March 26th, 2015

Consumer Privacy Bill and the role of FTC

By: Jyotsana Sinha

Panel 5

While the government is ready to take the next step by enacting a consumer privacy bill, the bill has increasingly drawn criticism from various actors, ranging from privacy advocates, the Federal Trade Commission (FTC) and even some members of the Congress.

FTC currently acts as the watchdog of consumer privacy in US. It regards the use or dissemination of personal information in a manner contrary to a posted privacy policy is a deceptive practice under the FTC Act, 15 U.S.C. § 45. FTC, however, does not possess actual rule making power. It merely enforces the policies established by the companies, however lax they are. Inspite of being the default enforcement authority, FTC lacks the necessary teeth to ensure proper enforcement.

Although the draft of Consumer Privacy Bill aims at empowering the consumer to take charge of their own data, the bill does not establish any mandatory standard to be followed by the companies. Neither does it enhance the authority of the FTC. While it is argued that adopting a business friendly and lenient approach towards the industry will be beneficial in gaining industry support, and self-regulation with minimal supervision by FTC will yield the desired result, the reality is quite the opposite. Giving the industries a free go on one hand and crippling the FTC on the other merely increases the risk to consumer privacy. The FTC has also expressed its disappointment at absence of any expansion or upgrading in the FTC’s role as a regulator.

The draft bill, while criticised by the privacy advocates, has been appreciated by the technology industry related groups. Highlighting the importance of benefit and risk assessment, the draft bill proposes establishment of Privacy Review Boards to counter the overreaching effect of law on beneficial use of data. It is important to note that the courts have continued to look up to the FTC as the crucial regulator of privacy policies and protector of consumer data and have rejected challenges to the scope of FTC’s power. With this support from the judiciary encouraging the FTC to ‘exercise [their] powers more robustly’ and ‘take more of a leadership role,’ it might not be surprising if FTC wishes to emerge as the supreme authority on consumer data privacy concerns. Lack of technical expertise and resource constrains are often cited as the reasons against empowering the FTC. But, the recent initiative by the FTC to establish BCP’s Office of Technology Research and Investigation to evaluate and address the effects of technological advancement in consumer privacy issues appears to be a step forward towards this goal. Amidst the criticism attracted by the draft bill and efforts of FTC to expand their authority, it now remains to be seen if any substantial development takes place effectually providing consumers the option and power to control their data.