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Small Business News

FTC Advises Businesses, Advertisers On How To Handle Private Data

The Federal Trade Commission (FTC) has issued a new report that sets forth a series of “best practices” for advertisers and data brokers to follow which can allow them to flourish while still protecting American consumer’s personal data.

The new report makes special provisions for small business and clearly defines who should adhere to what set of best practices. Specifically, the report calls for an increased degree of transparency from data brokers, organizations that collect consumer data for resale to other groups. These businesses would be required to disclose how and where the data are collected from.

The FTC press release on the report elaborates on the definitions of ‘small business’ and ‘reasonably linked’ consumer data:

“The final report changes the guidance’s scope. The preliminary report recommended that the proposed framework apply to all commercial entities that collect or use consumer data that can be linked to a specific consumer, computer, or other device. Recognizing the potential burden on small businesses, the report concludes that the framework should not apply to companies that collect and do not transfer only non-sensitive data from fewer than 5,000 consumers a year. The report also responds to comments filed by organizations and individuals that, with technological advances, more and more data could be “reasonably linked” to consumers, computers, or devices. The final report concludes that data is not “reasonably linked” if a company takes reasonable measures to de-identify the data, commits not to re-identify it, and prohibits downstream recipients from re-identifying it.”

Here the report spells-out recommendation for data brokers:

“It notes that data brokers often buy, compile, and sell highly personal information about consumers. Consumers are often unaware of their existence and the purposes to which they use the data. The report makes two recommendations to increase the transparency of such practices. First, it reiterates the Commission’s prior support for legislation that would provide consumers with access to information held by data brokers. Second, it calls on data brokers who compile consumer data for marketing purposes to explore creation of a centralized website where consumers could get information about their practices and their options for controlling data use.”

A higher degree of consumer awareness is advocated in the report calling for large platform providers to attend and participate in a public workshop on comprehensive data tracking. With regard to privacy policies, they should be clear, short, and concise, so users understand what they are agreeing to. Also, ‘do not track’ features should be built into platforms and be easy to understand and operate.

Overall, the March 2012 FTC Consumer Privacy report covers recommendations for all of the following:

Privacy by Design – companies should build in consumers’ privacy protections at every stage in developing their products. These include reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy;

Simplified Choice for Businesses and Consumers – companies should give consumers the option to decide what information is shared about them, and with whom. This should include a Do-Not-Track mechanism that would provide a simple, easy way for consumers to control the tracking of their online activities.

Greater Transparency – companies should disclose details about their collection and use of consumers’ information, and provide consumers access to the data collected about them.

What the FTC plans on for promoting enforceable self-regulatory codes:

“The FTC will work with the Department of Commerce and stakeholders to develop industry-specific codes of conduct. To the extent that strong privacy codes are developed, when companies adhere to these codes, the FTC will take that into account in its law enforcement efforts. If companies do not honor the codes they sign up for, they could be subject to FTC enforcement actions.”

So the FTC offers these best practices as a set of guidelines for online business, but they are not convinced everyone will follow them. They still have a vested interest in protecting the public from fraudulent and unfair business dealings. Those who are interested in the workshop on data tracking can contact the FTC, the presentation will take place on May 30th. Their contact number is 1-800-FTC-HELP.

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