Antitrust Law Daily Wrap Up, PRIVACY NEWS: FTC Staff Report Recommends Best Practices for Companies That Use Facial Recognition Technologies, (Oct 22, 2012)

By Jeffrey May, J.D.

An FTC staff report recommends “best practices” for companies using facial recognition technologies ("Facing Facts: Best Practices for Common Uses of Facial Recognition Technologies,"October 22, 2012). While noting that the commercial use of facial recognition technologies is still young, the report suggests efforts that can be taken by industry now, so that “as this industry grows, it does so in a way that respects the privacy interests of consumers while preserving the beneficial uses the technology has to offer.”

The FTC staff report recommends that companies using facial recognition technologies:

1. Design their services with consumer privacy in mind;

2. Develop reasonable security protections for the information they collect, and sound methods for determining when to keep information and when to dispose of it; and

3. Consider the sensitivity of information when developing their facial recognition products and services—for example, digital signs using facial recognition technologies should not be set up in places where children congregate.

The staff report also recommends that companies take steps to make sure consumers are aware of facial recognition technologies when they come in contact with them, and that they have a choice as to whether data about them is collected. So, for example, if a company is using digital signs to determine the demographic features of passersby, such as age or gender, they should provide clear notice to consumers that the technology is in use before consumers come into contact with the signs.

The report follows a December 2011 FTC Face Facts workshop, which was a first step for the agency to explore new developments in this field and their potential impact on consumers. It also builds on the three core principles outlined in the Commission’s March 2012 report (“Protecting Consumer Privacy in an Era of Rapid Change”): privacy by design, simplified consumer choice, and transparency.

Dissent

There is no support for the far-reaching conclusions and recommendations of the staff report, according to a dissenting statement of FTC Commissioner J. Thomas Rosch. A more rigorous cost-benefit analysis should be conducted before the Commission embraces such recommendations.

The “deception” prong of Section 5 of the FTC Act, which embraces both misrepresentations and deceptive omissions, will be a more than adequate basis upon which to bring law enforcement actions, challenging misuses of facial recognition technology, Rosch noted. He objected to the staff recommendations to the extent that they were rooted in staff’s insistence that the “unfairness” prong, rather than the “deception” prong, of the consumer protection portion of Section 5 of the Federal Trade Commission Act, should govern practices relating to facial recognition technology. He found that there was nothing in the staff report that indicated that facial recognition technology was so advanced as to cause safety risks that amount to tangible injury.

Section 5(n) of the FTC Act limits the agency's unfairness authority to an act or practice that “causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition,” Rosch explained.

Rosch also questioned the adoption of “best practices” on the ground that facial recognition may be misused. “It is at least premature for anyone, much less the Commission, to suggest to businesses that they should adopt as ‘best practices’ safeguards that may be costly and inefficient against misconduct that may never occur,” Rosch said.

In addition, Rosch disagreed with the staff report's notion that companies should be required to “provide consumers with choices” whenever facial recognition is used and is “not consistent with the context of a transaction or a consumer’s relationship with a business.”

News: Privacy FederalTradeCommissionNews