Antitrust Law Daily Wrap Up, PRIVACY NEWS: FTC Commissioner Advises Taking Stock Before Seeking New Privacy Legislation, (Oct 17, 2012)

By Jeffrey May, J.D.

“It is important for policymakers to take an inventory of what is already in stock in the FTC closet before seeking new privacy laws,” FTC Commissioner Maureen K. Ohlhausen said in a speech before the Hudson Institute on October 16, 2012 (“The Government’s Role in Privacy: Getting it Right”).

“Before seeking new privacy legislation, it is important to identify a gap in statutory authority or to identify a case of substantial consumer harm that we’d like to address, but can’t, with our existing authority, especially given the array of financial, medical, and health and safety harms already reachable under our current FTC authority or other laws,” she noted.

“Although the FTC can proceed using its Section 5 authority—and since 2001 it has brought over thirty cases against companies for failing to protect consumer information—there are gaps that could be closed through carefully crafted federal legislation,” Olhausen said.

Olhausen said that she would support a uniform federal law for data security and breach notification. While there are a number of state laws in this area, the commissioner believes that a single standard would let companies know what to do and consumers know what to expect.

“I believe that, if carefully crafted, such a law is likely to benefit both consumers and business, particularly because, unlike uses of consumer information for advertising, product improvement, or fraud reduction, there are no benefits to consumers or competition from allowing consumer data to be stolen,” Olhausen said. “Any such law would have to consider carefully, however, what are reasonable precautions for safeguarding various types of data to avoid imposing undue costs that are not justified by consumer benefits.”

Olhausen also discussed privacy in the context of the FTC’s current statutory authority to protect American consumers against deceptive and unfair practices. She highlighted a recent case to illustrate how the FTC’s deception and unfairness authority works in the area of privacy, particularly online privacy.

She talked about settlements with DesignerWare, a software firm, and the seven rent-to-own companies that deployed DesignerWare’s software product in laptops they rented to consumers. The complaint against DesignerWare and the rent to own companies included both "straightforward" deception counts and unfairness counts. The Commission charged that licensing and enabling Detective Mode DesignerWare’s software product, which was intended to help the rent-to-own operators track the location of the computers; gathering sensitive personal information about renters; and disclosing that information to the rent-to-own businesses was unfair. The complaint also alleged that the intrusion into consumers’ homes, the tracking of their locations over time, and the capture and disclosure of information, including images of partially undressed individuals and sexual activity, was also unfair. Olhausen said that the enforcement actions showed that the Commission did not need additional authority to reach this “distasteful computer snooping.”

News: Privacy FederalTradeCommissionNews