FTC Chairwoman Says Businesses Must 'Step Up’ Protections in Big Data Analytics

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By Murray Griffin

June 12 --There are three steps that businesses should take to equip themselves for the “big data revolution,” Federal Trade Commission Chairwoman Edith Ramirez said June 10.

“First, all entities that have a role in the big data life cycle must step up their efforts to provide consumers with transparency and choice,” Ramirez said at a seminar in Hong Kong on big data from a privacy perspective, convened by the Hong Kong Office of the Privacy Commissioner for Personal Data.

“This includes the entities that collect, compile, consolidate, and analyze data, and the entities that use big data,” she said.

The second important action is taking “reasonable steps to safeguard consumers’ personal information,” Ramirez said, which applies to companies involved at any point in the big data life cycle--including those collecting the small bits of data that feed into much larger data sets.

“The importance of implementing reasonable data security cannot be overstated,” she said.

Another step is the responsible use of big data by companies “in ways that do not discriminate against or adversely affect vulnerable populations,” Ramirez said.

“Companies should think carefully about how the data sets they use have been crafted,” she said. “If they identify potential biases in the creation of these data sets, companies can and should develop strategies to overcome them.”

Internet of Things.

Ramirez said the extraordinary increase in the volume of data collected from multiple sources and the capacity to analyze the data, coupled with plummeting storage costs, might provide life-altering benefits for consumers and society but also carries great risks.

Managing these risks is made more complicated by the fact that data collection is no longer limited to computers and mobile devices, as companies are increasingly following consumers across the Internet of things--the vast and rapidly growing array of connected devices that consumers wear or use in their homes and cars.

“Some companies may not even offer patching or security updates since some IoT devices may be inexpensive and essentially disposable,” she said.

Ramirez said these changes raised important questions about how companies will make inferences from the data they collect and how they will share the data.

“Connected cars may direct emergency responders to an accident, but will the data transmitted be shared with your insurer who may raise your rate or cancel your policy?” she asked.

Companies “need to be very responsible about how they use big data analytics.” Federal Trade Commission Chairwoman Edith Ramirez

“Your smart TV may track your favorite shows, but will your TV-viewing habits be shared with prospective employers or schools?” Ramirez said.

Correlation Isn't Causation.

Speaking to Bloomberg BNA after the seminar, Ramirez said companies “need to be very responsible about how they use big data analytics” and added that “correlation does not equal causation.”

She said the FTC is doing work to raise awareness of the potential for adverse consequences if consumer data aren't used responsibly, but she said companies “have to take the biggest role” in ensuring problems don’t arise.

Ramirez added that the rise of the Internet of things has created challenges for regulators, businesses and consumers, as well as broadened the range of companies that have to grapple with privacy and data protection issues.

Managing data collection practices is no longer just the domain of a limited number of businesses, she said. “Now we see a whole slew of new players who are becoming effectively data companies, information companies,” she said.