Big Data Cos. Must Watch for Hidden Bias, FTC Says

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By Joseph Wright

Jan. 6 — Companies supplying big data analytics services must be aware of inherent data biases that could implicate a host of federal consumer protection laws, the Federal Trade Commission said in a Jan. 6 report.

“Big data's role is growing in nearly every area of business, affecting millions of consumers in concrete ways,” FTC Chairwoman Edith Ramirez said in a statement. “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 its report, “Big Data: A Tool for Inclusion or Exclusion?,” the FTC encouraged big data suppliers to consider a range of questions when using big data, including:

• How representative is the data set?
• Does the data model account for biases?
• How accurate are the predictions based on the data?
• Does reliance on big data raise fairness or ethics questions?


Failure to consider these issues could trigger liability under a wide range of consumer protection statutes, the FTC said. Those include the Equal Credit Opportunity Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Fair Housing Act and the Genetic Information Nondiscrimination Act.

Companies that fail to disclose properly how they use big data also risk violating Section 5 of the FTC Act, the agency said.

Mixed Reviews

Observers told Bloomberg BNA that the FTC report contained worrisome language suggesting an expansion of unfair trade practices liability for big data suppliers. The FTC remarked that big data suppliers could violate the FTC Act by selling big data services if they have a reason to know the data will be used for fraudulent or discriminatory purposes.

That assertion should raise eyebrows, Berin Szoka, president of technology policy think tank TechFreedom in Washington, told Bloomberg BNA Jan. 6.

“A lot of this conversation is distorted because the word ‘discriminatory' is inherently ambiguous,” Szoka said. “All of these companies are in the business of selling ‘discrimination' in the broader, benign sense.”

The FTC has been known to “bury” language within reports that contains new interpretations of Section 5 and they may be doing so here, Szoka said.

“I'd be pretty surprised if the standing rule today was that you could be held to have committed an unfair trade practice because one of your customers did something unfair with the data,” Szoka said.

The FTC focused on making the private sector aware that new technology doesn't render existing consumer protections obsolete, Daniel Castro, vice president of the Information Technology and Innovation Foundation in Washington, told Bloomberg BNA Jan. 6.

FTC Commissioner Maureen Ohlhausen submitted a statement accompanying the report, pointing out that market forces may eliminate many of the consumer protection issues identified in the report. Ohlhausen's statement was “helpful,” Castro said.

“She pointed out that while there are potential problems caused by big data, there are also many ways that these potential problems could be resolved by competitive markets,” Castro said. “So there is no need for policymakers to rush into action until there is actual evidence of consumer harm warranting government intervention.”

Federal Attention to Big Data Questions

The FTC held a series of information-gathering workshops on “big data” privacy issues beginning in February 2014 ((19 ECLR 267, 2/26/14)).

The White House has also been active on big data policy issues, releasing reports in February 2015 discussing both privacy and consumer protection-related concerns raised by big data's ability to permit sellers to engage in “differential pricing” strategies (20 ECLR 221, 2/11/15).

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For More Information


The FTC report “Big Data: A Tool for Inclusion or Exclusion?” can be found at