Companies Use Personal Data To "Trick" Consumers, Watchdogs Tell FTC

Dozens of advocacy groups are urging the Federal Trade Commission to pass privacy rules that would affect “the entire life cycle of data,” including its collection and use for “commercial gain.”

“It is well documented that discriminatory and abusive data practices are prevalent, indicating a widespread pattern of unfair or deceptive practices across all major spheres of everyday life of commerce,” Free Press and 44 other organizations, including the Electronic Privacy Information Center, Public Knowledge, and the Electronic Frontier Foundation say in a letter sent Monday to FTC Chair Lina Khan.

The organizations point to reports that companies have drawn on targeting data in discriminatory ways, such as by blocking housing from being shown to minorities. The letter also references a 2019 report by researchers who found that algorithms can facilitate employment discrimination by considering racial or gender stereotypes when deciding which ads to serve to particular audiences.

“Companies use personal data to enable and even perpetuate discriminatory practices,” the groups write. “Companies also use personal data to track, confuse, trick, and exploit individuals for commercial gain.”

They add: “A rulemaking that addresses the entire life cycle of data -- collection, use, management, retention, and deletion -- will provide people with significant protection from discrimination and related data harms.”

The ad industry's self-regulatory privacy codes generally require companies to disclose data collection practices and allow consumers to opt out of receiving targeted ads. Since 2012, the industry's self-regulatory principles have also prohibited companies from collecting information about consumers in order to determine their eligibility for employment, credit, health care or insurance. 

The advocacy groups' letter comes one month after nine Senate Democrats also urged Khan to promulgate privacy rules.

“Consumer privacy has become a consumer crisis,” Senator Richard Blumenthal (D-Connecticut) and eight others said in a September letter to Khan.

The lawmakers specifically sought rules that would include “strong protections for the data of members of marginalized communities, prohibitions on certain practices (such as the exploitative targeting of children and teens), opt-in consent rules on use of personal data, and global opt-out standards.”

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