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FTC Announces Potential Rulemaking Targeting Mass Commercial Surveillance and Lax Data Security Prac FTC Announces Potential Rulemaking Targeting Mass Commercial Surveillance and Lax Data Security Prac

FTC Announces Potential Rulemaking Targeting Mass Commercial Surveillance and Lax Data Security Practices

The Federal Trade Commission (FTC) announced that it is taking comments for potential rulemaking in order to address what it views as “harmful commercial surveillance and lax data security” issues related to the collecting, analyzing, and profiting from personal information by commercial entities. Please note that the FTC has stressed that this is NOT yet a formal rulemaking procedure but rather is meant to develop a public record and gather information to inform future potential rulemaking determinations under its authority to regulate unfair and deceptive consumer practices.

In its fact sheet, and during their press conference on August 11, the FTC specifically drew attention to suspicions surrounding businesses that are collecting large swaths of information from consumers on the internet or through devices such as cellphones, smartwatches, and appliances–with little-to-no customer awareness. “Mass surveillance has heightened the risks and stakes of data breaches, deception, manipulation, and other abuses,” the FTC noted. Additionally, the Commission highlighted that little is known about the algorithms and automated systems that currently process consumer data, and went on to allege that there are issues involving errors, bias, and inaccuracy in current commercial surveillance and data analysis programs that may be illegally discriminating against consumers. The FTC also alluded to a crackdown on dark patterns [1] and surveillance creep, where companies increasingly rely on “dark patterns or marketing to influence or coerce consumers into sharing personal information.”

Companies should note that a major component of the Commission’s comment process is to determine how to leverage civil penalties, particularly first offense fines, as well as certification standards to address concerns with these surveillance and collection practices. The risk for companies is steeper penalties, even for first-time violations, and the FTC hopes that this incentivizes all companies to operate compliantly.

The FTC has encouraged individuals from all industries and sectors to review each of the topics that it is requesting comments on, and to consider participating in the scheduled public forum on Thursday, September 8, 2022, from 2 p.m. to 7:30 p.m. ET. Meanwhile, the Advance Notice of Proposed Rulemaking will be published in the Federal Register soon, and comments will be due 60 days from that publication date.

Connect with Ice Miller Attorneys

Ice Miller has extensive experience assisting companies to navigate and comply with federal cybersecurity laws and regulations, as well as aiding in the commenting process for federal and state agency rulemaking. Our team includes Jarrod Loadholt, a former senior counsel to Congressional committees and subcommittees and partner in Ice Miller’s Public Affairs Group; Siddharth Bose, a former IT systems engineer and partner in Ice Miller’s Data Security and Privacy Group; Dakota Coates, an associate in Ice Miller’s Litigation and Data, Security, and Privacy Groups; and John B. Gregg, an associate in Ice Miller’s Public Affairs Group.

[1] “Dark patterns” is a term typically used to describe when a software or user interface is designed such that it tricks or otherwise misleads users into doing things they didn’t mean to do or guiding them against taking actions the company wants to discourage. A common example of this is burying an “unsubscribe” option in walls of text and making the option difficult to read/click.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
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