By Pamela Q. Devata and Craig B. Simonsen

The Federal Trade Commission (FTC) has just released a report on Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues (Report), January 6, 2016.

The FTC Chairwoman Edith Ramirez indicates in the FTC news release on the Report, that “big data’s role is growing in nearly every area of business, affecting millions of consumers in concrete ways….  The potential benefits to consumers are significant, but businesses must ensure that their big data use does not lead to harmful exclusion or discrimination.”

The Report examines “possible risks” that could result from biases or inaccuracies about certain groups, including:

  • 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 reviews various laws that may apply to the use of big data, concerning possible issues of discrimination or exclusion, including the Fair Credit Reporting Act, Federal Trade Commission Act, and other equal opportunity laws. Perhaps helpfully, from the Agency’s perspective, the Report 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 suggests four key “policy questions” that the Agency claims are drawn from research, into the ways big data can both present and prevent harms. The policy questions posed by the FTC “are designed to help companies determine how best to maximize the benefit of their use of big data while limiting possible harms….” Companies are intended to consider, and perhaps answer the questions of accuracy and built-in bias that may exist, and whether the company’s use of big data raises “ethical or fairness concerns.”

The Commission voted (4-0) to issue the Report. The Report was issued along with Commissioner Maureen Ohlhausen’s separate statement.

For employers, especially now with this heightened scrutiny and attention from the FTC, it may be a good time for you to consider seriously the “range of questions” as to whether your company’s big data programs comply with these laws.

Those with questions about these issues or topics are encouraged to reach out to the authors, your Seyfarth attorney, or any member of the Global Privacy & Security Team.