A Preliminary FTC Staff Report on "Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers"
Statz commends the FTC staff for a forward-looking effort to adapt the agency s historic privacy policies to the current commercial environment. Sea changes over the past three decades in industry data collection, use and sale have yet to be matched with comprehensive, effective business and legal protections for consumer privacy. The Report s recommendation that a national United States privacy framework should apply to every entity that collects or uses data that can reasonably be linked to a specific consumer or device, including third parties, is a basic concept that unfortunately has yet to be accepted uniformly in the corporate milieu, especially traditional brick-and-mortar industries. As a result, the foundational principles articulated in the Report are destined to be viewed as an important landmark in the evolution of public policy on consumer privacy in this country. Nonetheless, given the failure of a pure notice-and-choice privacy model to achieve the transparency and consent necessary for consumers to make informed decisions on whether and for what compensation (whether explicit or indirect) to release their private, digital data online data which is unequivocally owned by consumers, not ISPs, vendors, content and service providers or third party data aggregators Statz urges the FTC to move beyond the Report s focus on transparency of data practices and their corollary, Fair Information Privacy Practices (FIPPs). There is no longer any valid distinction between digital privacy in the e-commerce and real-world settings. An increasingly interconnected Internet of things is collecting and transmitting an unparalleled amount of data on consumer behavior, consumption and product usage autonomously. The risk of consumer harm and deception in this emerging environment arises less from a lack of transparency and information security than from collection and transfer of data that the affected consumer never knows of and has no opportunity to consent to its usage and dissemination, let alone be compensated. Statz and other firms are at present developing new business models for aggregation and sale of consumer data in transparent marketplaces that will monetize the private information consumers affirmatively decide they wish to sell. This will, for the first time, give individuals the ability to decide which personal information they want to release and the price at which they are willing to part with such commercially valuable data. We therefore concur with the Report s conclusion that regulators should act cautiously about restricting the exchange and use of consumer data in order to preserve the substantial consumer benefits made possible through the flow of information. Given this appropriate caution and the simultaneous emergence of both ubiquitous data collection and transparent consumer data marketplace exchanges, the FTC should accordingly direct its privacy enforcement priorities to identifying and sanctioning companies that seek to expropriate consumer data rights by sale of consumer information, whether aggregated, de-identified or personally identifiable, without affirmative consent and some form of bartered-for compensation. Statz believes a Commission enforcement focus on unfair and misleading practices by data mining firms that assert a right to use private data without explicit consent by and compensation to consumers is as significant to the development of privacy as the FTC s traditional focus on unauthorized disclosure of such information and the Report s recommendation of a do-not-track option for online, digital behavioral advertising. Personal data, which is being collected and sold today by third party companies with no notice no offer of compensation to consumers, is a concrete threat to consumer privacy at least as great as the length, ambiguity, arcane language and obscure location of online privacy notices to which the Report addresses the bulk of its analysis.