FTC Sets Robust Data Privacy Protection Agenda

By Kewa Jiang

July 2022

In May 2022, Georgetown University law professor Alvaro Bedoya was confirmed to the fifth and last open commissioner’s seat on the Federal Trade Commission (FTC). With the appointment of Commissioner Bedoya, a Democrat, the Democratic appointees on the Commission now have a 3-2 majority. Consequently, many analysts observe that FTC Chair Lina Khan is clear to push forward a very robust data privacy protection agenda. In interviews, Chair Khan noted how increased consumer use of online platforms during the COVID-19 pandemic has led to a wider “commercial surveillance” industry. Below are some highlights of the FTC’s forthcoming data privacy agenda.

Renewed Focus on Children’s Online Privacy and Advertising

On May 19, 2022, the FTC released a policy statement reaffirming the agency’s commitment to protecting children’s online privacy, especially in this era of virtual learning. The policy statement warns educational technology companies that the agency “intends to scrutinize compliance with the full breadth of the substantive prohibitions and requirements of the COPPA Rule and statutory language.” In particular, the FTC will focus on prohibition against mandatory collection, use prohibitions, retention prohibitions, and security requirements. The statement also emphasizes that the onus of ensuring protection of children’s data privacy should be on businesses and not schools and parents. Additionally, young students should not have to hand over their data privacy and be subject to online surveillance to do online schoolwork.  

Another area of focus for the FTC is child-directed stealth advertising. Children may respond differently to advertisements and endorsements compared to adults, especially given the blurred lines between content and advertisement on social media. The FTC will be hosting a virtual event on October 19, 2022 titled, “Protecting Kids from Stealth Advertising in Digital Media.” The event will unite experts from different fields, such as the law, child development, and consumer advocacy, to discuss children’s capacity to distinguish advertisements and ways to protect children from stealth digital marketing.

Deceptive Digital Advertising and Dark Patterns

The FTC’s increased scrutiny of children’s digital advertising is part of its broader efforts to combat deceptive digital advertising. A component of achieving the objective is to modernize its guide to businesses titled, “.com Disclosures: How to Make Effective Disclosures in Digital Advertising.” The guide provides resources about advertising and marketing in digital spaces. But the agency is concerned that some businesses have been incorrectly using the guide as justification for deploying dark patterns and digital deception in advertising. The FTC is currently seeking public comments on updating the guide until August 2, 2022.

Modernization of the guide is a continuation of the FTC’s increased efforts to crack down on the use of illegal dark patterns that deceive consumers. For instance, in November 2021 the agency released the enforcement policy statement about using illegal dark patterns to deceive consumers into subscription services. The agency worked to prevent consumers from being tricked by the use of automatic renewal subscriptions, continuity plans, free-to-pay conversions, and pre-notification plans. The statement was meant to warn businesses of the need to provide clear, up-front information about services provided and fess, obtain consumers’ express informed consent, and make cancellation easy.

Harmful Use of Artificial Intelligence Technology and Algorithms

In June 2022, the FTC also issued a report to Congress warning against the use of artificial intelligence (AI) to combat online problems and relying on AI as a policy solution. The report notes that AI is already used by most major tech companies and adoption of AI tools as policy solutions may introduce additional harms. The report highlights the inherent design flaws and inaccuracy within AI tools, bias and discrimination, and commercial surveillance incentives. The agency recommended lawmakers to focus on “developing legal frameworks that would ensure AI tools do not cause additional harm” rather than attempting to use AI to solve online harms.

In response to the concerns raised about biases in AI and algorithmic tools, the FTC is considering initiating rulemaking to “curb lax security practices, limit privacy abuses, and ensure that algorithmic decision-making does not result in unlawful discrimination” Regulation of AI and algorithmic tools is supported by numerous Congressional Senators, such as Elizabeth Warren (D-Maryland) and Bernie Sanders (D-Vermont), who sent a letter to Chair Khan in June 2022 showing their support. The letter highlights the Senators concern about how such tools may discriminate against marginalized and minority communities. Two of the Senators that signed the letter, Ron Wyden (D-Oregon) and Cory Booker (D-New Jersey), along with Representative Yvette Clarke (D-New York) also proposed the Algorithmic Accountability Act to Congress in February 2022. The Act aims to create more transparency and oversight in the use of AI and algorithmic tools. 

Looking Ahead

Besides consumer data privacy, the FTC also has its eyes set on enforcing antitrust laws against numerous big tech companies. Given all the FTC intends to achieve, there is sure to be more news and developments to come as we enter the second half of the year.