Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Commissioner Brill discusses the benefits and consumer protection challenges of the Internet of Things, (Feb 27, 2014)

By Linda O’Brien, J.D., LL.M.

The Internet of Things promises to deliver convenience, safety, and insights into some of society’s challenges, but this flood of data also creates privacy and security risks for consumers, said FTC Commissioner Julie Brill in a speech on February 26 at The Internet of Things: Roundtable with FTC Commissioner Brill, presented by the Center for Policy on Emerging Technologies in Washington, D.C.

Brill began her opening address, entitled “The Internet of Things: Building Trust to Maximize Consumer Benefits,” by contemplating that the daily activities of consumers yield an astounding amount of data. Individuals are estimated to create 70 percent of all data in the world and it is predicted that the total amount of data will double every two years from now on. According to one report, the data broker Acxiom processes 50 trillion data transactions per year.

The Internet of Things is here. More important than the rapid growth in available data is the proliferation of data sources, in Brill’s view. One company estimates that there will be 25 billion Internet-connected devices by 2015. By the end of this decade, 40 percent of data will come from sensors. There is one unmistakable message: The Internet of Things is here, she said. It is no surprise that many of the devices that consumers use each day in their homes are becoming networked. Thermostats, refrigerators, ovens, and lighting systems are just a few of the household necessities that can talk over a network.

While convenience is only part of the story, scientists, entrepreneurs, academics, and policy makers see the potential for this vast expansion in the data available about us to solve important social challenges. The potential benefits that these kinds of solutions can bring to society are enormous and exciting.

But consumers, policy makers, and academics also see risks to consumers in these vast storehouses of data, stated Brill.

Going forward, consumers will have a multitude of devices that could generate data that is accurate, abundant, and sensitive and, if combined with other online and offline data, could have the potential to create alarmingly personal consumer profiles. Now is the time to ask how companies can provide this burgeoning connectivity and its considerable benefits without compromising consumers’ privacy or losing their trust. These are some of the big data privacy challenges presented by the Internet of Things that need to be addressed, according to Brill.

Privacy challenges. Brill next discussed that one of the most troubling risks coming from the collection and use of big data is its use in making sensitive predictions about consumers, such as those involving their sexual orientation, health conditions, religion, and race. Data brokers are going far beyond this in the profiles that they develop from vast amounts of online and offline data. A recent GAO report states that at least one data broker includes in its profiles about consumers information about 28 or more specific diseases. According to a Senate staff report released last December, another data broker keeps 75,000 data elements about consumers’ health information in its system. All of this creation and collection and use of health information is happening outside of any regulatory scheme to protect this information.

There are two main reasons to be concerned about the vast amounts of personal data coming from the Internet of Things, Brill observed. First, we should all be concerned about the use of deeply sensitive personal information to make decisions about consumers, outside a legal regime that would provide notice and an opportunity to challenge the accuracy of the data. Second, we should all be concerned that questions about privacy will keep consumers away from the Internet of Things because they do not trust it. These privacy concerns should be addressed now, still somewhat early in the development of the Internet of Things.

Ensuring transparency. The companies that are building new Internet-connected devices and services are at the front line of protecting consumer privacy on the Internet of Things, according to Brill. The FTC and many others have been addressing privacy challenges as new technologies and business models have rapidly grown and evolved in recent years.

Brill highlighted three of best practices. The first is privacy by design. Because many connected devices will have little or no user interface, it is especially important for companies to promote consumer privacy in their products and services and throughout their organizations. Robust de-identification of personal data is another best practice that developers can use to protect privacy on the Internet of Things. Third, connected device developers should recognize that effective transparency is a fundamental building block of consumer privacy protections.

In addition to focusing on the developers of connected devices, there must be a focus on the behind-the-scenes data collectors who are creating rich profiles about consumers. If the data broker industry wants to build consumers’ trust and gain the benefits of this trust, the industry needs to take some affirmative steps to change its relationship with consumers, in Brill’s view.

While legislation—such as the Data Broker Accountability and Transparency Act—would help, the industry needs to take action even before legislation is enacted. Brill urged industry to join a comprehensive initiative, called “Reclaim Your Name,” which would provide consumers with more knowledge about and control over decisions like how much information to share, with whom, and for what purpose.

Solving these privacy challenges is critical to ensuring that privacy is woven into the fabric of the Internet of Things. Additionally, strong privacy and security protections will sustain the consumer trust that will help the Internet of Things and big data reach their full potential to benefit everyone. Business leaders; policy makers and law enforcement officials at the federal, state, and local levels; consumer advocates; and academics all have a role to play in developing these protections, Brill concluded.

News: ConsumerProtection Privacy FederalTradeCommissionNews