Broadband Privacy and the FCC: Protect Consumers from Being Deceived and from Unfair Practices

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Left to right: Jon Leibowitz, Davis Polk & Wardwell LLP, Former Chairman of the Federal Trade Commission, Professor Peter Swire, Huang Professor of Law and Ethics, Scheller College of Business, Georgia Institute of Technology, Katharina Kopp, Ph.D., Director of Privacy and Data Project, Center for Democracy & Technology, Debra Berlyn, President, Consumer Policy Solutions, and Jules Polonetsky, CEO, Future of Privacy Forum.

Yesterday, the Future of Privacy Forum hosted an event to discuss the direction the FCC could take to best advance consumer protections as it considers how to regulate broadband providers’ use of consumer data. The key question was whether the FCC should adopt the “no deception or unfairness” model successfully used by the FTC and many State Attorneys General for many decades. Even local consumer regulators use this model — as Consumer Affairs Commissioner of New York City under Mayor Giuliani, I enforced NYC’s “mini FTC act” to protect consumers. Or, as some have argued, should the FCC come up with its own privacy regime of rules specific to ISPs?

Some important concepts we examined at the event included the following:

Broad Privacy Regimes or a Sectoral Approach?

Privacy and consumer advocates have long criticized the US sectoral approach to privacy, arguing that it is confusing and less effective than a broad general set of privacy rules for all data. The Obama administration embraced this view when it proposed a broad based Consumer Privacy Bill of Rights, which would have promised protection for any online personal information collected about consumers. Globally, the trend towards comprehensive privacy regulation that started in Europe has spread throughout almost all of the Western world. Katharina Kopp of the Center of Democracy and Technology noted that CDT’s long term goal was comprehensive privacy legislation across all sectors.

Does adding an additional area of sector-specific privacy legislation take a step backwards and make achieving broad privacy legislation less likely? Likely so, in my view, but even more likely so if the path the FCC takes is out of sync with the general broad approach that is applicable across the rest of the economy.

Is the FTC an Effective Enforcer of Online Privacy?

The FTC has been an aggressive actor in using its broad Section Five authority to bring numerous actions against companies of every shape or size. Tech giants Google, Microsoft and Facebook are all subject to 20 year consent decrees following FTC enforcement actions. The FTC has been able to bring actions in cases of consumer harm or deception, even when the harm or deception has been fairly conceptual, as in the Nomi case where the company failed to provide an opt-out that it wasn’t required to provide. Despite an almost certainty that no consumer entering a store had ever heard of Nomi or read its policy, the FTC took action based on its very broad view of its Section 5 Authority. Former FTC Chairman Jon Leibowitz discussed the important lead role the FTC has played in successfully policing online practices using its deception and unfairness authority.

Are ISPs unique in the types or amount of data they collect?

One important consideration for regulators is the rapid pace of change in technology and the uses of data. A decade ago, the leaders in the world of ad tracking and targeting were the companies that had access to the most data. Today, data has been democratized. Data is available to any vendor with a credit card. Blue Kai, the key data provider in Oracle’s new data division, offers more than 80 comprehensive sources of data to its customers.  Every online player, large or small, has access to detailed data about every American consumer.

Professor Peter Swire has published a new paper which provides an incredibly detailed and extensive review of the types of data collected by ISPs. Swire shows that some of the conventional wisdom which assumes that ISPs can access every bit of a consumer online activity is off base, as a number of factors limit the visibility ISPs have. Swire also shows that much of the data used by tracking and targeting companies is widely available via social networks, search engines, ad networks, app stores and other companies that collect cross-device and cross-context data about consumers.

Will Consumers See any Difference if the FTC takes a restrictive approach?

Today, any company with a budget can bid for data at advertising and data exchanges or can license “data as a service” from a wide number of providers. Restrictive FCC rules could keep ISPs out of the ad tech business, but consumers will see no change in their online experience – the ads they see will still be targeted based on data from the plethora of companies they interact with online.

Is the FTC deception and unfairness standard a license for ISPs to have wide liberty with consumer data?

The FTC deception and unfairness standards can be quite strict. They take into account context, sensitivity of data, risk of harm and a wide range of factors. But, the standard is flexible and allows the FTC to demand higher standards when appropriate and to allow more practical uses of data when appropriate.

How can the FCC promulgate consumer friendly rules here that help simplify the intertwined and complex ad tech environment?

I recently came across the announcement and the agenda for the First Annual Privacy and Data Protection Summit on May 2001. The event was presented by the 50 member strong Privacy Officers Association, the predecessor of today’s 15,000 member International Association of Privacy Professionals. The small group of us who gathered debated the best ways to provide consumer protection at a time when internet business models were still developing.

Speaking at the event, I explained to the audience how easy it was to decline web tracking and ad targeting. Just use your browser’s cookie settings! Block all cookies, block just third party cookies, or clear your cookies and ad networks would no longer recognize your browser. Consumer controls were fairly basic and effective.

How things have changed.

Today, meaningful control for consumers has become incredibly complex. Cookie controls are increasingly meaningless, because companies that fingerprint consumer devices track without cookies.  Central ad industry opt-outs are effective to decline ads targeted based on web surfing, but allow continued tracking, as well as targeting based on appended data. Apps don’t use cookies for tracking, so users who want to use the industry opt-out program need to download a special app to opt-out of app related ad targeting. Or consumers can use the”Limit Ad Tracking” settings that iOS and Android provide, but not every ad network cooperates.  And the Do Not Track option offered by web browsers?  Only about a dozen or so companies respect that setting. If you live in California, online companies need to tell you whether they respect the Do Not Track setting, unless they cooperate with the central industry opt-out program, in which case they do not need to tell you.

Has your head exploded yet?  No, then let’s keep going.

If you don’t want your home WiFi IP address linked to your home location, please add to the name of your home router the letters “_NOMAP”. Google and Mozilla will then opt you out of their location services data bases.  But for Skyhook, Microsoft and many others, find your home router MAC address and submit it at each of the opt-out pages provided by those companies.

Today, ISPs are part of the equation, as they have entered the advertising technology market. Digital signage increasingly includes tracking capabilities, as do in store Wi-Fi networks and more.

I could go on, but it should be abundantly clear that today’s online tracking and targeting options are likely only understood by a handful of experts who work at the intersection of ad tech and privacy.

Today, most of this ad targeting activity is subject to FTC jurisdiction, no matter the source of the data so an unhappy consumer can complain to that agency, regardless of the technology involved.  But the FCC is extending its privacy rules to ISPs, which would mean that consumers will need to turn to that agency if an ad was targeted with tracking or targeting enabled by an ISP.  Since ad targeting involves multiple actors, the FTC and FCC will need to cooperate on ad tech investigations, but each regulator will have a different standard for the same activity if the FCC comes up with its own regime.

The FCC proposal has been released as I write this post and seems to take a more regulatory restrictive approach, although it invites comments on other more consumer friendly paths to accomplish its consumer protection goal. I hope the FCC will take the time to understand the complex ad tech ecosystem and will consider the strong but flexible deception and unfairness rules that could provide its enforcement staff with tools that have stood the test of time.

Jules Polonetsky is CEO of the Future of Privacy Forum. He is a former Chief Privacy Officer of AOL and DoubleClick, and was the Consumer Affairs Commissioner of New York City under Mayor Guiliani.