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Protecting Privacy and Consumer Data in the Digital Age is FTC Priority

Cornerstone Support is partnering with Troutman Sanders LLP to bring you a series of articles relating to the ARM industry. Troutman Sanders LLP is an international law firm with more than 600 lawyers practicing in 16 offices located throughout the United States and Asia. The firm’s clients range from large multinational corporations to individual entrepreneurs and reflect virtually every sector and industry. The Consumer Financial Services practice is purposely structured and staffed to reflect clients’ legal reality, which includes compliance, regulatory changes, governmental investigations, governmental litigation and private lawsuits. The Firm regularly works with clients on compliance matters and litigation involving federal and state consumer laws, such as the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Electronic Fund Transfer Act, and the Equal Credit Opportunity Act. Troutman Sanders’ Consumer Financial Services lawyers successfully interact and negotiate with the Consumer Financial Protection Bureau, the Federal Trade Commission, state Attorneys General and other state regulators. For more information, please visit the Consumer Financial Services practice’s blog at: http://www.consumerfinancialserviceslawmonitor.com

MR9C5748-800x800Federal Trade Commissioner Julie Brill promoted the FTC’s role as the nation’s leading consumer protection and privacy agency with respect to Internet, social media, and smartphone technology in two recent speeches occurring over a three-day span.  In both speeches, Brill referenced and reiterated the FTC’s concerns regarding data collection, the interface of smartphone technology and privacy, and the need for appropriate consumer disclosures.  From the perspective of the FTC, consumers must understand and make thoughtful decisions about the products they buy and the personal data being shared.  Likewise, retailers, industries involved in the sale of goods and services, and ISPs must be truthful in their marketing and consumer disclosures.

Most recently, on September 28, Brill gave the keynote address at the Better Business Bureau’s National Advertising Division Annual Conference.  “With the rapid rise of social media and constant connectivity through more and more devices swapping more and more information, we are entering the democratization of truth,” Brill remarked.  Consumers are making decisions based on information and reviews they read online not knowing or understanding fully that companies may be monetizing the reviews, paying bloggers, and causing employees to tweet in support of their products on personal Twitter accounts.  Brill emphasized that it is increasingly pursuing enforcement actions requiring companies to engage in endorsement practices which are “truthful and not misleading.”  She further stated:  “If there is a connection between an endorser and an advertiser that would affect how consumers evaluate the review, that connection must be clearly and conspicuously disclosed.”

17f8rtrvagua5jpgAt the Better Business National Advertising Division Annual Conference, Brill also emphasized the FTC’s increasing focus on targeted consumer data collection.  “At a bare minimum, where device-level data is collected or stored, it is critical that consumers are aware of retail mobile location tracking when it is happening, and are able to exercise some control over its use.”  And, remarked Brill, companies must also be truthful about consumer choices, even when tracking is occurring invisibly and there is no way for consumers to understand that it is happening, let alone exercise any choices about data use.  The FTC will continue to examine and study data security and the necessity of privacy notices and disclosures even for those connections having no user interface.  In sum, retailers and advertisers must be aware, Brill warned, that “the principles of truth in advertising, consumer control over their data, and privacy protection behind which the FTC has always stood can and do still apply” in the rapidly evolving Internet age.

The Commissioner similarly emphasized the FTC’s jurisdiction over unfair or deceptive acts affecting Internet commerce in her remarks on September 26, during a keynote address at the Telecommunications Policy Research Conference at George Mason University School of Law.  Her remarks delivered two messages:  (1) the FTC welcomed the FCC as “another cop on the privacy beat” as a consequence of the FCC’s recent Open Internet Order; and (2) the reclassification of broadband Internet access service as a common carrier service outside of the FTC’s purview would not stop the FTC from continuing its core mission of protecting consumer privacy in the digital age.

 

HiResIn her remarks at the Telecommunications Policy Research Conference, Brill emphasized the narrowness of the FCC’s Open Internet Order, and clarified that the FTC still retained “a target-rich environment” with authority over a broad scope of unfair or deceptive acts affecting Internet commerce:  “Our consumer protection authority extends to the apps, edge services, ad networks, advertisers, publishers, data brokers, analytics firms, and the many other actors whose data practices are part of the delivery of valuable services to consumers but also, in some instances, raise privacy and data security concerns.”  She emphasized that the Order does not affect the FTC’s ability to enforce the FTC Act against common carriers for activities that are not common carriage services.  The Commissioner reminded the audience of the FTC’s role as a civil law enforcement agency responsible for protecting consumers from a broad array of unfair or deceptive acts or practices under the FTC Act.  Noting recent enforcement actions in the communications space involving crammed charges imposed on consumers, litigation and enforcement cases arising out of misrepresentations regarding “unlimited” data plans, and increased focus on robocall scams targeting minorities, elderly, and financially vulnerable consumers, Brill warned that the FTC’s focus on these areas would continue notwithstanding the “limited change” brought about by the Open Internet Order.  Moreover, Brill emphasized the distinct remedies that the FTC and FCC could obtain.  The FTC has authority to obtain restitution for consumers when they lose money as a result of unfair or deceptive practices, while the FCC’s authority is penal in nature and geared towards deterrence.

maskme-digital-privacy-shutterstock_141525853Brill concluded her remarks by focusing on the critical importance of privacy and trust in the digital age.  The use of smartphones, computers, and other devices by consumers paints a “deeply personal portrait” of the daily habits of users and members of their household.  Broadband providers acquire vast amounts of unencrypted data in manners often invisible to consumers.  It is both the use of data and the disclosure of the data which is garnering the attention of the FTC, Brill noted.  ISPs and other Internet connected industries should expect increasing scrutiny and the development of critical details intended to protect the disclosure and use of sensitive consumer data derived from the Internet.  In addition, data security is of paramount importance and a top consumer protection priority for the FTC, cautioned Brill.  She warned that the FTC will remain vigilant in protecting the security of customer data in the hands of ISPs:  “Like other companies that maintain huge amounts of sensitive data about their customers, ISPs could become an attractive target for attackers, and the risk to consumers increases as the amount of data that ISPs store increases.  As a result, ISPs should also be held accountable for maintaining appropriate security for consumers’ data.”

 

Ethan G. Ostroff and Mary C. Zinsner
Troutman Sanders LLP