Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

FTC Will Rely on Existing Laws to Regulate Corporate Use of Big Data

Author: Scarinci Hollenbeck, LLC

Date: January 19, 2016

Key Contacts

Back

FTC to Rely on Existing Laws to Police Corporate Use of Big Data

Existing Laws

The Federal Trade Commission (FTC) recently issued a report outlining a number of legal concerns for businesses to consider regarding their use of big data analytics – namely, the process of collecting, organizing, and analyzing large sets of data through the application of sophisticated computer algorithms to discover useful information. The report makes it clear that the FTC intends to rely on its existing enforcement authority to pursue exclusionary or discriminatory practices by companies using big data unlawfully.

“Big data’s role is growing in nearly every area of business, affecting millions of consumers in concrete ways,” said FTC Chairwoman Edith Ramirez. “The potential benefits to consumers are significant, but businesses must ensure that their big data use does not lead to harmful exclusion or discrimination.”

The report

The FTC report, Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues, is the product of the FTC’s 2014 workshop on how the use of big data analytics impacts consumers, particularly with regard to how businesses put the information to use once it is collected. As the report highlights, the FTC recognizes that the staggering amount of data that businesses can now collect regarding consumers can be used to provide benefits to underserved populations, including increased educational attainment, access to credit through non-traditional methods, specialized health care for underserved communities, and better access to employment. However, the FTC also warns that big data is prone to abuse. In support, it cites businesses that use big data to offer misleading offers or scams to the most vulnerable prospects or target ads, particularly for financial products, to low-income consumers who may otherwise be eligible for better offers but may never receive them because of the misuse of such data.

The FTC report highlights several existing laws that may apply to big data practices, suggesting that the agency believes that it already has the tools it needs to combat such discriminatory or exclusionary practices. The FTC Big Data Report specifically cites compliance concerns regarding the Fair Credit Reporting Act (FCRA), Federal Trade Commission Act (FTC Act), and the Equal Credit Opportunity Act (ECOA).

What does the report mean?

For businesses that compile big data that will be used for eligibility decisions (such as credit, employment, insurance, housing, government benefits, and the like), the FTC highlights the FCRA’s accuracy and privacy provisions. For creditors using big data analytics in a credit transaction, the report underscores the need to comply with the requirement to provide statements of specific reasons for adverse action.

For companies that use or otherwise rely on big data analytics in a way that might adversely affect people in their ability to obtain credit, housing, or employment, the FTC suggests the following considerations:

  1. Are you treating people differently based on a prohibited basis, such as race or national origin?
  2. Do your policies, practices, or decisions have an adverse effect or impact on a member of a protected class, and if they do, are they justified by a legitimate business need that cannot reasonably be achieved by means that are less disparate in their impact?

In summary, the FTC report makes clear that it will continue to monitor areas where big data practices could violate existing laws, including the FTC Act, the FCRA, and ECOA.

Accordingly, businesses should expect the agency to increase its enforcement actions in these areas.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Common Causes of Partnership Disputes and How to Resolve Them post image

Common Causes of Partnership Disputes and How to Resolve Them

Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]

Author: Christopher D. Warren

Link to post with title - "Common Causes of Partnership Disputes and How to Resolve Them"
President Trump's Termination of Member Gwynne Wilcox post image

President Trump's Termination of Member Gwynne Wilcox

On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]

Author: Matthew F. Mimnaugh

Link to post with title - "President Trump's Termination of Member Gwynne Wilcox"
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide post image

How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide

Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]

Author: Christopher D. Warren

Link to post with title - "How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide"
Gross Lease vs. Net Lease: Understanding the Key Differences post image

Gross Lease vs. Net Lease: Understanding the Key Differences

Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]

Author: Robert L. Baker, Jr.

Link to post with title - "Gross Lease vs. Net Lease: Understanding the Key Differences"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!