reports on the subject: “Credit Invisibles” in 2015 and “Becoming Credit Visible” in 2017.

    Consumer Finance CFPB Research Credit Reporting Agency

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  • CFPB studies how borrowers transition out of student loan debt

    Federal Issues

    On June 29, the CFPB released a new Data Point report from the Office of Research titled, “Final Student Loan Payments and Broader Household Borrowing,” which examines how student borrowers transition out of their student loan debt and repayment patterns are interconnected with general household finances. Among other things, the report found (i) 94 percent of final payments exceed the scheduled payment, and the median final payment made is 55 times larger than the scheduled payment; (ii) student borrowers who pay off loans early are 31 percent more likely to take out their first mortgage in the year following the student loan payoff than in the previous year; and (iii) student borrowers who pay off loans on schedule are likely to use new monthly savings to pay down other debts. The CFPB’s findings suggest (i) the timing of student loan payoffs may be determined by life events such as increases in wealth and household formations, and (ii) continuing to study student loan payoffs may help predict the evolution of the student loan market.

    Federal Issues CFPB Research Student Lending Consumer Finance

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