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Data ‘Surveillance’ Crackdown Begins With FTC Privacy Pitch (2)

Aug. 11, 2022, 2:31 PMUpdated: Aug. 11, 2022, 6:36 PM

The Federal Trade Commission is seeking public feedback on a proposed rulemaking to limit what it’s dubbed “commercial surveillance” by businesses that sell or share information collected about people, with potential new powers to levy fines for data protection violations.

The anticipated rules, kickstarted with a notice issued Thursday asking questions about how to proceed, would protect the personal data companies such as Alphabet Inc. and Meta Platforms Inc. collect about consumers.

Consumer groups have been pressing the FTC to begin the likely years-long process of putting out regulations to govern consumer data that’s used for targeted advertising. Attention is turning to the agency as lawmakers in Congress make progress toward a bipartisan privacy law proposal but remain divided on enforcement and other key issues.

Typically the FTC is only able to fine companies like Meta that have breached past privacy agreements with the agency. That would change if the commission finalizes new rules allowing the agency to seek penalties for first-time violations.

The Democrat-led commission voted 3-2 to issue the rulemaking notice, with its Republican members voting against the action. Republicans on the commission and in Congress criticized the agency for acting while legislation is still in the works, emphasizing their view that lawmakers should establish federal privacy rules instead.

In response to such criticism, FTC Chair Lina Khan said the “lengthy” process of seeking public feedback on a rulemaking gives the agency time to “reassess” its efforts if Congress passes a privacy bill in the meantime. “That robust public record can also inform policymakers,” Khan said during a press conference Thursday with FTC staff and Democratic commissioners.

The commission is concerned about businesses that track consumer behavior across websites and apps to deliver personalized ads to them, according to the rulemaking notice. Without standards for data security, aggregating troves of information about people exposes them to hackers and identity thieves, the notice says.

The FTC also is interested in overseeing data-driven algorithms to make sure they don’t unlawfully discriminate against consumers. Civil rights advocates have raised issues over potential racial or gender bias in regard to which audiences see housing ads online and which job candidates are favored by automated hiring software.

Privacy groups cheered the launch of a rulemaking bid, although it could take several years to complete because of the complicated process the FTC must follow. The US Chamber of Commerce pushed back on what it characterizes as regulatory overreach by the agency.

(Updates with additional reporting)

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bloombergindustry.com

To contact the editor responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com