This morning, the FTC announced that it would host a public workshop in September entitled “Big Data: A Tool for Inclusion or Exclusion?” in order to examine the increasing use of big-data analytics and its potential impact on low-income, diverse, and underserved American consumers. The FTC noted that while predictive-analytic techniques produce tremendous benefits by enabling innovation in medicine, education, and transportation, and in improving product offerings, manufacturing processes, and tailored ads, there is concern that insights from big data also “may be used to categorize consumers in ways that may affect them unfairly, or even unlawfully.”
The FTC gave examples of such practices that could limit certain populations of consumers’ access to higher quality products or services, including: (1) rewarding frequent customers with better service or shorter wait times; (2) offering a discounted mortgage rate to a consumer who has a checking, savings, credit card, and retirement account with a competitor; (3) providing offers for “gold level” credit cards to high-income consumers while offering low-income consumers subprime credit cards; (4) circumventing the requirements of the Fair Credit Reporting Act by assessing credit risk through unregulated “aggregate scoring models,” which are based on aggregate credit or demographic profiles of groups of consumers who shop at certain stores, rather than the credit characteristics of individual consumers. Although these types of uses of big data may be thought to bring about convenience, efficiency, and economic opportunity for some, consumer advocates have urged businesses and regulators to ensure that such techniques be implemented to respect the values of equality and opportunity for all.
The FTC’s public workshop, which will bring together business, industry, academics, and consumer advocates, intends to explore the following specific questions: (1) How are organizations using big data to categorize consumers? (2) What benefits do consumers receive from these practices, and do these practices raise consumer-protection concerns? (3) What benefits do organizations gain from these practices, and what are the social and economic effects of using big data to categorize consumers? (4) How do existing laws apply to such practices, and are there gaps in the legal framework? (5) Are companies appropriately assessing the impact of big-data practices on low-income and underserved populations, and should additional measures be considered?
Congress has recently focused on these issues as well. Last December the Senate Commerce Committee released a report entitled, “A Review of the Data Broker Industry: Collection, Use, and Sale of Consumer Data for Marketing Purposes,” which described business practices that, according to Chairman John D. Rockefeller IV (D-WV), “raise some serious consumer protection concerns.” In particular, Chairman Rockefeller stated that he was disturbed by evidence that some data brokers — companies that collect and sell big data — categorize consumers by income, and specifically, segment economically vulnerable populations into groups with descriptions like, “Rural and Barely Making It” and “Ethnic Second-City Strugglers.” The report was followed by a Commerce Committee hearing at which Chairman Rockefeller inquired about how and why consumers are categorized in such ways, and which companies are buying these consumer lists for targeted marketing purposes.
Citing this report, and such uses of big data that identify “the most and least desirable consumers,” many have recently suggested that big data is a civil rights issue. Fourteen major civil rights organizations, including the ACLU and NAACP, earlier this year published “Civil Rights Principles for the Era of Big Data,” detailing five key directives to guide companies and government entities adopting big-data technologies, including: (1) preserve constitutional principles; (2) enhance individual control of personal information; (3) protect people from inaccurate data.
In advance of the workshop, the FTC has invited the public to file comments, reports, and original research on the proposed topics.