FTC Seeks Input for Potential Data Privacy and Security Rulemaking

On Aug. 11, 2022, the Federal Trade Commission issued an Advance Notice of Proposed Rulemaking seeking input that will shape potential rules “to crack down on harmful commercial surveillance and lax data security.” 

The focus of the ANPR overlaps in part with recent state consumer data privacy laws and federal legislation, but the definition of “commercial surveillance” is extremely broad and “refers to the collection, aggregation, analysis, retention, transfer, or monetization of consumer data and the direct derivatives of that information.”  

By that definition, receiving information from a consumer who applies for a loan and, using that information with permission to obtain information of their creditworthiness, would be considered “surveillance.” 

Note that the definition in the ANPR differs from the definition in the FTC’s Fact Sheet on the FTC’s Commercial Surveillance and Data Security Rulemaking where commercial surveillance is described as “the business of collecting, analyzing, and profiting from information about people.”

The ANPR provides a summary of the FTC’s history of enforcement actions related to data privacy and security and then turns to its reasons for the rulemaking, explaining that its “experience suggests that enforcement alone without rulemaking may be insufficient to protect consumers from significant harms.”

The ANPR states that part of the issue is the fact that “the FTC Act limits the remedies that the Commission may impose in enforcement actions,” since “the Commission does not have authority to seek civil penalties for first-time violations [of Section 5 of the FTC Act].”  However, trade regulation rules would remedy that issue and “incentivize all companies to invest in compliance more consistently.”

The ANPR includes 95 questions spread out among the following topics:

1. To What Extent Do Commercial Surveillance Practices or Lax Security Measures Harm Consumers?
   
   
2. To What Extent Do Commercial Surveillance Practices or Lax Data Security Measures Harm Children, including Teenagers?
   
   
3. How Should the Commission Balance Costs and Benefits?
   
   
4. How, if at All, Should the Commission Regulate Harmful Commercial Surveillance or Data Security Practices that Are Prevalent?

• Rulemaking Generally
• Data Security
• Collection, Use, Retention, and Transfer of Consumer Data
• Automated Decision-making Systems
• Discrimination Based on Protected Categories
• Consumer Consent
• Notice, Transparency, and Disclosure
• Remedies
• Obsolescence

The deadline for submitting comments will be 60 days from the date the ANPR is published in the Federal Register, and there will be a virtual public forum on Sept. 8, 2022.