FTC Issues Report on Big Data

FTC FCRA ECOA Data Collection / Aggregation

On January 6, the FTC published a report titled, “Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues.” The report, which draws from information from a September 2014 FTC workshop, as well as public comments and research, primarily focuses on the final stage in the life cycle of big data use by addressing the commercial use of consumer data and its effect on low-income and underserved populations. According to the report, participants in the 2014 workshop expressed concern that potential inaccuracies and biases from big data may lead companies to “exclude low-income and underserved communities from credit and employment opportunities.” For example, the report states that, “if big data analytics incorrectly predicts that particular consumers are not good candidates for prime credit offers, educational opportunities, or certain lucrative jobs, such educational opportunities, employment, and credit may never be offered to these consumers.” In order to minimize legal and ethical risks, and to avoid possible exclusion and/or discrimination, the report suggests that companies should obtain an understanding of various laws that may apply to their big data practices, including the FCRA, equal opportunity laws, and the FTC Act. The report provides a basic overview of these laws and presents companies with a number of questions to consider when examining whether or not their data practices comply with such laws, including, but not limited to, whether or not a company maintains reasonable security over consumer data, and whether it complies with requirements under the Equal Credit Opportunity Act regarding requests for information and record retention. In addition to these questions, the report advises companies to consider the following four key policy questions: (i) How representative is your data set? (ii) Does your data model account for biases? (iii) How accurate are your predictions based on big data? (iv) Does your reliance on big data raise ethical or fairness concerns? Finally, while the report acknowledges the benefits of big data, such as providing access to credit using non-traditional methods and increasing equal access to employment, the FTC’s report stresses the significance of examining and raising awareness about big data practices that have the potential to adversely impact low-income and underserved populations.