Antitrust Law Daily Wrap Up, PRIVACY NEWS: FTC report provides recommendations to businesses on use of big data, (Jan 6, 2016)

By Linda O’Brien, J.D., LL.M.

The FTC has released a new report that outlines a number of questions for businesses to consider to help ensure that their use of big data analytics, while producing many benefits for consumers, avoids outcomes that may be exclusionary or discriminatory, the agency announced today.

The report, “Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues,” focuses on big data at the end of its lifecycle, its use after collection and analysis, and information from the FTC’s 2014 workshop, “Big Data: A Tool for Inclusion or Exclusion?” as well as the Commission’s seminar on Alternative Scoring Products. The FTC also considered extensive public comments and additional public research in compiling the report.

The report highlights innovative uses of big data that are providing 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.

Additionally, the report looks at possible risks that could result from biases or inaccuracies about certain groups, including more individuals mistakenly denied opportunities based on the actions of others, exposing sensitive information, creating or reinforcing existing disparities, assisting in the targeting of vulnerable consumers for fraud, creating higher prices for goods and services in lower-income communities, and weakening the effectiveness of consumer choice.

The report outlines the various laws that apply to the use of big data, especially with regard to possible issues of discrimination or exclusion, including the Fair Credit Reporting Act, the FTC Act, and equal opportunity laws. It also provides a range of questions for businesses to consider when they examine whether their big data programs comply with these laws.

The report also proposes four key policy questions that are drawn from research into the ways big data can both present and prevent harms. The policy questions are designed to help companies determine how best to maximize the benefit of their use of big data while limiting possible harms, by examining both practical questions of accuracy and built-in bias as well as whether the company’s use of big data raises ethical or fairness concerns.

“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.”

In a separate statement, Commissioner Ohlhausen noted that, while she supports the report as a useful contribution to the ongoing policy discussion about the effect of big data analysis on low-income, disadvantaged, and vulnerable consumers, she emphasized the importance of evaluating the concerns of privacy advocates and academics over the potential inaccuracies of big data analytics in the context of market and competitive forces that affect all companies using those analytics.

In Ohlhausen’s view, concerns about the effects of inaccurate data are certainly legitimate. However, to understand the benefits and risks of tools like big data analytics, “the powerful forces of economics and free-market competition” must be considered.

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