[Federal Register Volume 87, Number 161 (Monday, August 22, 2022)]
[Proposed Rules]
[Pages 51273-51299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17752]


=======================================================================
-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

16 CFR Chapter I


Trade Regulation Rule on Commercial Surveillance and Data 
Security

AGENCY: Federal Trade Commission.

ACTION: Advance notice of proposed rulemaking; request for public 
comment; public forum.

-----------------------------------------------------------------------

SUMMARY: The Federal Trade Commission (``FTC'') is publishing this 
advance notice of proposed rulemaking (``ANPR'') to request public 
comment on the prevalence of commercial surveillance and data security 
practices that harm consumers. Specifically, the Commission invites 
comment on whether it should implement new trade regulation rules or 
other regulatory alternatives concerning the ways in which companies 
collect, aggregate, protect, use, analyze, and retain consumer data, as 
well as transfer, share, sell, or otherwise monetize that data in ways 
that are unfair or deceptive.

DATES: 
    Comments due date: Comments must be received on or before October 
21, 2022.
    Meeting date: The Public Forum will be held virtually on Thursday, 
September 8, 2022, from 2 p.m. until 7:30 p.m. Members of the public 
are invited to attend at the website https://www.ftc.gov/news-events/events/2022/09/commercial-surveillance-data-security-anpr-public-forum.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Comment Submissions part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Commercial 
Surveillance ANPR, R111004'' on your comment, and file your comment 
online at https://www.regulations.gov. If you prefer to file your 
comment on paper, mail your comment to the following address: Federal 
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, 
Suite CC-5610 (Annex B), Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: James Trilling, 202-326-3497; Peder 
Magee, 202-326-3538; Olivier Sylvain, 202-326-3046; or 
[email protected].

I. Overview

    Whether they know it or not, most Americans today surrender their 
personal information to engage in the most basic aspects of modern 
life. When they buy groceries, do homework, or apply for car insurance, 
for example, consumers today likely give a wide range of personal 
information about themselves to companies, including their 
movements,\1\ prayers,\2\ friends,\3\ menstrual cycles,\4\ web-
browsing,\5\ and faces,\6\ among other basic aspects of their lives.
---------------------------------------------------------------------------

    \1\ See, e.g., Press Release, Fed. Trade Comm'n, Mobile 
Advertising Network InMobi Settles FTC Charges It Tracked Hundreds 
of Millions of Consumers' Locations Without Permission (June 22, 
2016), https://www.ftc.gov/news-events/press-releases/2016/06/mobile-advertising-network-inmobi-settles-ftc-charges-it-tracked. 
See also Stuart A. Thompson & Charlie Warzel, Twelve Million Phones, 
One Dataset, Zero Privacy, N.Y. Times (Dec. 19, 2019), https://www.nytimes.com/interactive/2019/12/19/opinion/location-tracking-cell-phone.html; Jon Keegan & Alfred Ng, There's a Multibillion-
Dollar Market for Your Phone's Location Data, The Markup (Sept. 30, 
2021), https://themarkup.org/privacy/2021/09/30/theres-a-multibillion-dollar-market-for-your-phones-location-data; Ryan 
Nakashima, AP Exclusive: Google Tracks Your Movements, Like It or 
Not, Associated Press (Aug. 13, 2018), https://apnews.com/article/north-america-science-technology-business-ap-top-news-828aefab64d4411bac257a07c1af0ecb.
    \2\ See, e.g., Joseph Cox, How the U.S. Military Buys Location 
Data from Ordinary Apps, Motherboard (Nov. 16, 2020), https://www.vice.com/en/article/jgqm5x/us-military-location-data-xmode-locate-x.
    \3\ See, e.g., Press Release, Fed. Trade Comm'n, Path Social 
Networking App Settles FTC Charges It Deceived Consumers and 
Improperly Collected Personal Information from Users' Mobile Address 
Books (Feb. 1, 2013), https://www.ftc.gov/news-events/press-releases/2013/02/path-social-networking-app-settles-ftc-charges-it-deceived.
    \4\ See, e.g., Press Release, Fed. Trade Comm'n, FTC Finalizes 
Order with Flo Health, a Fertility-Tracking App that Shared 
Sensitive Health Data with Facebook, Google, and Others (June 22, 
2021), https://www.ftc.gov/news-events/press-releases/2021/06/ftc-finalizes-order-flo-health-fertility-tracking-app-shared.
    \5\ See, e.g., Fed. Trade Comm'n, A Look at What ISPs Know About 
You: Examining the Privacy Practices of Six Major internet Service 
Providers: An FTC Staff Report (Oct. 21, 2021), https://www.ftc.gov/system/files/documents/reports/look-what-isps-know-about-you-examining-privacy-practices-six-major-internet-service-providers/p195402_isp_6b_staff_report.pdf.
    \6\ See, e.g., Press Release, Fed. Trade Comm'n, FTC Finalizes 
Settlement with Photo App Developer Related to Misuse of Facial 
Recognition Technology (May 7, 2021), https://www.ftc.gov/news-events/press-releases/2021/05/ftc-finalizes-settlement-photo-app-developer-related-misuse. See also Tom Simonite, Face Recognition Is 
Being Banned--but It's Still Everywhere, Wired (Dec. 22, 2021), 
https://www.wired.com/story/face-recognition-banned-but-everywhere/.
---------------------------------------------------------------------------

    Companies, meanwhile, develop and market products and services to 
collect and monetize this data. An elaborate and lucrative market for 
the collection,

[[Page 51274]]

retention, aggregation, analysis, and onward disclosure of consumer 
data incentivizes many of the services and products on which people 
have come to rely. Businesses reportedly use this information to target 
services--namely, to set prices,\7\ curate newsfeeds,\8\ serve 
advertisements,\9\ and conduct research on people's behavior,\10\ among 
other things. While, in theory, these personalization practices have 
the potential to benefit consumers, reports note that they have 
facilitated consumer harms that can be difficult if not impossible for 
any one person to avoid.\11\
---------------------------------------------------------------------------

    \7\ See, e.g., Casey Bond, Target Is Tracking You and Changing 
Prices Based on Your Location, Huffington Post (Feb. 24, 2022), 
https://www.huffpost.com/entry/target-tracking-location-changing-prices_l_603fd12bc5b6ff75ac410a38; Maddy Varner & Aaron Sankin, 
Suckers List: How Allstate's Secret Auto Insurance Algorithm 
Squeezes Big Spenders, The MarkUp (Feb. 25, 2020), https://themarkup.org/allstates-algorithm/2020/02/25/car-insurance-suckers-list. See generally Executive Office of the President of the United 
States, Big Data and Differential Pricing, at 2, 12-13 (Feb. 2015), 
https://obamawhitehouse.archives.gov/sites/default/files/whitehouse_files/docs/Big_Data_Report_Nonembargo_v2.pdf.
    \8\ See, e.g., Will Oremus et al., Facebook under fire: How 
Facebook shapes your feed: The evolution of what posts get top 
billing on users' news feeds, and what gets obscured, Wash. Post 
(Oct. 26, 2021), https://www.washingtonpost.com/technology/interactive/2021/how-facebook-algorithm-works/.
    \9\ See, e.g., Nat Ives, Facebook Ad Campaign Promotes 
Personalized Advertising, Wall. St. J. (Feb. 25, 2021), https://www.wsj.com/articles/facebook-ad-campaign-promotes-personalized-advertising-11614261617.
    \10\ See, e.g., Elise Hu, Facebook Manipulates Our Moods for 
Science and Commerce: A Roundup, NPR (June 30, 2014), https://www.npr.org/sections/alltechconsidered/2014/06/30/326929138/facebook-manipulates-our-moods-for-science-and-commerce-a-roundup.
    \11\ See, e.g., Matthew Hindman et al., Facebook Has a 
Superuser-Supremacy Problem, The Atlantic (Feb. 10, 2022), https://www.theatlantic.com/technology/archive/2022/02/facebook-hate-speech-misinformation-superusers/621617/; Consumer Protection Data 
Spotlight, Fed. Trade Comm'n, Social Media a Gold Mine for Scammers 
in 2021 (Jan. 25, 2022), https://www.ftc.gov/news-events/blogs/data-spotlight/2022/01/social-media-gold-mine-scammers-2021; Jonathan 
Stempel, Facebook Sued for Age, Gender Bias in Financial Services 
Ads, Reuters (Oct. 31, 2019), https://www.reuters.com/article/us-facebook-lawsuit-bias/facebook-sued-for-age-gender-bias-in-financial-services-ads-idUSKBN1XA2G8; Karen Hao, Facebook's Ad 
Algorithms Are Still Excluding Women from Seeing Jobs, MIT Tech. 
Rev. (Apr. 9, 2021), https://www.technologyreview.com/2021/04/09/1022217/facebook-ad-algorithm-sex-discrimination; Corin Faife & 
Alfred Ng, Credit Card Ads Were Targeted by Age, Violating 
Facebook's Anti-Discrimination Policy, The MarkUp (Apr. 29, 2021), 
https://themarkup.org/citizen-browser/2021/04/29/credit-card-ads-were-targeted-by-age-violating-facebooks-anti-discrimination-policy. 
Targeted behavioral advertising is not the only way in which 
internet companies automate advertising at scale. Researchers have 
found that contextual advertising may be as cost-effective as 
targeting, if not more so. See, e.g., Keach Hagey, Behavioral Ad 
Targeting Not Paying Off for Publishers, Study Suggests, Wall St. J. 
(May 29, 2019), https://www.wsj.com/articles/behavioral-ad-targeting-not-paying-off-for-publishers-study-suggests-11559167195 
(discussing Veronica Marotta et al., Online Tracking and Publishers' 
Revenues: An Empirical Analysis (2019), https://weis2019.econinfosec.org/wp-content/uploads/sites/6/2019/05/WEIS_2019_paper_38.pdf).
---------------------------------------------------------------------------

    Some companies, moreover, reportedly claim to collect consumer data 
for one stated purpose but then also use it for other purposes.\12\ 
Many such firms, for example, sell or otherwise monetize such 
information or compilations of it in their dealings with advertisers, 
data brokers, and other third parties.\13\ These practices also appear 
to exist outside of the retail consumer setting. Some employers, for 
example, reportedly collect an assortment of worker data to evaluate 
productivity, among other reasons \14\--a practice that has become far 
more pervasive since the onset of the COVID-19 pandemic.\15\
---------------------------------------------------------------------------

    \12\ See, e.g., Drew Harvell, Is Your Pregnancy App Sharing Your 
Intimate Data with Your Boss?, Wash. Post (Apr. 10, 2019), https://www.washingtonpost.com/technology/2019/04/10/tracking-your-pregnancy-an-app-may-be-more-public-than-you-think/; Jon Keegan & 
Alfred Ng, The Popular Family Safety App Life360 Is Selling Precise 
Location Data on Its Tens of Millions of Users, The MarkUp (Dec. 6, 
2021), https://themarkup.org/privacy/2021/12/06/the-popular-family-safety-app-life360-is-selling-precise-location-data-on-its-tens-of-millions-of-user.
    \13\ See, e.g., Fed. Trade Comm'n, Data Brokers: A Call for 
Transparency and Accountability (May 2014), https://www.ftc.gov/system/files/documents/reports/data-brokers-call-transparency-accountability-report-federal-trade-commission-may-2014/140527databrokerreport.pdf. See also, e.g., Press Release, Fed. 
Trade Comm'n, FTC Puts an End to Data Broker Operation that Helped 
Scam More Than $7 Million from Consumers' Accounts (Nov. 30, 2016), 
https://www.ftc.gov/news-events/press-releases/2016/11/ftc-puts-end-data-broker-operation-helped-scam-more-7-million; Press Release, 
Fed. Trade Comm'n, Data Broker Defendants Settle FTC Charges They 
Sold Sensitive Personal Information to Scammers (Feb. 18, 2016), 
https://www.ftc.gov/news-events/press-releases/2016/02/data-broker-defendants-settle-ftc-charges-they-sold-sensitive.
    \14\ See, e.g., Drew Harwell, Contract Lawyers Face a Growing 
Invasion of Surveillance Programs That Monitor Their Work, Wash. 
Post (Nov. 11, 2021), https://www.washingtonpost.com/technology/2021/11/11/lawyer-facial-recognition-monitoring/; Annie Palmer, 
Amazon Is Rolling Out Cameras That Can Detect If Warehouse Workers 
Are Following Social Distancing Rules, CNBC (June 16, 2020), https://www.cnbc.com/2020/06/16/amazon-using-cameras-to-enforce-social-distancing-rules-at-warehouses.html; Sarah Krouse, How Google Spies 
on Its Employees, The Information (Sept. 23, 2021), https://www.theinformation.com/articles/how-google-spies-on-its-employees; 
Adam Satariano, How My Boss Monitors Me While I Work From Home, N.Y. 
Times (May 6, 2020), https://www.nytimes.com/2020/05/06/technology/employee-monitoring-work-from-home-virus.html.
    \15\ See, e.g., Danielle Abril & Drew Harwell, Keystroke 
tracking, screenshots, and facial recognition: The box may be 
watching long after the pandemic ends, Wash. Post (Sept. 24, 2021), 
https://www.washingtonpost.com/technology/2021/09/24/remote-work-from-home-surveillance/.
---------------------------------------------------------------------------

    Many companies engage in these practices pursuant to the ostensible 
consent that they obtain from their consumers.\16\ But, as networked 
devices and online services become essential to navigating daily life, 
consumers may have little choice but to accept the terms that firms 
offer.\17\ Reports suggest that consumers have become resigned to the 
ways in which companies collect and monetize their information, largely 
because consumers have little to no actual control over what happens to 
their information once companies collect it.\18\
---------------------------------------------------------------------------

    \16\ See Tr. of FTC Hr'g, The FTC's Approach to Consumer Privacy 
(Apr. 9, 2019), at 50, https://www.ftc.gov/system/files/documents/public_events/1418273/ftc_hearings_session_12_transcript_day_1_4-9-19.pdf (remarks of Paul Ohm). See also Fed. Trade Comm'n, Privacy 
Online: Fair Information Practices in the Electronic Marketplace: A 
Report to Congress 26 (May 2000), https://www.ftc.gov/sites/default/files/documents/reports/privacy-online-fair-information-practices-electronic-marketplace-federal-trade-commission-report/privacy2000.pdf.
    \17\ See Tr. of FTC Hr'g, The FTC's Approach to Consumer Privacy 
(Apr. 10, 2019), at 129, https://www.ftc.gov/system/files/documents/public_events/1418273/ftc_hearings_session_12_transcript_day_2_4-10-19.pdf (remarks of FTC Commissioner Rebecca Kelly Slaughter, 
describing privacy consent as illusory because consumers often have 
no choice other than to consent in order to reach digital services 
that have become necessary for participation in contemporary 
society).
    \18\ See Joe Nocera, How Cookie Banners Backfired, N.Y. Times 
(Jan. 29, 2022), https://www.nytimes.com/2022/01/29/business/dealbook/how-cookie-banners-backfired.html (discussing concept of 
``digital resignation'' developed by Nora Draper and Joseph Turow). 
See also Nora A. Draper & Joseph Turow, The Corporate Cultivation of 
Digital Resignation, 21 New Media & Soc'y 1824-39 (2019).
---------------------------------------------------------------------------

    In any event, the permissions that consumers give may not always be 
meaningful or informed. Studies have shown that most people do not 
generally understand the market for consumer data that operates beyond 
their monitors and displays.\19\ Most consumers, for example, know 
little about the data brokers and third parties who collect and trade 
consumer data or build consumer profiles \20\ that can expose intimate 
details about their lives and, in the wrong hands, could expose 
unsuspecting people to future harm.\21\

[[Page 51275]]

Many privacy notices that acknowledge such risks are reportedly not 
readable to the average consumer.\22\ Many consumers do not have the 
time to review lengthy privacy notices for each of their devices, 
applications, websites, or services,\23\ let alone the periodic updates 
to them. If consumers do not have meaningful access to this 
information, they cannot make informed decisions about the costs and 
benefits of using different services.\24\
---------------------------------------------------------------------------

    \19\ See Neil Richards & Woodrow Hartzog, The Pathologies of 
Digital Consent, 96 Wash. U.L. Rev. 1461, 1477-78, 1498-1502 (2019); 
Daniel J. Solove, Introduction: Privacy Self-Management and the 
Consent Dilemma, 126 Harv. L. Rev. 1879, 1885-86 (2013) (``Solove 
Privacy Article'').
    \20\ See generally Fed. Trade Comm'n, Data Brokers: A Call for 
Transparency and Accountability (May 2014), https://www.ftc.gov/system/files/documents/reports/data-brokers-call-transparency-accountability-report-federal-trade-commission-may-2014/140527databrokerreport.pdf.
    \21\ See, e.g., Press Release, Fed. Trade Comm'n, FTC Puts an 
End to Data Broker Operation that Helped Scam More Than $7 Million 
from Consumers' Accounts (Nov. 30, 2016), https://www.ftc.gov/news-events/press-releases/2016/11/ftc-puts-end-data-broker-operation-helped-scam-more-7-million; Press Release, Fed. Trade Comm'n, Data 
Broker Defendants Settle FTC Charges They Sold Sensitive Personal 
Information to Scammers (Feb. 18, 2016), https://www.ftc.gov/news-events/press-releases/2016/02/data-broker-defendants-settle-ftc-charges-they-sold-sensitive; FTC v. Accusearch, 570 F.3d 1187, 1199 
(10th Cir. 2009). See also Molly Olmstead, A Prominent Priest Was 
Outed for Using Grindr. Experts Say It's a Warning Sign, Slate (July 
21, 2021), https://slate.com/technology/2021/07/catholic-priest-grindr-data-privacy.html.
    \22\ See Brooke Auxier et al., Americans and Privacy: Concerned, 
Confused and Feeling Lack of Control Over Their Personal 
Information, Pew Res. Ctr. (Nov. 15, 2019), https://www.pewresearch.org/internet/2019/11/15/americans-and-privacy-concerned-confused-and-feeling-lack-of-control-over-their-personal-information/. See also Solove Privacy Article, 126 Harv. L. Rev. at 
1885; Aleecia M. McDonald & Lorrie Faith Cranor, The Cost of Reading 
Privacy Policies, 4 I/S J. of L. & Pol'y for Info. Society 543 
(2008); Irene Pollach, What's Wrong with Online Privacy Policies?, 
50 Comm's ACM 103 (2007).
    \23\ Kevin Litman-Navarro, We Read 150 Privacy Policies. They 
Were an Incomprehensible Disaster, N.Y. Times (2019), https://www.nytimes.com/interactive/2019/06/12/opinion/facebook-google-privacy-policies.html; Alexis C. Madrigal, Reading the Privacy 
Policies You Encounter in a Year Would Take 76 Work Days, The 
Atlantic (Mar. 1, 2012), https://www.theatlantic.com/technology/archive/2012/03/reading-theprivacy-policies-you-encounter-in-a-year-would-take-76-work-days/253851/. See also FTC Comm'r Rebecca Kelly 
Slaughter, Wait But Why? Rethinking Assumptions About Surveillance 
Advertising: IAPP Privacy Security Risk Closing Keynote (``Slaughter 
Keynote'') (Oct. 22, 2021), at 4, https://www.ftc.gov/system/files/documents/public_statements/1597998/iapp_psr_2021_102221_final2.pdf.
    \24\ See FTC Comm'r Christine S. Wilson, A Defining Moment for 
Privacy: The Time is Ripe for Federal Privacy Legislation, Remarks 
at the Future of Privacy Forum (Feb. 6, 2020), https://www.ftc.gov/news-events/news/speeches/remarks-commissioner-christine-s-wilson-future-privacy-forum.
---------------------------------------------------------------------------

    This information asymmetry between companies and consumer runs even 
deeper. Companies can use the information that they collect to direct 
consumers' online experiences in ways that are rarely apparent--and in 
ways that go well beyond merely providing the products or services for 
which consumers believe they sign up.\25\ The Commission's enforcement 
actions have targeted several pernicious dark pattern practices, 
including burying privacy settings behind multiple layers of the user 
interface \26\ and making misleading representations to ``trick or 
trap'' consumers into providing personal information.\27\ In other 
instances, firms may misrepresent or fail to communicate clearly how 
they use and protect people's data.\28\ Given the reported scale and 
pervasiveness of such practices, individual consumer consent may be 
irrelevant.
---------------------------------------------------------------------------

    \25\ See generally Ryan Calo & Alex Rosenblat, The Taking 
Economy: Uber, Information, and Power, 117 Colum. L. Rev. 1623 
(2017); Ryan Calo, Digital Market Manipulation, 82 Geo. Wash. L. 
Rev. 995 (2014).
    \26\ See Press Release, Fed. Trade Comm'n, Facebook Settles FTC 
Charges That It Deceived Consumers by Failing to Keep Privacy 
Promises (Nov. 29, 2011), https://www.ftc.gov/news-events/press-releases/2011/11/facebook-settles-ftc-charges-it-deceived-consumers-failing-keep.
    \27\ See Press Release, Fed. Trade Comm'n, FTC Takes Action 
against the Operators of Copycat Military websites (Sept. 6, 2018), 
https://www.ftc.gov/news-events/press-releases/2018/09/ftc-takes-action-against-operators-copycat-military-websites.
    \28\ See generally infra Item III(a).
---------------------------------------------------------------------------

    The material harms of these commercial surveillance practices may 
be substantial, moreover, given that they may increase the risks of 
cyberattack by hackers, data thieves, and other bad actors. Companies' 
lax data security practices may impose enormous financial and human 
costs. Fraud and identity theft cost both businesses and consumers 
billions of dollars, and consumer complaints are on the rise.\29\ For 
some kinds of fraud, consumers have historically spent an average of 60 
hours per victim trying to resolve the issue.\30\ Even the nation's 
critical infrastructure is at stake, as evidenced by the recent attacks 
on the largest fuel pipeline,\31\ meatpacking plants,\32\ and water 
treatment facilities \33\ in the United States.
---------------------------------------------------------------------------

    \29\ Press Release, Fed. Trade Comm'n, New Data Shows FTC 
Received 2.8 Million Fraud Reports from Consumers in 2021 (Feb. 22, 
2022), https://www.ftc.gov/news-events/news/press-releases/2022/02/new-data-shows-ftc-received-28-million-fraud-reports-consumers-2021-0.
    \30\ Fed. Trade Comm'n, Identity Theft Survey Report (Sept. 
2003), https://www.ftc.gov/sites/default/files/documents/reports/federal-trade-commission-identity-theft-program/synovatereport.pdf.
    \31\ William Turton & Kartikay Mehrotra, Hackers Breached 
Colonial Pipeline Using Compromised Password, Bloomberg (June 4, 
2021), https://www.bloomberg.com/news/articles/2021-06-04/hackers-breached-colonial-pipeline-using-compromised-password.
    \32\ Dan Charles, The Food Industry May Be Finally Paying 
Attention To Its Weakness To Cyberattacks, NPR (July 5, 2021), 
https://www.npr.org/2021/07/05/1011700976/the-food-industry-may-be-finally-paying-attention-to-its-weakness-to-cyberattack.
    \33\ Josh Margolin & Ivan Pereira, Outdated Computer System 
Exploited in Florida Water Treatment Plant Hack, ABC News (Feb. 11, 
2021), https://abcnews.go.com/US/outdated-computer-system-exploited-florida-water-treatment-plant/story?id=75805550.
---------------------------------------------------------------------------

    Companies' collection and use of data have significant consequences 
for consumers' wallets, safety, and mental health. Sophisticated 
digital advertising systems reportedly automate the targeting of 
fraudulent products and services to the most vulnerable consumers.\34\ 
Stalking apps continue to endanger people.\35\ Children and teenagers 
remain vulnerable to cyber bullying, cyberstalking, and the 
distribution of child sexual abuse material.\36\ Peer-reviewed research 
has linked social media use with depression, anxiety, eating disorders, 
and suicidal ideation among kids and teens.\37\
---------------------------------------------------------------------------

    \34\ See, e.g., Zeke Faux, How Facebook Helps Shady Advertisers 
Pollute the internet, Bloomberg (Mar. 27, 2019), https://www.bloomberg.com/news/features/2018-03-27/ad-scammers-need-suckers-and-facebook-helps-find-them (noting an affiliate marketer's claim 
that Facebook's ad system ``find[s] the morons for me'').
    \35\ See Consumer Advice, Fed. Trade Comm'n, Stalking Apps: What 
to Know (May 2021), https://consumer.ftc.gov/articles/stalking-apps-what-know.
    \36\ See Ellen M. Selkie, Jessica L. Fales, & Megan A. Moreno, 
Cyberbullying Prevalence Among U.S. Middle and High School-Aged 
Adolescents: A Systematic Review and Quality Assessment, 58 J. 
Adolescent Health 125 (2016); Fed. Trade Comm'n, Parental Advisory: 
Dating Apps (May 6, 2019), https://consumer.ftc.gov/consumer-alerts/2019/05/parental-advisory-dating-apps; Subcommittee on Consumer 
Protection, Product Safety, and Data Security, U.S. Senate Comm. on 
Com., Sci. & Transp., Hearing, Protecting Kids Online: internet 
Privacy and Manipulative Marketing (May 18, 2021), https://www.commerce.senate.gov/2021/5/protecting-kids-online-internet-privacy-and-manipulative-marketing; Aisha Counts, Child Sexual Abuse 
Is Exploding Online. Tech's Best Defenses Are No Match., Protocol 
(Nov. 12, 2021), https://www.protocol.com/policy/csam-child-safety-online.
    \37\ See, e.g., Elroy Boers et al., Association of Screen Time 
and Depression in Adolescence, 173 JAMA Pediatr. 9 (2019) at 857 
(``We found that high mean levels of social media over 4 years and 
any further increase in social media use in the same year were 
associated with increased depression.''); Hugues Sampasa-Kanyinga & 
Rosamund F. Lewis, Frequent Use of Social Networking Sites Is 
Associated with Poor Psychological Functioning Among Children and 
Adolescents, 18 Cyberpsychology, Behavior, and Social Networking 7 
(2015) at 380 (``Daily [social networking site] use of more than 2 
hours was . . . independently associated with poor self-rating of 
mental health and experiences of high levels of psychological 
distress and suicidal ideation.''); Jean M. Twenge et al., Increases 
in Depressive Symptoms, Suicide-Related Outcomes, and Suicide Rates 
Among U.S. Adolescents After 2010 and Links to Increased New Media 
Screen Time, 6 Clinical Psychological Sci. 1 (2018) at 11 
(``[A]dolescents using social media sites every day were 13% more 
likely to report high levels of depressive symptoms than those using 
social media less often.''); H.C. Woods & H. Scott, #Sleepyteens: 
Social Media Use in Adolescence is Associated with Poor Sleep 
Quality, Anxiety, Depression, and Low Self-Esteem, 51 J. of 
Adolescence 41-9 (2016) at 1 (``Adolescents who used social media 
more . . . experienced poorer sleep quality, lower self-esteem and 
higher levels of anxiety and depression.''); Simon M. Wilksch et 
al., The relationship between social media use and disordered eating 
in young adolescents, 53 Int'l J. of Eating Disorders 1 at 96 (``A 
clear pattern of association was found between [social media] usage 
and [disordered eating] cognitions.'').
---------------------------------------------------------------------------

    Finally, companies' growing reliance on automated systems is 
creating new

[[Page 51276]]

forms and mechanisms for discrimination based on statutorily protected 
categories,\38\ including in critical areas such as housing,\39\ 
employment,\40\ and healthcare.\41\ For example, some employers' 
automated systems have reportedly learned to prefer men over women.\42\ 
Meanwhile, a recent investigation suggested that lenders' use of 
educational attainment in credit underwriting might disadvantage 
students who attended historically Black colleges and universities.\43\ 
And the Department of Justice recently settled its first case 
challenging algorithmic discrimination under the Fair Housing Act for a 
social media advertising delivery system that unlawfully discriminated 
based on protected categories.\44\ Critically, these kinds of disparate 
outcomes may arise even when automated systems consider only 
unprotected consumer traits.\45\
---------------------------------------------------------------------------

    \38\ A few examples of where automated systems may have produced 
disparate outcomes include inaccuracies and delays in the delivery 
of child welfare services for the needy; music streaming services 
that are more likely to recommend men than women; gunshot detection 
software that mistakenly alerts local police when people light 
fireworks in majority-minority neighborhoods; search engine results 
that demean black women; and face recognition software that is more 
likely to misidentify dark-skinned women than light-skinned men. See 
Joy Buolamwini & Timnit Gebru, Gender Shades: Intersectional 
Accuracy Disparities in Commercial Gender Classification, 81 Proc. 
of Mach. Learning Res. (2018); Latanya Sweeney, Discrimination in 
Online Ad Delivery: Google Ads, Black Names and White Names, Racial 
Discrimination, and Click Advertising, 11 Queue 10, 29 (Mar. 2013); 
Muhammad Ali et al., Discrimination Through Optimization: How 
Facebook's Ad Delivery Can Lead to Skewed Outcomes, 3 Proc. ACM on 
Hum.-Computer Interaction (2019); Virginia Eubanks, Automating 
Inequality: How High-Tech Tools Profile, Police, and Punish the Poor 
(2018); Andres Ferraro, Xavier Serra, & Christine Bauer, Break the 
Loop: Gender Imbalance in Music Recommenders, CHIIR '21: Proceedings 
of the 2021 Conference on Human Information Interaction and 
Retrieval, 249-254 (Mar. 2021), https://dl.acm.org/doi/proceedings/10.1145/3406522. See generally Anita Allen, Dismantling the ``Black 
Opticon'': Privacy, Race, Equity, and Online Data-Protection Reform, 
131 Yale L. J. Forum 907 (2022), https://www.yalelawjournal.org/pdf/F7.AllenFinalDraftWEB_6f26iyu6.pdf; Safiya Umoja Noble, Algorithms 
of Oppression: How Search Engines Reinforce Racism (2018); Danielle 
Citron, Hate Crimes in Cyberspace (2014).
    \39\ See Ny Magee, Airbnb Algorithm Linked to Racial Disparities 
in Pricing, The Grio (May 13, 2021), https://thegrio.com/2021/05/13/airbnb-racial-disparities-in-pricing/; Emmanuel Martinez & Lauren 
Kirchner, The Secret Bias Hidden in Mortgage-Approval Algorithms, 
ABC News & The MarkUp (Aug. 25, 2021), https://abcnews.go.com/Business/wireStory/secret-bias-hidden-mortgage-approval-algorithms-79633917. See generally Fed. Trade Comm'n, Accuracy in Consumer 
Reporting Workshop (Dec. 10, 2019), https://www.ftc.gov/news-events/events-calendar/accuracy-consumer-reporting-workshop. See also Alex 
P. Miller & Kartik Hosanagar, How Targeted Ads and Dynamic Pricing 
Can Perpetuate Bias, Harv. Bus. Rev. (Nov. 8, 2019), https://hbr.org/2019/11/how-targeted-ads-and-dynamic-pricing-can-perpetuate-bias.
    \40\ See Ifeoma Ajunwa, The ``Black Box'' at Work, Big Data & 
Society (Oct. 19, 2020), https://journals.sagepub.com/doi/full/10.1177/2053951720938093.
    \41\ See Donna M. Christensen et al., Medical Algorithms are 
Failing Communities of Color, Health Affs. (Sept. 9, 2021), https://www.healthaffairs.org/do/10.1377/hblog20210903.976632/full/; Heidi 
Ledford, Millions of Black People Affected by Racial Bias in Health-
Care Algorithms, Nature (Oct. 24, 2019), https://www.nature.com/articles/d41586-019-03228-6/.
    \42\ Jeffrey Dastin, Amazon scraps secret AI recruiting tool 
that showed bias against women, Reuters (Oct. 10, 2018), https://www.reuters.com/article/us-amazon-com-jobs-automation-insight/amazon-scraps-secret-ai-recruiting-tool-that-showed-bias-against-women-idUSKCN1MK08G; Dave Gershgorn, Companies are on the hook if 
their hiring algorithms are biased, Quartz (Oct. 22, 2018), https://qz.com/1427621/companies-are-on-the-hook-if-their-hiring-algorithms-are-biased/.
    \43\ Katherine Welbeck & Ben Kaufman, Fintech Lenders' Responses 
to Senate Probe Heighten Fears of Educational Redlining, Student 
Borrower Prot. Ctr. (July 31, 2020), https://protectborrowers.org/fintech-lenders-response-to-senate-probe-heightens-fears-of-educational-redlining/. This issue is currently being investigated 
by the company and outside parties. Relman Colfax, Fair Lending 
Monitorship of Upstart Network's Lending Model, https://www.relmanlaw.com/cases-406.
    \44\ Compl., United States v. Meta Platforms, Inc., No. 22-05187 
(S.D.N.Y. filed June 21, 2022), https://www.justice.gov/usao-sdny/press-release/file/1514051/download; Settlement Agreement, United 
States v. Meta Platforms, Inc., No. 22-05187 (S.D.N.Y. filed June 
21, 2022), https://www.justice.gov/crt/case-document/file/1514126/download.
    \45\ Andrew Selbst, A New HUD Rule Would Effectively Encourage 
Discrimination by Algorithm, Slate (Aug. 19, 2019), https://slate.com/technology/2019/08/hud-disparate-impact-discrimination-algorithm.html. See also Rebecca Kelly Slaughter, Algorithms and 
Economic Justice, 23 Yale J. L. & Tech. 1, 11-14 (2021) (``Slaughter 
Algorithms Paper''); Anupam Chander, The Racist Algorithm?, 115 
Mich. L. Rev. 1023, 1029-30, 1037-39 (2017); Solon Barocas & Andrew 
D. Selbst, Big Data's Disparate Impact, 104 Calif. L. Rev. 671, 677-
87 (2016).
---------------------------------------------------------------------------

    The Commission is issuing this ANPR pursuant to Section 18 of the 
Federal Trade Commission Act (``FTC Act'') and the Commission's Rules 
of Practice \46\ because recent Commission actions, news reporting, and 
public research suggest that harmful commercial surveillance and lax 
data security practices may be prevalent and increasingly 
unavoidable.\47\ These developments suggest that trade regulation rules 
reflecting these current realities may be needed to ensure Americans 
are protected from unfair or deceptive acts or practices. New rules 
could also foster a greater sense of predictability for companies and 
consumers and minimize the uncertainty that case-by-case enforcement 
may engender.
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 57a; 16 CFR parts 0 and 1.
    \47\ In May 2022, three consumer advocacy groups urged the 
Commission to commence a rulemaking proceeding to protect ``privacy 
and civil rights.'' See Letter of Free Press, Access Now, and 
UltraViolet to Chair Lina M. Khan (May 12, 2022), https://act.freepress.net/sign/protect_privacy_civil_rights. Late in 2021, 
moreover, the Commission received a petition that calls on it to 
promulgate rules pursuant to its authority to protect against unfair 
methods of competition in the market for consumer data. See Press 
Release, Accountable Tech, Accountable Tech Petitions FTC to Ban 
Surveillance Advertising as an `Unfair Method of Competition' (Sept. 
28, 2021), https://accountabletech.org/media/accountable-tech-petitions-ftc-to-ban-surveillance-advertising-as-an-unfair-method-of-competition/. In accordance with the provision of its Rules of 
Practice concerning public petitions, 16 CFR 1.31, the Commission 
published a notice about the petition, 86 FR 73206 (Dec. 23, 2021), 
and accepted public comments, which are compiled at https://www.regulations.gov/docket/FTC-2021-0070/comments. The petitioner 
urges new rules that address the way in which certain dominant 
companies exploit their access to and control of consumer data. 
Those unfair-competition concerns overlap with some of the concerns 
in this ANPR about unfair or deceptive acts or practices, and 
several comments in support of the petition also urged the 
Commission to pursue a rulemaking using its authority to regulate 
unfair or deceptive practices. See, e.g., Cmt. of Consumer Reports & 
Elec. Privacy Info. Ctr., at 2 (Jan. 27, 2022), https://downloads.regulations.gov/FTC-2021-0070-0009/attachment_1.pdf. 
Accordingly, Item IV, below, invites comment on the ways in which 
existing and emergent commercial surveillance practices harm 
competition and on any new trade regulation rules that would address 
such practices. Such rules could arise from the Commission's 
authority to protect against unfair methods of competition, so they 
may be proposed directly without first being subject of an advance 
notice of proposed rulemaking. See 15 U.S.C. 57a(a)(2) (Section 18's 
procedural requirements, including an ANPR, apply to rules defining 
unfair or deceptive acts or practices but expressly do not apply to 
rules ``with respect to unfair methods of competition'').
---------------------------------------------------------------------------

    Countries around the world and states across the nation have been 
alert to these concerns. Many accordingly have enacted laws and 
regulations that impose restrictions on companies' collection, use, 
analysis, retention, transfer, sharing, and sale or other monetization 
of consumer data. In recognition of the complexity and opacity of 
commercial surveillance practices today, such laws have reduced the 
emphasis on providing notice and obtaining consent and have instead 
stressed additional privacy ``defaults'' as well as increased 
accountability for businesses and restrictions on certain practices.
    For example, European Union (``EU'') member countries enforce the 
EU's General Data Protection Regulation (``GDPR''),\48\ which, among 
other things, limits the processing of personal data to six lawful 
bases and provides consumers with certain rights to access, delete, 
correct, and port such data. Canada's Personal Information Protection 
and Electronic Documents Act \49\ and Brazil's General Law for the

[[Page 51277]]

Protection of Personal Data \50\ contain some similar rights.\51\ Laws 
in California,\52\ Virginia, \53\ Colorado,\54\ Utah,\55\ and 
Connecticut,\56\ moreover, include some comparable rights, and numerous 
state legislatures are considering similar laws. Alabama,\57\ 
Colorado,\58\ and Illinois,\59\ meanwhile, have enacted laws related to 
the development and use of artificial intelligence. Other states, 
including Illinois,\60\ Texas,\61\ and Washington,\62\ have enacted 
laws governing the use of biometric data. All fifty U.S. states have 
laws that require businesses to notify consumers of certain breaches of 
consumers' data.\63\ And numerous states require businesses to take 
reasonable steps to secure consumers' data.\64\
---------------------------------------------------------------------------

    \48\ See Data Protection in the EU, Eur. Comm'n, https://ec.europa.eu/info/law/law-topic/data-protection/data-protection-eu_en.
    \49\ See Personal Information Protection and Electronic 
Documents Act (PIPEDA), Off. of the Privacy Comm'r of Can., https://www.priv.gc.ca/en/privacy-topics/privacy-laws-in-canada/the-personal-information-protection-and-electronic-documents-act-pipeda/ 
(last modified Dec. 8, 2021).
    \50\ Brazilian General Data Protection Law (Law No. 13,709, of 
Aug. 14, 2018), https://iapp.org/resources/article/brazilian-data-protection-law-lgpd-english-translation/.
    \51\ In 2021, the European Commission also announced proposed 
legislation to create additional rules for artificial intelligence 
that would, among other things, impose particular documentation, 
transparency, data management, recordkeeping, security, assessment, 
notification, and registration requirements for certain artificial 
intelligence systems that pose high risks of causing consumer 
injury. See Proposal for a Regulation of the European Parliament and 
of the Council Laying Down Harmonised Rules on Artificial 
Intelligence (Artificial Intelligence Act) and Amending Certain 
Union Legislative Acts, COM (2021) 206 final (Apr. 21, 2021), 
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021PC0206.
    \52\ See California Privacy Rights Act of 2020, Proposition 24 
(Cal. 2020) (codified at Cal. Civ. Code 1798.100-199.100); State of 
Cal. Dep't of Just., California Consumer Privacy Act (CCPA): 
Frequently Asked Questions (FAQs), https://oag.ca.gov/privacy/ccpa.
    \53\ See Consumer Data Protection Act, S.B. 1392, 161st Gen. 
Assem. (Va. 2021) (codified at Va. Code Ann. 59.1-575 through 59.1-
585 (2021)).
    \54\ See Protect Personal Data Privacy Act, 21 S.B. 190, 73 Gen. 
Assem. (Colo. 2021).
    \55\ See Utah Consumer Privacy Act, 2022 Utah Laws 462 (codified 
at Utah Code Ann. 13-61-1 through 13-61-4).
    \56\ See An Act Concerning Personal Data Privacy and Online 
Monitoring, 2022 Conn. Acts P.A. 22-15 (Reg. Sess.).
    \57\ See Act. No. 2021-344, S.B. 78, 2021 Leg., Reg. Sess., 
(Ala. 2021).
    \58\ See Restrict Insurers' Use of External Consumer Data Act, 
21 S.B. 169, 73rd Gen. Assem., 1st Reg. Sess. (Colo. 2021).
    \59\ See Artificial Intelligence Video Interview Act, H.B. 53, 
102nd Gen. Assem., Reg. Sess. (Ill. 2021) (codified at 820 Ill. 
Comp. Stat. Ann. 42/1 et seq.).
    \60\ See Biometric Information Privacy Act, S.B. 2400, 2008 Gen. 
Assem., Reg. Sess. (Ill. 2021) (codified at 740 Ill. Comp. Stat. 
Ann. 14/1 et seq.).
    \61\ See Tex. Bus. & Com. Code 503.001.
    \62\ See Wash. Rev. Code Ann. 19.375.010 through 19.375.900.
    \63\ See Nat'l Conf. of State Leg., Security Breach Notification 
Laws (Jan. 17, 2022), https://www.ncsl.org/research/telecommunications-and-information-technology/security-breach-notification-laws.aspx.
    \64\ See Nat'l Conf. of State Leg., Data Security Laws, Private 
Sector (May 29, 2019), https://www.ncsl.org/research/telecommunications-and-information-technology/data-security-laws.aspx.
---------------------------------------------------------------------------

    Through this ANPR, the Commission is beginning to consider the 
potential need for rules and requirements regarding commercial 
surveillance and lax data security practices. Section 18 of the FTC Act 
authorizes the Commission to promulgate, modify, and repeal trade 
regulation rules that define with specificity acts or practices that 
are unfair or deceptive in or affecting commerce within the meaning of 
Section 5(a)(1) of the FTC Act.\65\ Through this ANPR, the Commission 
aims to generate a public record about prevalent commercial 
surveillance practices or lax data security practices that are unfair 
or deceptive, as well as about efficient, effective, and adaptive 
regulatory responses. These comments will help to sharpen the 
Commission's enforcement work and may inform reform by Congress or 
other policymakers, even if the Commission does not ultimately 
promulgate new trade regulation rules.\66\
---------------------------------------------------------------------------

    \65\ 15 U.S.C. 45(a)(1).
    \66\ Cf. Slaughter Keynote at 4; Oral Statement of Comm'r 
Christine S. Wilson, Strengthening the Federal Trade Commission's 
Authority to Protect Consumers: Hearing before the Senate Comm. on 
Com., Sci. & Transp. (Apr. 20, 2021), https://www.ftc.gov/system/files/documents/public_statements/1589180/opening_statement_final_for_postingrevd.pdf.
---------------------------------------------------------------------------

    The term ``data security'' in this ANPR refers to breach risk 
mitigation, data management and retention, data minimization, and 
breach notification and disclosure practices.
    For the purposes of this ANPR, ``commercial surveillance'' refers 
to the collection, aggregation, analysis, retention, transfer, or 
monetization of consumer data and the direct derivatives of that 
information. These data include both information that consumers 
actively provide--say, when they affirmatively register for a service 
or make a purchase--as well as personal identifiers and other 
information that companies collect, for example, when a consumer 
casually browses the web or opens an app. This latter category is far 
broader than the first.
    The term ``consumer'' as used in this ANPR includes businesses and 
workers, not just individuals who buy or exchange data for retail goods 
and services. This approach is consistent with the Commission's 
longstanding practice of bringing enforcement actions against firms 
that harm companies \67\ as well as workers of all kinds.\68\ The FTC 
has frequently used Section 5 of the FTC Act to protect small 
businesses or individuals in contexts involving their employment or 
independent contractor status.\69\
---------------------------------------------------------------------------

    \67\ See, e.g., Press Release, Fed. Trade Comm'n, FTC Obtains 
Contempt Ruling Against `Yellow Pages' Scam (Nov. 25, 2015), https://www.ftc.gov/news-events/press-releases/2015/11/ftc-obtains-contempt-ruling-against-yellow-pages-scam; Press Release, Fed. Trade 
Comm'n, FTC and Florida Halt internet `Yellow Pages' Scammers (July 
17, 2014), https://www.ftc.gov/news-events/press-releases/2014/07/ftc-florida-halt-internet-yellow-pages-scammers; In re Spiegel, 
Inc., 86 F.T.C. 425, 439 (1975). See also FTC v. Sperry & Hutchinson 
Co., 405 U.S. 233, 244 (1972); FTC v. Bunte Bros., Inc., 312 U.S. 
349, 353 (1941); In re Orkin Exterminating Co., Inc., 108 F.T.C. 263 
(1986), aff'd, Orkin Exterminating Co., Inc. v. FTC, 849 F.2d 1354 
(11th Cir. 1988); FTC v. Datacom Mktg., Inc., No. 06-c-2574, 2006 WL 
1472644, at *2 (N.D. Ill. May 24, 2006). Previously, the Commission 
included ``businessmen'' among those Congress charged it to protect 
under the statute. See Fed. Trade Comm'n, FTC Policy Statement on 
Unfairness (Dec. 17, 1980), appended to In re Int'l Harvester Co., 
104 F.T.C. 949, 1072 n.8 (1984), https://www.ftc.gov/public-statements/1980/12/ftc-policy-statement-unfairness.
    \68\ See, e.g., Press Release, Fed. Trade Comm'n, FTC Settles 
Charges Against Two Companies That Allegedly Failed to Protect 
Sensitive Employee Data (May 3, 2011), https://www.ftc.gov/news-events/press-releases/2011/05/ftc-settles-charges-against-two-companies-allegedly-failed; Press Release, Fed. Trade Comm'n, Rite 
Aid Settles FTC Charges That It Failed to Protect Medical and 
Financial Privacy of Customers and Employees (July 27, 2010), 
https://www.ftc.gov/news-events/press-releases/2010/07/rite-aid-settles-ftc-charges-it-failed-protect-medical-financial; Press 
Release, Fed. Trade Comm'n, CVS Caremark Settles FTC Charges: Failed 
to Protect Medical and Financial Privacy of Customers and Employees; 
CVS Pharmacy Also Pays $2.25 Million to Settle Allegations of HIPAA 
Violations (Feb. 18, 2009), https://www.ftc.gov/news-events/press-releases/2009/02/cvs-caremark-settles-ftc-chargesfailed-protect-medical-financial. See also Press Release, Fed. Trade Comm'n, Amazon 
To Pay $61.7 Million to Settle FTC Charges It Withheld Some Customer 
Tips from Amazon Flex Drivers (Feb. 2, 2021), https://www.ftc.gov/news-events/press-releases/2021/02/amazon-pay-617-million-settle-ftc-charges-it-withheld-some.
    \69\ See, e.g., FTC v. IFC Credit Corp., 543 F. Supp. 2d 925, 
934-41 (N.D. Ill. 2008) (holding that the FTC's construction of the 
term ``consumer'' to include businesses as well as individuals is 
reasonable and is supported by the text and history of the FTC Act).
---------------------------------------------------------------------------

    This ANPR proceeds as follows. Item II outlines the Commission's 
existing authority to bring enforcement actions and promulgate trade 
regulation rules under the FTC Act. Item III sets out the wide range of 
actions against commercial surveillance and data security acts or 
practices that the Commission has pursued in recent years as well as 
the benefits and shortcomings of this case-by-case approach. Item IV 
sets out the questions on which the Commission seeks public comment. 
Finally, Item V provides instructions on the comment submission 
process, and Item VI describes a public forum that is scheduled to take 
place to facilitate public involvement in this rulemaking proceeding.

II. The Commission's Authority

    Congress authorized the Commission to propose a rule defining 
unfair or

[[Page 51278]]

deceptive acts or practices with specificity when the Commission ``has 
reason to believe that the unfair or deceptive acts or practices which 
are the subject of the proposed rulemaking are prevalent.'' \70\ A 
determination about prevalence can be made either on the basis of 
``cease-and-desist'' orders regarding such acts or practices that the 
Commission has previously issued, or when it has ``any other 
information'' that ``indicates a widespread pattern of unfair or 
deceptive acts or practices.'' \71\
---------------------------------------------------------------------------

    \70\ 15 U.S.C. 57a(b)(3).
    \71\ Id.
---------------------------------------------------------------------------

    Generally, a practice is unfair under Section 5 if (1) it causes or 
is likely to cause substantial injury, (2) the injury is not reasonably 
avoidable by consumers, and (3) the injury is not outweighed by 
benefits to consumers or competition.\72\ A representation, omission, 
or practice is deceptive under Section 5 if it is likely to mislead 
consumers acting reasonably under the circumstances and is material to 
consumers--that is, it would likely affect the consumer's conduct or 
decision with regard to a product or service.\73\ Under the statute, 
this broad language is applied to specific commercial practices through 
Commission enforcement actions and the promulgation of trade regulation 
rules.
---------------------------------------------------------------------------

    \72\ 15 U.S.C. 45(n).
    \73\ See FTC Policy Statement on Deception (Oct. 14, 1983), 
appended to In re Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 
(1984), https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf.
---------------------------------------------------------------------------

    In addition to the FTC Act, the Commission enforces a number of 
sector-specific laws that relate to commercial surveillance practices, 
including: the Fair Credit Reporting Act,\74\ which protects the 
privacy of consumer information collected by consumer reporting 
agencies; the Children's Online Privacy Protection Act (``COPPA''),\75\ 
which protects information collected online from children under the age 
of 13; the Gramm-Leach-Bliley Act (``GLBA''),\76\ which protects the 
privacy of customer information collected by financial institutions; 
the Controlling the Assault of Non-Solicited Pornography and Marketing 
(``CAN-SPAM'') Act,\77\ which allows consumers to opt out of receiving 
commercial email messages; the Fair Debt Collection Practices Act,\78\ 
which protects individuals from harassment by debt collectors and 
imposes disclosure requirements on related third-parties; the 
Telemarketing and Consumer Fraud and Abuse Prevention Act,\79\ under 
which the Commission implemented the Do Not Call Registry; \80\ the 
Health Breach Notification Rule,\81\ which applies to certain health 
information; and the Equal Credit Opportunity Act,\82\ which protects 
individuals from discrimination on the basis of race, color, religion, 
national origin, sex, marital status, receipt of public assistance, or 
good faith exercise of rights under the Consumer Credit Protection Act 
and requires creditors to provide to applicants, upon request, the 
reasons underlying decisions to deny credit.
---------------------------------------------------------------------------

    \74\ 15 U.S.C. 1681 through 1681x.
    \75\ 15 U.S.C. 6501 through 6506.
    \76\ Public Law 106-102, 113 Stat. 1338 (1999) (codified as 
amended in scattered sections of 12 and 15 U.S.C.).
    \77\ 15 U.S.C. 7701 through 7713.
    \78\ 15 U.S.C. 1692 through 1692p.
    \79\ 15 U.S.C. 6101 through 6108.
    \80\ 16 CFR part 310.
    \81\ 16 CFR part 318.
    \82\ 15 U.S.C. 1691 through 1691f.
---------------------------------------------------------------------------

III. The Commission's Current Approach to Privacy and Data Security

a. Case-By-Case Enforcement and General Policy Work

    For more than two decades, the Commission has been the nation's 
privacy agency, engaging in policy work and bringing scores of 
enforcement actions concerning data privacy and security.\83\ These 
actions have alleged that certain practices violate Section 5 of the 
FTC Act or other statutes to the extent they pose risks to physical 
security, cause economic or reputational injury, or involve unwanted 
intrusions into consumers' daily lives.\84\ For example, the Commission 
has brought actions for:
---------------------------------------------------------------------------

    \83\ ``Since 1995, the Commission has been at the forefront of 
the public debate on online privacy.'' Fed. Trade Comm'n, Privacy 
Online: Fair Information Practices in the Electronic Marketplace--A 
Report to Congress 3 (2000), http://www.ftc.gov/reports/privacy2000/privacy2000.pdf (third consecutive annual report to Congress after 
it urged the Commission to take on a greater role in policing 
privacy practices using Section 5 as the internet grew from a niche 
service to a mainstream utility). The first online privacy 
enforcement action came in 1998 against GeoCities, ``one of the most 
popular sites on the World Wide Web.'' Press Release, Fed. Trade 
Comm'n, internet Site Agrees to Settle FTC Charges of Deceptively 
Collecting Personal Information in Agency's First internet Privacy 
Case (Aug. 13, 1998), http://www.ftc.gov/news-events/press-releases/1998/08/internet-site-agrees-settle-ftc-charges-deceptively-collecting.
    \84\ See Fed. Trade Comm'n, Comment to the National 
Telecommunications & Information Administration on Developing the 
Administration's Approach to Consumer Privacy, No. 180821780-8780-
01, 8-9 (Nov. 9, 2018), https://www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-comment-ntia-developingadministrations-approach-consumer-privacy/p195400_ftc_comment_to_ntia_112018.pdf; 
FTC Comm'r Christine S. Wilson, A Defining Moment for Privacy: The 
Time Is Ripe for Federal Privacy Legislation: Remarks at the Future 
of Privacy Forum 11, n.39 (Feb. 6, 2020), https://www.ftc.gov/system/files/documents/public_statements/1566337/commissioner_wilson_privacy_forum_speech_02-06-2020.pdf.
---------------------------------------------------------------------------

     the surreptitious collection and sale of consumer phone 
records obtained through false pretenses; \85\
---------------------------------------------------------------------------

    \85\ See, e.g., Compl. for Injunctive and Other Equitable 
Relief, United States v. Accusearch, Inc., No. 06-cv-105 (D. Wyo. 
filed May 1, 2006), https://www.ftc.gov/sites/default/files/documents/cases/2006/05/060501accusearchcomplaint.pdf.
---------------------------------------------------------------------------

     the public posting of private health-related data online; 
\86\
---------------------------------------------------------------------------

    \86\ See, e.g., Compl., In re Practice Fusion, Inc., F.T.C. File 
No. 142-3039 (Aug. 16, 2016), https://www.ftc.gov/system/files/documents/cases/160816practicefusioncmpt.pdf.
---------------------------------------------------------------------------

     the sharing of private health-related data with third 
parties; \87\
---------------------------------------------------------------------------

    \87\ See, e.g., Decision and Order, In re Flo Health, Inc., FTC 
File No. 1923133 (June 22, 2021), www.ftc.gov/system/files/documents/cases/192_3133_flo_health_decision_and_order.pdf.
---------------------------------------------------------------------------

     inaccurate tenant screening; \88\
---------------------------------------------------------------------------

    \88\ See, e.g., Compl. for Civ. Penalties, Permanent Injunction, 
and Other Equitable Relief, United States v. AppFolio, Inc., No. 
1:20-cv-03563 (D.D.C. filed Dec. 8, 2020), https://www.ftc.gov/system/files/documents/cases/ecf_1_-_us_v_appfolio_complaint.pdf.
---------------------------------------------------------------------------

     public disclosure of consumers' financial information in 
responses to consumers' critical online reviews of the publisher's 
services; \89\
---------------------------------------------------------------------------

    \89\ See, e.g., Compl., United States v. Mortg. Sols. FCS, Inc., 
No. 4:20-cv-00110 (N.D. Cal. filed Jan. 6, 2020), https://www.ftc.gov/system/files/documents/cases/mortgage_solutions_complaint.pdf.
---------------------------------------------------------------------------

     pre-installation of ad-injecting software that acted as a 
man-in-the-middle between consumers and all websites with which they 
communicated and collected and transmitted to the software developer 
consumers' internet browsing data; \90\
---------------------------------------------------------------------------

    \90\ See, e.g., Decision and Order, In re Lenovo (United States) 
Inc., FTC File No. 152 3134 (Dec. 20, 2017), https://www.ftc.gov/system/files/documents/cases/152_3134_c4636_lenovo_united_states_decision_and_order.pdf.
---------------------------------------------------------------------------

     solicitation and online publication of ``revenge porn''--
intimate pictures and videos of ex-partners, along with their personal 
information--and the collection of fees to take down such information; 
\91\
---------------------------------------------------------------------------

    \91\ See, e.g., Compl. for Permanent Injunction and Other 
Equitable Relief, FTC and State of Nevada v. EMP Media, Inc., No. 
2:18-cv-00035 (D. Nev. filed Jan. 9, 2018), https://www.ftc.gov/system/files/documents/cases/1623052_myex_complaint_1-9-18.pdf; 
Compl., In re Craig Brittain, F.T.C. File No. 132-3120 (Dec. 28, 
2015), https://www.ftc.gov/system/files/documents/cases/160108craigbrittaincmpt.pdf.
---------------------------------------------------------------------------

     development and marketing of ``stalkerware'' that 
purchasers surreptitiously installed on others' phones or computers in 
order to monitor them; \92\
---------------------------------------------------------------------------

    \92\ See, e.g., Compl., In re Support King, LLC, F.T.C. File No. 
192-3003 (Dec. 20, 2021), https://www.ftc.gov/system/files/documents/cases/1923003c4756spyfonecomplaint_0.pdf; Compl., In re 
Retina-X Studios, LLC, F.T.C. File No. 172-3118 (Mar. 26, 2020), 
https://www.ftc.gov/system/files/documents/cases/172_3118_retina-x_studios_complaint_0.pdf; Compl. for Permanent Injunction and Other 
Equitable Relief, FTC v. CyberSpy Software, LLC., No. 6:08-cv-01872 
(M.D. Fla. filed Nov. 5, 2008), https://www.ftc.gov/sites/default/files/documents/cases/2008/11/081105cyberspycmplt.pdf.

---------------------------------------------------------------------------

[[Page 51279]]

     retroactive application of material privacy policy changes 
to personal information that businesses previously collected from 
users; \93\
---------------------------------------------------------------------------

    \93\ See, e.g., Compl., In re Facebook, Inc., F.T.C. File No. 
092-3184 (July 27, 2012), https://www.ftc.gov/sites/default/files/documents/cases/2012/08/120810facebookcmpt.pdf; Compl., In re 
Gateway Learning Corp., F.T.C. File No. 042-3047 (Sept. 10, 2004), 
https://www.ftc.gov/sites/default/files/documents/cases/2004/09/040917comp0423047.pdf.
---------------------------------------------------------------------------

     distribution of software that caused or was likely to 
cause consumers to unwittingly share their files publicly; \94\
---------------------------------------------------------------------------

    \94\ See, e.g., Compl. for Permanent Injunction and Other 
Equitable Relief, FTC v. FrostWire LLC, No. 1:11-cv-23643 (S.D. Fla. 
filed Oct. 7, 2011), https://www.ftc.gov/sites/default/files/documents/cases/2011/10/111011frostwirecmpt.pdf.
---------------------------------------------------------------------------

     surreptitious activation of webcams in leased computers 
placed in consumers' homes; \95\
---------------------------------------------------------------------------

    \95\ See, e.g., Compl., In re DesignerWare, LLC, F.T.C. File No. 
112-3151 (Apr. 11, 2013), https://www.ftc.gov/sites/default/files/documents/cases/2013/04/130415designerwarecmpt.pdf; Compl., In re 
Aaron's, Inc., F.T.C. File No. 122-3264 (Mar. 10, 2014), https://www.ftc.gov/system/files/documents/cases/140311aaronscmpt.pdf.
---------------------------------------------------------------------------

     sale of sensitive data such as Social Security numbers to 
third parties who did not have a legitimate business need for the 
information,\96\ including known fraudsters; \97\
---------------------------------------------------------------------------

    \96\ See, e.g., Compl. for Permanent Injunction and Other 
Equitable Relief, FTC v. Blue Global & Christopher Kay, 2:17-cv-
02117 (D. Ariz. filed July 3, 2017), https://www.ftc.gov/system/files/documents/cases/ftc_v_blue_global_de01.pdf.
    \97\ See, e.g., Compl. for Permanent Injunction and Other 
Equitable Relief, FTC v. Sequoia One, LLC, Case No. 2:15-cv-01512 
(D. Nev. filed Aug. 7, 2015), https://www.ftc.gov/system/files/documents/cases/150812sequoiaonecmpt.pdf; Compl. for Permanent 
Injunction and Other Equitable Relief, FTC v. Sitesearch Corp., No. 
CV-14-02750-PHX-NVW (D. Ariz. filed Dec. 22, 2014), https://www.ftc.gov/system/files/documents/cases/141223leaplabcmpt.pdf.
---------------------------------------------------------------------------

     collection and sharing of sensitive television-viewing 
information to target advertising contrary to reasonable expectations; 
\98\
---------------------------------------------------------------------------

    \98\ See, e.g., Compl. for Permanent Injunction and Other 
Equitable and Monetary Relief, FTC v. Vizio, Inc., No. 2:17-cv-00758 
(D.N.J. filed Feb 6, 2017), https://www.ftc.gov/system/files/documents/cases/170206_vizio_2017.02.06_complaint.pdf.
---------------------------------------------------------------------------

     collection of phone numbers and email addresses to improve 
social media account security, but then deceptively using that data to 
allow companies to target advertisements in violation of an existing 
consent order; \99\
---------------------------------------------------------------------------

    \99\ See, e.g., Compl. for Civil Penalties, Permanent 
Injunction, Monetary Relief, and other Equitable Relief, United 
States v. Twitter, Inc., Case No. 3:22-cv-3070 (N.D. Cal. filed May 
25, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/2023062TwitterFiledComplaint.pdf.
---------------------------------------------------------------------------

     failure to implement reasonable measures to protect 
consumers' personal information,\100\ including Social Security numbers 
and answers to password reset questions,\101\ and later covering up an 
ensuing breach; \102\ and
---------------------------------------------------------------------------

    \100\ See, e.g., Compl., In re InfoTrax Sys., L.C., F.T.C. File 
No. 162-3130 (Dec. 30, 2019), https://www.ftc.gov/system/files/documents/cases/c-4696_162_3130_infotrax_complaint_clean.pdf; Compl. 
for Permanent Injunction & Other Relief, FTC v. Equifax, Inc., No. 
1:19-mi-99999-UNA (N.D. Ga. filed July 22, 2019), https://www.ftc.gov/system/files/documents/cases/172_3203_equifax_complaint_7-22-19.pdf; First Amended Compl. for 
Injunctive and Other Relief, FTC v. Wyndham Worldwide Corp., No. 
2:12-01365 (D. Ariz. filed Aug. 9, 2012), https://www.ftc.gov/sites/default/files/documents/cases/2012/08/120809wyndhamcmpt.pdf.
    \101\ See, e.g., Compl., In re Residual Pumpkin Entity, LLC, 
F.T.C. File No. 1923209 (June 23, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/1923209CafePressComplaint.pdf.
    \102\ Id.
---------------------------------------------------------------------------

     misrepresentations of the safeguards employed to protect 
data.\103\
---------------------------------------------------------------------------

    \103\ See, e.g., Compl., In re MoviePass, Inc., F.T.C. File No. 
192-3000 (Oct. 1, 2021), https://www.ftc.gov/system/files/documents/cases/1923000_-_moviepass_complaint_final.pdf; Compl., In re SkyMed 
Int'l, Inc., F.T.C. File No. 192-3140 (Jan. 26, 2021), https://www.ftc.gov/system/files/documents/cases/c-4732_skymed_final_complaint.pdf; Compl., In re HTC Am., Inc., F.T.C. 
File No. 122-3049 (June 25, 2013), https://www.ftc.gov/sites/default/files/documents/cases/2013/07/130702htccmpt.pdf.
---------------------------------------------------------------------------

    This is just a sample of the Commission's enforcement work in data 
privacy and security.\104\
---------------------------------------------------------------------------

    \104\ See also, e.g., Compl., In re Turn Inc., F.T.C. File No. 
152-3099 (Apr. 6, 2017) (alleging that Respondent deceptively 
tracked consumers online and through their mobile applications for 
advertising purposes even after consumers took steps to opt out of 
such tracking), https://www.ftc.gov/system/files/documents/cases/152_3099_c4612_turn_complaint.pdf; Compl., In re Epic Marketplace, 
Inc., F.T.C. File No. 112-3182 (Mar. 13, 2013) (alleging the 
Respondents deceptively collected for advertising purposes 
information about consumers' interest in sensitive medical and 
financial and other issues), https://www.ftc.gov/sites/default/files/documents/cases/2013/03/130315epicmarketplacecmpt.pdf; Compl., 
In re ScanScout, Inc., F.T.C. File No. 102-3185 (Dec. 14, 2011) 
(alleging that Respondent deceptively used flash cookies to collect 
for advertising purposes the data of consumers who changed their web 
browser settings to block cookies), https://www.ftc.gov/sites/default/files/documents/cases/2011/12/111221scanscoutcmpt.pdf; 
Compl., In re Chitika, Inc., F.T.C. File No. 102-3087 (June 7, 2011) 
(alleging that Respondent deceptively tracked consumers online for 
advertising purposes even after they opted out of online tracking on 
Respondent's website), https://www.ftc.gov/sites/default/files/documents/cases/2011/06/110617chitikacmpt.pdf.
---------------------------------------------------------------------------

    The orders that the Commission has obtained in these actions impose 
a variety of remedies, including prohibiting licensing, marketing, or 
selling of surveillance products,\105\ requiring companies under order 
to implement comprehensive privacy and security programs and obtain 
periodic assessments of those programs by independent third 
parties,\106\ requiring deletion of illegally obtained consumer 
information \107\ or work product derived from that data,\108\ 
requiring companies to provide notice to consumers affected by harmful 
practices that led to the action,\109\ and mandating that companies 
improve the transparency of their data management practices.\110\ The 
Commission may rely on these orders to seek to impose further sanctions 
on firms that repeat their unlawful practices.\111\
---------------------------------------------------------------------------

    \105\ Decision and Order, In re Support King, LLC, F.T.C. File 
No. 192-3003 (Dec. 20, 2021), https://www.ftc.gov/system/files/documents/cases/1923003c4756spyfoneorder.pdf.
    \106\ See, e.g., Decision and Order, In re Zoom Video Commc'ns, 
Inc., F.T.C. File No. 192-3167 (Jan. 19, 2021), https://www.ftc.gov/system/files/documents/cases/1923167_c-4731_zoom_final_order.pdf; 
Decision and Order, In re Tapplock, F.T.C. File No. 192-3011 (May 
18, 2020), https://www.ftc.gov/system/files/documents/cases/1923011c4718tapplockorder.pdf; Decision and Order, In re Uber 
Techs., Inc., F.T.C. File No. 152-3054 (Oct. 25, 2018), https://www.ftc.gov/system/files/documents/cases/152_3054_c-4662_uber_technologies_revised_decision_and_order.pdf.
    \107\ Decision and Order, In re Retina-X Studios, F.T.C. File 
No. 172-3118 (Mar. 26, 2020), https://www.ftc.gov/system/files/documents/cases/1723118retinaxorder_0.pdf; Decision and Order, In re 
PaymentsMD, LLC, F.T.C. File No. 132-3088 (Jan. 27, 2015), https://www.ftc.gov/system/files/documents/cases/150206paymentsmddo.pdf.
    \108\ See, e.g., Decision and Order, In re Everalbum, Inc., 
F.T.C. File No. 192-3172 (May 6, 2021), https://www.ftc.gov/system/files/documents/cases/1923172_-_everalbum_decision_final.pdf; Final 
Order, In re Cambridge Analytica, LLC, F.T.C. File No. 182-3107 
(Nov. 25, 2019), https://www.ftc.gov/system/files/documents/cases/d09389_comm_final_orderpublic.pdf. See generally Slaughter 
Algorithms Paper, 23 Yale J. L. & Tech. at 38-41 (discussing 
algorithmic disgorgement).
    \109\ See, e.g., Decision and Order, In re Flo Health, Inc., 
F.T.C. File No. 192-3133 (June 17, 2021), https://www.ftc.gov/system/files/documents/cases/192_3133_flo_health_decision_and_order.pdf.
    \110\ See, e.g., Decision and Order, In re Everalbum, Inc., 
F.T.C. File No. 192-3172 (May 6, 2021), https://www.ftc.gov/system/files/documents/cases/1923172_-_everalbum_decision_final.pdf.
    \111\ See, e.g., Press Release, Fed. Trade Comm'n, FTC Charges 
Twitter with Deceptively Using Account Security Data to Sell 
Targeted Ads (May 25, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/05/ftc-charges-twitter-deceptively-using-account-security-data-sell-targeted-ads; Press Release, Fed. Trade 
Comm'n, FTC Imposes $5 Billion Penalty and Sweeping New Privacy 
Restrictions on Facebook (July 24, 2019), https://www.ftc.gov/news-events/press-releases/2019/07/ftc-imposes-5-billion-penalty-sweeping-new-privacy-restrictions; Press Release, Fed. Trade Comm'n, 
LifeLock to Pay $100 Million to Consumers to Settle FTC Charges it 
Violated 2010 Order (Dec. 17, 2015), https://www.ftc.gov/news-events/press-releases/2015/12/lifelock-pay-100-million-consumers-settle-ftc-charges-it-violated; Press Release, Fed. Trade Comm'n, 
Google Will Pay $22.5 Million to Settle FTC Charges it 
Misrepresented Privacy Assurances to Users of Apple's Safari 
internet Browser (Aug. 9, 2012), https://www.ftc.gov/news-events/press-releases/2012/08/google-will-pay-225-million-settle-ftc-charges-it-misrepresented; Press Release, Fed. Trade Comm'n, 
Consumer Data Broker ChoicePoint Failed to Protect Consumers' 
Personal Data, Left Key Electronic Monitoring Tool Turned Off for 
Four Months (Oct. 19, 2009), https://www.ftc.gov/news-events/press-releases/2009/10/consumer-data-broker-choicepoint-failed-protect-consumers.

---------------------------------------------------------------------------

[[Page 51280]]

    The Commission has also engaged in broader policy work concerning 
data privacy and security. For example, it has promulgated rules 
pursuant to the sector-specific statutes enumerated above.\112\ It also 
has published reports and closely monitored existing and emergent 
practices, including data brokers' activities,\113\ ``dark patterns,'' 
\114\ facial recognition,\115\ Internet of Things,\116\ big data,\117\ 
cross-device tracking,\118\ and mobile privacy disclosures.\119\ The 
Commission, furthermore, has invoked its authority under Section 6(b) 
to require companies to prepare written reports or answer specific 
questions about their commercial practices.\120\
---------------------------------------------------------------------------

    \112\ See, e.g., 16 CFR part 312 (COPPA Rule); 16 CFR part 314 
(GLBA Safeguards Rule). The Commission recently updated the GLBA 
rules. See Press Release, Fed. Trade Comm'n, FTC Strengthens 
Security Safeguards for Consumer Financial Information Following 
Widespread Data Breaches (Oct. 27, 2021), https://www.ftc.gov/news-events/press-releases/2021/10/ftc-strengthens-security-safeguards-consumer-financial.
    \113\ See, e.g., Fed. Trade Comm'n, Data Brokers: A Call for 
Transparency and Accountability (May 2014), https://www.ftc.gov/system/files/documents/reports/data-brokers-call-transparency-accountability-report-federal-trade-commission-may-2014/140527databrokerreport.pdf.
    \114\ See Fed. Trade Comm'n, Bringing Dark Patterns to Light: An 
FTC Workshop (Apr. 29, 2021), https://www.ftc.gov/news-events/events-calendar/bringing-dark-patterns-light-ftc-workshop. See also 
Press Release, Fed. Trade Comm'n, FTC to Ramp up Enforcement against 
Illegal Dark Patterns that Trick or Trap Consumers into 
Subscriptions (Oct. 28, 2021), https://www.ftc.gov/news-events/press-releases/2021/10/ftc-ramp-enforcement-against-illegal-dark-patterns-trick-or-trap. The Commission's recent policy statement on 
``negative option marketing,'' moreover, takes up overlapping 
concerns about the ways in which companies dupe consumers into 
purchasing products or subscriptions by using terms or conditions 
that enable sellers to interpret a consumer's failure to assertively 
reject the service or cancel the agreement as consent. See Fed. 
Trade Comm'n, Enforcement Policy Statement Regarding Negative Option 
Marketing (Oct. 28, 2021), https://www.ftc.gov/public-statements/2021/10/enforcement-policy-statement-regarding-negative-option-marketing. Those practices do not always entail the collection and 
use of consumer data, and do not always count as ``commercial 
surveillance'' as we mean the term in this ANPR.
    \115\ See Fed. Trade Comm'n, Facing Facts: Best Practices for 
Common Uses of Facial Recognition Technologies (Oct. 2012), https://www.ftc.gov/sites/default/files/documents/reports/facing-facts-best-practices-common-uses-facial-recognition-technologies/121022facialtechrpt.pdf.
    \116\ See Fed. Trade Comm'n, Internet of Things: Privacy & 
Security in a Connected World (Jan. 2015), https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-staff-report-november-2013-workshop-entitled-internet-things-privacy/150127iotrpt.pdf.
    \117\ See Fed. Trade Comm'n, Big Data: A Tool for Inclusion or 
Exclusion? (Jan. 2016), https://www.ftc.gov/system/files/documents/reports/big-data-tool-inclusion-or-exclusion-understanding-issues/160106big-data-rpt.pdf.
    \118\ See Fed. Trade Comm'n, Cross-Device Tracking: An FTC Staff 
Report (Jan. 2017), https://www.ftc.gov/system/files/documents/reports/cross-device-tracking-federal-trade-commission-staff-report-january-2017/ftc_cross-device_tracking_report_1-23-17.pdf.
    \119\ See Fed. Trade Comm'n, Mobile Privacy Disclosures: 
Building Trust Through Transparency: FTC Staff Report (Feb. 2013), 
https://www.ftc.gov/sites/default/files/documents/reports/mobile-privacy-disclosures-building-trust-through-transparency-federal-trade-commission-staff-report/130201mobileprivacyreport.pdf.
    \120\ See 15 U.S.C. 46(b). The Commission's recent report on 
broadband service providers is an example. Press Release, Fed. Trade 
Comm'n, FTC Staff Report Finds Many internet Service Providers 
Collect Troves of Personal Data, Users Have Few Options to Restrict 
Use (Oct 21, 2021), https://www.ftc.gov/news-events/press-releases/2021/10/ftc-staff-report-finds-many-internet-service-providers-collect. The Commission also recently commenced a Section 6(b) 
inquiry into social media companies. See Business Blog, Fed. Trade 
Comm'n, FTC issues 6(b) orders to social media and video streaming 
services (Dec. 14, 2020), https://www.ftc.gov/news-events/blogs/business-blog/2020/12/ftc-issues-6b-orders-social-media-video-streaming-services. Past Section 6(b) inquiries related to data 
privacy or security issues include those involving mobile security 
updates and the practices of data brokers. See Press Release, FTC 
Recommends Steps to Improve Mobile Device Security Update Practices 
(Feb. 28, 2018), https://www.ftc.gov/news-events/press-releases/2018/02/ftc-recommends-steps-improve-mobile-device-security-update; 
Press Release, FTC Recommends Congress Require the Data Broker 
Industry to be More Transparent and Give Consumers Greater Control 
Over Their Personal Information (May 27, 2014), https://www.ftc.gov/news-events/press-releases/2014/05/ftc-recommends-congress-require-data-broker-industry-be-more.
---------------------------------------------------------------------------

b. Reasons for Rulemaking

    The Commission's extensive enforcement and policy work over the 
last couple of decades on consumer data privacy and security has raised 
important questions about the prevalence of harmful commercial 
surveillance and lax data security practices. This experience suggests 
that enforcement alone without rulemaking may be insufficient to 
protect consumers from significant harms. First, the FTC Act limits the 
remedies that the Commission may impose in enforcement actions on 
companies for violations of Section 5.\121\ Specifically, the statute 
generally does not allow the Commission to seek civil penalties for 
first-time violations of that provision.\122\ The fact that the 
Commission does not have authority to seek penalties for first-time 
violators may insufficiently deter future law violations. This may put 
firms that are careful to follow the law, including those that 
implement reasonable privacy-protective measures, at a competitive 
disadvantage. New trade regulation rules could, by contrast, set clear 
legal requirements or benchmarks by which to evaluate covered 
companies. They also would incentivize all companies to invest in 
compliance more consistently because, pursuant to the FTC Act, the 
Commission may impose civil penalties for first-time violations of duly 
promulgated trade regulation rules.\123\
---------------------------------------------------------------------------

    \121\ See, e.g., 15 U.S.C. 53, 57b. See also Rohit Chopra & 
Samuel A.A. Levine, The Case for Resurrecting the FTC Act's Penalty 
Offense Authority, 170 U. Pa. L. Rev. 71 (2021) (arguing that the 
Commission should provide whole industries notice of practices that 
the FTC has declared unfair or deceptive in litigated cease-and-
desist orders in order to increase deterrence by creating a basis 
for the Commission to seek civil penalties pursuant to section 
5(m)(1)(B) of the FTC Act against those that engage in such 
practices with knowledge that they are unfair or deceptive).
    \122\ Typically, in order to obtain civil monetary penalties 
under the FTC Act, the Commission must find that a respondent has 
violated a previously entered cease-and-desist order and then must 
bring a subsequent enforcement action for a violation of that order. 
See 15 U.S.C. 45(l).
    \123\ See 15 U.S.C. 45(m).
---------------------------------------------------------------------------

    Second, while the Commission can enjoin conduct that violates 
Section 5, as a matter of law and policy enforcement, such relief may 
be inadequate in the context of commercial surveillance and lax data 
security practices. For instance, after a hacker steals personal 
consumer data from an inadequately secured database, an injunction 
stopping the conduct and requiring the business to take affirmative 
steps to improve its security going forward can help prevent future 
breaches but does not remediate the harm that has already occurred or 
is likely to occur.\124\
---------------------------------------------------------------------------

    \124\ The Supreme Court recently held, in AMG Capital 
Management, LLC v. FTC, 141 S. Ct. 1341 (2021), that Section 13(b) 
of the FTC Act, 15 U.S.C. 53(b), does not allow the FTC to obtain 
equitable monetary relief in federal court for violations of Section 
5. This has left Section 19, 15 U.S.C. 57b--which requires evidence 
of fraudulent or dishonest conduct--as the only avenue for the 
Commission to obtain financial redress for consumers.
---------------------------------------------------------------------------

    Third, even in those instances in which the Commission can obtain 
monetary relief for violations of Section 5, such relief may be 
difficult to apply to some harmful commercial surveillance or lax data 
security practices that may not cause direct financial injury or, in 
any given individual case, do not lend themselves to broadly accepted 
ways of quantifying harm.\125\ This is a problem that is underscored by 
commercial surveillance practices involving automated decision-making 
systems where the harm to any given individual or small group of 
individuals might affect other consumers in ways that are opaque or

[[Page 51281]]

hard to discern in the near term,\126\ but are potentially no less 
unfair or deceptive.
---------------------------------------------------------------------------

    \125\ See generally Danielle Keats Citron & Daniel J. Solove, 
Privacy Harms, 102 B.U. L. Rev. 793 (2022).
    \126\ See generally Alicia Solow-Niederman, Information Privacy 
and the Inference Economy, 117 Nw. U. L. Rev. 1, 27-38 (forthcoming 
2022; cited with permission from author) (currently available at 
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3921003).
---------------------------------------------------------------------------

    Finally, the Commission's limited resources today can make it 
challenging to investigate and act on the extensive public reporting on 
data security practices that may violate Section 5, especially given 
how digitized and networked all aspects of the economy are becoming. A 
trade regulation rule could provide clarity and predictability about 
the statute's application to existing and emergent commercial 
surveillance and data security practices that, given institutional 
constraints, may be hard to equal or keep up with, case-by-case.\127\
---------------------------------------------------------------------------

    \127\ The Commission is wary of committing now, even 
preliminarily, to any regulatory approach without public comment 
given the reported scope of commercial surveillance practices. The 
FTC Act, however, requires the Commission to identify ``possible 
regulatory alternatives under consideration'' in this ANPR. 15 
U.S.C. 57a(b)(2)(A)(i). Thus, in Item IV below, this ANPR touches on 
a variety of potential regulatory interventions, including, among 
others, restrictions on certain practices in certain industries, 
disclosure, and notice requirements.
---------------------------------------------------------------------------

IV. Questions

    The commercial surveillance and lax data security practices that 
this ANPR describes above are only a sample of what the Commission's 
enforcement actions, news reporting, and published research have 
revealed. Here, in this Item, the Commission invites public comment on 
(a) the nature and prevalence of harmful commercial surveillance and 
lax data security practices, (b) the balance of costs and 
countervailing benefits of such practices for consumers and 
competition, as well as the costs and benefits of any given potential 
trade regulation rule, and (c) proposals for protecting consumers from 
harmful and prevalent commercial surveillance and lax data security 
practices.
    This ANPR does not identify the full scope of potential approaches 
the Commission might ultimately undertake by rule or otherwise. It does 
not delineate a boundary on the issues on which the public may submit 
comments. Nor does it constrain the actions the Commission might pursue 
in an NPRM or final rule. The Commission invites comment on all 
potential rules, including those currently in force in foreign 
jurisdictions, individual U.S. states, and other legal 
jurisdictions.\128\
---------------------------------------------------------------------------

    \128\ The Commission is currently undertaking its regular 
periodic review of current COPPA enforcement and rules. See Fed. 
Trade Comm'n, Request for Public Comment on the Federal Trade 
Commission's Implementation of the Children's Online Privacy 
Protection Rule, 84 FR 35842 (July 25, 2019), https://www.federalregister.gov/documents/2019/07/25/2019-15754/request-for-public-comment-on-the-federal-trade-commissions-implementation-of-the-childrens-online. Nothing in this ANPR displaces or supersedes 
that proceeding.
---------------------------------------------------------------------------

    Given the significant interest this proceeding is likely to 
generate, and in order to facilitate an efficient review of 
submissions, the Commission encourages but does not require commenters 
to (1) submit a short Executive Summary of no more than three single-
spaced pages at the beginning of all comments, (2) provide supporting 
material, including empirical data, findings, and analysis in published 
reports or studies by established news organizations and research 
institutions, (3) consistent with the questions below, describe the 
relative benefits and costs of their recommended approach, (4) refer to 
the numbered question(s) to which the comment is addressed, and (5) tie 
their recommendations to specific commercial surveillance and lax data 
security practices.

a. To what extent do commercial surveillance practices or lax security 
measures harm consumers?

    This ANPR has alluded to only a fraction of the potential consumer 
harms arising from lax data security or commercial surveillance 
practices, including those concerning physical security, economic 
injury, psychological harm, reputational injury, and unwanted 
intrusion.
    1. Which practices do companies use to surveil consumers?
    2. Which measures do companies use to protect consumer data?
    3. Which of these measures or practices are prevalent? Are some 
practices more prevalent in some sectors than in others?
    4. How, if at all, do these commercial surveillance practices harm 
consumers or increase the risk of harm to consumers?
    5. Are there some harms that consumers may not easily discern or 
identify? Which are they?
    6. Are there some harms that consumers may not easily quantify or 
measure? Which are they?
    7. How should the Commission identify and evaluate these commercial 
surveillance harms or potential harms? On which evidence or measures 
should the Commission rely to substantiate its claims of harm or risk 
of harm?
    8. Which areas or kinds of harm, if any, has the Commission failed 
to address through its enforcement actions?
    9. Has the Commission adequately addressed indirect pecuniary 
harms, including potential physical harms, psychological harms, 
reputational injuries, and unwanted intrusions?
    10. Which kinds of data should be subject to a potential trade 
regulation rule? Should it be limited to, for example, personally 
identifiable data, sensitive data, data about protected categories and 
their proxies, data that is linkable to a device, or non-aggregated 
data? Or should a potential rule be agnostic about kinds of data?
    11. Which, if any, commercial incentives and business models lead 
to lax data security measures or harmful commercial surveillance 
practices? Are some commercial incentives and business models more 
likely to protect consumers than others? On which checks, if any, do 
companies rely to ensure that they do not cause harm to consumers?
    12. Lax data security measures and harmful commercial surveillance 
injure different kinds of consumers (e.g., young people, workers, 
franchisees, small businesses, women, victims of stalking or domestic 
violence, racial minorities, the elderly) in different sectors (e.g., 
health, finance, employment) or in different segments or ``stacks'' of 
the internet economy. For example, harms arising from data security 
breaches in finance or healthcare may be different from those 
concerning discriminatory advertising on social media which may be 
different from those involving education technology. How, if at all, 
should potential new trade regulation rules address harms to different 
consumers across different sectors? Which commercial surveillance 
practices, if any, are unlawful such that new trade regulation rules 
should set out clear limitations or prohibitions on them? To what 
extent, if any, is a comprehensive regulatory approach better than a 
sectoral one for any given harm?

b. To what extent do commercial surveillance practices or lax data 
security measures harm children, including teenagers?

    13. The Commission here invites comment on commercial surveillance 
practices or lax data security measures that affect children, including 
teenagers. Are there practices or measures to which children or 
teenagers are particularly vulnerable or susceptible? For instance, are 
children and teenagers more likely than adults to be manipulated by 
practices designed to

[[Page 51282]]

encourage the sharing of personal information?
    14. What types of commercial surveillance practices involving 
children and teens' data are most concerning? For instance, given the 
reputational harms that teenagers may be characteristically less 
capable of anticipating than adults, to what extent should new trade 
regulation rules provide teenagers with an erasure mechanism in a 
similar way that COPPA provides for children under 13? Which measures 
beyond those required under COPPA would best protect children, 
including teenagers, from harmful commercial surveillance practices?
    15. In what circumstances, if any, is a company's failure to 
provide children and teenagers with privacy protections, such as not 
providing privacy-protective settings by default, an unfair practice, 
even if the site or service is not targeted to minors? For example, 
should services that collect information from large numbers of children 
be required to provide them enhanced privacy protections regardless of 
whether the services are directed to them? Should services that do not 
target children and teenagers be required to take steps to determine 
the age of their users and provide additional protections for minors?
    16. Which sites or services, if any, implement child-protective 
measures or settings even if they do not direct their content to 
children and teenagers?
    17. Do techniques that manipulate consumers into prolonging online 
activity (e.g., video autoplay, infinite or endless scroll, quantified 
public popularity) facilitate commercial surveillance of children and 
teenagers? If so, how? In which circumstances, if any, are a company's 
use of those techniques on children and teenagers an unfair practice? 
For example, is it an unfair or deceptive practice when a company uses 
these techniques despite evidence or research linking them to clinical 
depression, anxiety, eating disorders, or suicidal ideation among 
children and teenagers?
    18. To what extent should trade regulation rules distinguish 
between different age groups among children (e.g., 13 to 15, 16 to 17, 
etc.)?
    19. Given the lack of clarity about the workings of commercial 
surveillance behind the screen or display, is parental consent an 
efficacious way of ensuring child online privacy? Which other 
protections or mechanisms, if any, should the Commission consider?
    20. How extensive is the business-to-business market for children 
and teens' data? In this vein, should new trade regulation rules set 
out clear limits on transferring, sharing, or monetizing children and 
teens' personal information?
    21. Should companies limit their uses of the information that they 
collect to the specific services for which children and teenagers or 
their parents sign up? Should new rules set out clear limits on 
personalized advertising to children and teenagers irrespective of 
parental consent? If so, on what basis? What harms stem from 
personalized advertising to children? What, if any, are the prevalent 
unfair or deceptive practices that result from personalized advertising 
to children and teenagers?
    22. Should new rules impose differing obligations to protect 
information collected from children depending on the risks of the 
particular collection practices?
    23. How would potential rules that block or otherwise help to stem 
the spread of child sexual abuse material, including content-matching 
techniques, otherwise affect consumer privacy?

c. How should the Commission balance costs and benefits?

    24. The Commission invites comment on the relative costs and 
benefits of any current practice, as well as those for any responsive 
regulation. How should the Commission engage in this balancing in the 
context of commercial surveillance and data security? Which variables 
or outcomes should it consider in such an accounting? Which variables 
or outcomes are salient but hard to quantify as a material cost or 
benefit? How should the Commission ensure adequate weight is given to 
costs and benefits that are hard to quantify?
    25. What is the right time horizon for evaluating the relative 
costs and benefits of existing or emergent commercial surveillance and 
data security practices? What is the right time horizon for evaluating 
the relative benefits and costs of regulation?
    26. To what extent would any given new trade regulation rule on 
data security or commercial surveillance impede or enhance innovation? 
To what extent would such rules enhance or impede the development of 
certain kinds of products, services, and applications over others?
    27. Would any given new trade regulation rule on data security or 
commercial surveillance impede or enhance competition? Would any given 
rule entrench the potential dominance of one company or set of 
companies in ways that impede competition? If so, how and to what 
extent?
    28. Should the analysis of cost and benefits differ in the context 
of information about children? If so, how?
    29. What are the benefits or costs of refraining from promulgating 
new rules on commercial surveillance or data security?

d. How, if at all, should the Commission regulate harmful commercial 
surveillance or data security practices that are prevalent?

i. Rulemaking Generally
    30. Should the Commission pursue a Section 18 rulemaking on 
commercial surveillance and data security? To what extent are existing 
legal authorities and extralegal measures, including self-regulation, 
sufficient? To what extent, if at all, are self-regulatory principles 
effective?
ii. Data Security
    31. Should the Commission commence a Section 18 rulemaking on data 
security? The Commission specifically seeks comment on how potential 
new trade regulation rules could require or help incentivize reasonable 
data security.
    32. Should, for example, new rules require businesses to implement 
administrative, technical, and physical data security measures, 
including encryption techniques, to protect against risks to the 
security, confidentiality, or integrity of covered data? If so, which 
measures? How granular should such measures be? Is there evidence of 
any impediments to implementing such measures?
    33. Should new rules codify the prohibition on deceptive claims 
about consumer data security, accordingly authorizing the Commission to 
seek civil penalties for first-time violations?
    34. Do the data security requirements under COPPA or the GLBA 
Safeguards Rule offer any constructive guidance for a more general 
trade regulation rule on data security across sectors or in other 
specific sectors?
    35. Should the Commission take into account other laws at the state 
and federal level (e.g., COPPA) that already include data security 
requirements. If so, how? Should the Commission take into account other 
governments' requirements as to data security (e.g., GDPR). If so, how?
    36. To what extent, if at all, should the Commission require firms 
to certify that their data practices meet clear security standards? If 
so, who should set those standards, the FTC or a third-party entity?

[[Page 51283]]

iii. Collection, Use, Retention, and Transfer of Consumer Data
    37. How do companies collect consumers' biometric information? What 
kinds of biometric information do companies collect? For what purposes 
do they collect and use it? Are consumers typically aware of that 
collection and use? What are the benefits and harms of these practices?
    38. Should the Commission consider limiting commercial surveillance 
practices that use or facilitate the use of facial recognition, 
fingerprinting, or other biometric technologies? If so, how?
    39. To what extent, if at all, should the Commission limit 
companies that provide any specifically enumerated services (e.g., 
finance, healthcare, search, or social media) from owning or operating 
a business that engages in any specific commercial surveillance 
practices like personalized or targeted advertising? If so, how? What 
would the relative costs and benefits of such a rule be, given that 
consumers generally pay zero dollars for services that are financed 
through advertising?
    40. How accurate are the metrics on which internet companies rely 
to justify the rates that they charge to third-party advertisers? To 
what extent, if at all, should new rules limit targeted advertising and 
other commercial surveillance practices beyond the limitations already 
imposed by civil rights laws? If so, how? To what extent would such 
rules harm consumers, burden companies, stifle innovation or 
competition, or chill the distribution of lawful content?
    41. To what alternative advertising practices, if any, would 
companies turn in the event new rules somehow limit first- or third-
party targeting?
    42. How cost-effective is contextual advertising as compared to 
targeted advertising?
    43. To what extent, if at all, should new trade regulation rules 
impose limitations on companies' collection, use, and retention of 
consumer data? Should they, for example, institute data minimization 
requirements or purpose limitations, i.e., limit companies from 
collecting, retaining, using, or transferring consumer data beyond a 
certain predefined point? Or, similarly, should they require companies 
to collect, retain, use, or transfer consumer data only to the extent 
necessary to deliver the specific service that a given individual 
consumer explicitly seeks or those that are compatible with that 
specific service? If so, how? How should it determine or define which 
uses are compatible? How, moreover, could the Commission discern which 
data are relevant to achieving certain purposes and no more?
    44. By contrast, should new trade regulation rules restrict the 
period of time that companies collect or retain consumer data, 
irrespective of the different purposes to which it puts that data? If 
so, how should such rules define the relevant period?
    45. Pursuant to a purpose limitation rule, how, if at all, should 
the Commission discern whether data that consumers give for one purpose 
has been only used for that specified purpose? To what extent, 
moreover, should the Commission permit use of consumer data that is 
compatible with, but distinct from, the purpose for which consumers 
explicitly give their data?
    46. Or should new rules impose data minimization or purpose 
limitations only for certain designated practices or services? Should, 
for example, the Commission impose limits on data use for essential 
services such as finance, healthcare, or search--that is, should it 
restrict companies that provide these services from using, retaining, 
or transferring consumer data for any other service or commercial 
endeavor? If so, how?
    47. To what extent would data minimization requirements or purpose 
limitations protect consumer data security?
    48. To what extent would data minimization requirements or purpose 
limitations unduly hamper algorithmic decision-making or other 
algorithmic learning-based processes or techniques? To what extent 
would the benefits of a data minimization or purpose limitation rule be 
out of proportion to the potential harms to consumers and companies of 
such a rule?
    49. How administrable are data minimization requirements or purpose 
limitations given the scale of commercial surveillance practices, 
information asymmetries, and the institutional resources such rules 
would require the Commission to deploy to ensure compliance? What do 
other jurisdictions have to teach about their relative effectiveness?
    50. What would be the effect of data minimization or purpose 
limitations on consumers' ability to access services or content for 
which they are not currently charged out of pocket? Conversely, which 
costs, if any, would consumers bear if the Commission does not impose 
any such restrictions?
    51. To what extent, if at all, should the Commission require firms 
to certify that their commercial surveillance practices meet clear 
standards concerning collection, use, retention, transfer, or 
monetization of consumer data? If promulgated, who should set those 
standards: the FTC, a third-party organization, or some other entity?
    52. To what extent, if at all, do firms that now, by default, 
enable consumers to block other firms' use of cookies and other 
persistent identifiers impede competition? To what extent do such 
measures protect consumer privacy, if at all? Should new trade 
regulation rules forbid the practice by, for example, requiring a form 
of interoperability or access to consumer data? Or should they permit 
or incentivize companies to limit other firms' access to their 
consumers' data? How would such rules interact with general concerns 
and potential remedies discussed elsewhere in this ANPR?
iv. Automated Decision-Making Systems
    53. How prevalent is algorithmic error? To what extent is 
algorithmic error inevitable? If it is inevitable, what are the 
benefits and costs of allowing companies to employ automated decision-
making systems in critical areas, such as housing, credit, and 
employment? To what extent can companies mitigate algorithmic error in 
the absence of new trade regulation rules?
    54. What are the best ways to measure algorithmic error? Is it more 
pronounced or happening with more frequency in some sectors than 
others?
    55. Does the weight that companies give to the outputs of automated 
decision-making systems overstate their reliability? If so, does that 
have the potential to lead to greater consumer harm when there are 
algorithmic errors?
    56. To what extent, if at all, should new rules require companies 
to take specific steps to prevent algorithmic errors? If so, which 
steps? To what extent, if at all, should the Commission require firms 
to evaluate and certify that their reliance on automated decision-
making meets clear standards concerning accuracy, validity, 
reliability, or error? If so, how? Who should set those standards, the 
FTC or a third-party entity? Or should new rules require businesses to 
evaluate and certify that the accuracy, validity, or reliability of 
their commercial surveillance practices are in accordance with their 
own published business policies?
    57. To what extent, if at all, do consumers benefit from automated 
decision-making systems? Who is most likely to benefit? Who is most 
likely to be harmed or disadvantaged? To what extent do such practices 
violate Section 5 of the FTC Act?

[[Page 51284]]

    58. Could new rules help ensure that firms' automated decision-
making practices better protect non-English speaking communities from 
fraud and abusive data practices? If so, how?
    59. If new rules restrict certain automated decision-making 
practices, which alternatives, if any, would take their place? Would 
these alternative techniques be less prone to error than the automated 
decision-making they replace?
    60. To what extent, if at all, should new rules forbid or limit the 
development, design, and use of automated decision-making systems that 
generate or otherwise facilitate outcomes that violate Section 5 of the 
FTC Act? Should such rules apply economy-wide or only in some sectors? 
If the latter, which ones? Should these rules be structured differently 
depending on the sector? If so, how?
    61. What would be the effect of restrictions on automated decision-
making in product access, product features, product quality, or 
pricing? To what alternative forms of pricing would companies turn, if 
any?
    62. Which, if any, legal theories would support limits on the use 
of automated systems in targeted advertising given potential 
constitutional or other legal challenges?
    63. To what extent, if at all, does the First Amendment bar or not 
bar the Commission from promulgating or enforcing rules concerning the 
ways in which companies personalize services or deliver targeted 
advertisements?
    64. To what extent, if at all, does Section 230 of the 
Communications Act, 47 U.S.C. 230, bar the Commission from promulgating 
or enforcing rules concerning the ways in which companies use automated 
decision-making systems to, among other things, personalize services or 
deliver targeted advertisements?
v. Discrimination Based on Protected Categories
    65. How prevalent is algorithmic discrimination based on protected 
categories such as race, sex, and age? Is such discrimination more 
pronounced in some sectors than others? If so, which ones?
    66. How should the Commission evaluate or measure algorithmic 
discrimination? How does algorithmic discrimination affect consumers, 
directly and indirectly? To what extent, if at all, does algorithmic 
discrimination stifle innovation or competition?
    67. How should the Commission address such algorithmic 
discrimination? Should it consider new trade regulation rules that bar 
or somehow limit the deployment of any system that produces 
discrimination, irrespective of the data or processes on which those 
outcomes are based? If so, which standards should the Commission use to 
measure or evaluate disparate outcomes? How should the Commission 
analyze discrimination based on proxies for protected categories? How 
should the Commission analyze discrimination when more than one 
protected category is implicated (e.g., pregnant veteran or Black 
woman)?
    68. Should the Commission focus on harms based on protected 
classes? Should the Commission consider harms to other underserved 
groups that current law does not recognize as protected from 
discrimination (e.g., unhoused people or residents of rural 
communities)?
    69. Should the Commission consider new rules on algorithmic 
discrimination in areas where Congress has already explicitly 
legislated, such as housing, employment, labor, and consumer finance? 
Or should the Commission consider such rules addressing all sectors?
    70. How, if at all, would restrictions on discrimination by 
automated decision-making systems based on protected categories affect 
all consumers?
    71. To what extent, if at all, may the Commission rely on its 
unfairness authority under Section 5 to promulgate antidiscrimination 
rules? Should it? How, if at all, should antidiscrimination doctrine in 
other sectors or federal statutes relate to new rules?
    72. How can the Commission's expertise and authorities complement 
those of other civil rights agencies? How might a new rule ensure space 
for interagency collaboration?
vi. Consumer Consent
    73. The Commission invites comment on the effectiveness and 
administrability of consumer consent to companies' commercial 
surveillance and data security practices. Given the reported scale, 
opacity, and pervasiveness of existing commercial surveillance today, 
to what extent is consumer consent an effective way of evaluating 
whether a practice is unfair or deceptive? How should the Commission 
evaluate its effectiveness?
    74. In which circumstances, if any, is consumer consent likely to 
be effective? Which factors, if any, determine whether consumer consent 
is effective?
    75. To what extent does current law prohibit commercial 
surveillance practices, irrespective of whether consumers consent to 
them?
    76. To what extent should new trade regulation rules prohibit 
certain specific commercial surveillance practices, irrespective of 
whether consumers consent to them?
    77. To what extent should new trade regulation rules require firms 
to give consumers the choice of whether to be subject to commercial 
surveillance? To what extent should new trade regulation rules give 
consumers the choice of withdrawing their duly given prior consent? How 
demonstrable or substantial must consumer consent be if it is to remain 
a useful way of evaluating whether a commercial surveillance practice 
is unfair or deceptive? How should the Commission evaluate whether 
consumer consent is meaningful enough?
    78. What would be the effects on consumers of a rule that required 
firms to give consumers the choice of being subject to commercial 
surveillance or withdrawing that consent? When or how often should any 
given company offer consumers the choice? And for which practices 
should companies provide these options, if not all?
    79. Should the Commission require different consent standards for 
different consumer groups (e.g., parents of teenagers (as opposed to 
parents of pre-teens), elderly individuals, individuals in crisis or 
otherwise especially vulnerable to deception)?
    80. Have opt-out choices proved effective in protecting against 
commercial surveillance? If so, how and in what contexts?
    81. Should new trade regulation rules require companies to give 
consumers the choice of opting out of all or certain limited commercial 
surveillance practices? If so, for which practices or purposes should 
the provision of an opt-out choice be required? For example, to what 
extent should new rules require that consumers have the choice of 
opting out of all personalized or targeted advertising?
    82. How, if at all, should the Commission require companies to 
recognize or abide by each consumer's respective choice about opting 
out of commercial surveillance practices--whether it be for all 
commercial surveillance practices or just some? How would any such rule 
affect consumers, given that they do not all have the same preference 
for the amount or kinds of personal information that they share?
vii. Notice, Transparency, and Disclosure
    83. To what extent should the Commission consider rules that 
require companies to make information

[[Page 51285]]

available about their commercial surveillance practices? What kinds of 
information should new trade regulation rules require companies to make 
available and in what form?
    84. In which contexts are transparency or disclosure requirements 
effective? In which contexts are they less effective?
    85. Which, if any, mechanisms should the Commission use to require 
or incentivize companies to be forthcoming? Which, if any, mechanisms 
should the Commission use to verify the sufficiency, accuracy, or 
authenticity of the information that companies provide?

a. What are the mechanisms for opacity?

    86. The Commission invites comment on the nature of the opacity of 
different forms of commercial surveillance practices. On which 
technological or legal mechanisms do companies rely to shield their 
commercial surveillance practices from public scrutiny? Intellectual 
property protections, including trade secrets, for example, limit the 
involuntary public disclosure of the assets on which companies rely to 
deliver products, services, content, or advertisements. How should the 
Commission address, if at all, these potential limitations?

b. Who should administer notice or disclosure requirements?

    87. To what extent should the Commission rely on third-party 
intermediaries (e.g., government officials, journalists, academics, or 
auditors) to help facilitate new disclosure rules?
    88. To what extent, moreover, should the Commission consider the 
proprietary or competitive interests of covered companies in deciding 
what role such third-party auditors or researchers should play in 
administering disclosure requirements?

c. What should companies provide notice of or disclose?

    89. To what extent should trade regulation rules, if at all, 
require companies to explain (1) the data they use, (2) how they 
collect, retain, disclose, or transfer that data, (3) how they choose 
to implement any given automated decision-making system or process to 
analyze or process the data, including the consideration of alternative 
methods, (4) how they process or use that data to reach a decision, (5) 
whether they rely on a third-party vendor to make such decisions, (6) 
the impacts of their commercial surveillance practices, including 
disparities or other distributional outcomes among consumers, and (7) 
risk mitigation measures to address potential consumer harms?
    90. Disclosures such as these might not be comprehensible to many 
audiences. Should new rules, if promulgated, require plain-spoken 
explanations? How effective could such explanations be, no matter how 
plain? To what extent, if at all, should new rules detail such 
requirements?
    91. Disclosure requirements could vary depending on the nature of 
the service or potential for harm. A potential new trade regulation 
rule could, for example, require different kinds of disclosure tools 
depending on the nature of the data or practices at issue (e.g., 
collection, retention, or transfer) or the sector (e.g., consumer 
credit, housing, or work). Or the agency could impose transparency 
measures that require in-depth accounting (e.g., impact assessments) or 
evaluation against externally developed standards (e.g., third-party 
auditing). How, if at all, should the Commission implement and enforce 
such rules?
    92. To what extent should the Commission, if at all, make regular 
self-reporting, third-party audits or assessments, or self-administered 
impact assessments about commercial surveillance practices a standing 
obligation? How frequently, if at all, should the Commission require 
companies to disclose such materials publicly? If it is not a standing 
obligation, what should trigger the publication of such materials?
    93. To what extent do companies have the capacity to provide any of 
the above information? Given the potential cost of such disclosure 
requirements, should trade regulation rules exempt certain companies 
due to their size or the nature of the consumer data at issue?
viii. Remedies
    94. How should the FTC's authority to implement remedies under the 
Act determine the form or substance of any potential new trade 
regulation rules on commercial surveillance? Should new rules enumerate 
specific forms of relief or damages that are not explicit in the FTC 
Act but that are within the Commission's authority? For example, should 
a potential new trade regulation rule on commercial surveillance 
explicitly identify algorithmic disgorgement, a remedy that forbids 
companies from profiting from unlawful practices related to their use 
of automated systems, as a potential remedy? Which, if any, other 
remedial tools should new trade regulation rules on commercial 
surveillance explicitly identify? Is there a limit to the Commission's 
authority to implement remedies by regulation?
ix. Obsolescence
    95. The Commission is alert to the potential obsolescence of any 
rulemaking. As important as targeted advertising is to today's internet 
economy, for example, it is possible that its role may wane. Companies 
and other stakeholders are exploring new business models.\129\ Such 
changes would have notable collateral consequences for companies that 
have come to rely on the third-party advertising model, including and 
especially news publishing. These developments in online advertising 
marketplace are just one example. How should the Commission account for 
changes in business models in advertising as well as other commercial 
surveillance practices?
---------------------------------------------------------------------------

    \129\ See, e.g., Brian X. Chen, The Battle for Digital Privacy 
Is Reshaping the internet, N.Y. Times (Sept. 16, 2021), https://www.nytimes.com/2021/09/16/technology/digital-privacy.html.
---------------------------------------------------------------------------

V. Comment Submissions

    You can file a comment online or on paper. For the Commission to 
consider your comment, it must receive it on or before October 21, 
2022. Write ``Commercial Surveillance ANPR, R111004'' on your comment. 
Your comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the https://www.regulations.gov website. The Commission strongly 
encourages you to submit your comments online through the https://www.regulations.gov website. To ensure the Commission considers your 
online comment, please follow the instructions on the web-based form.
    If you file your comment on paper, write ``Commercial Surveillance 
ANPR, R111004'' on your comment and on the envelope, and mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B), 
Washington, DC 20580.
    Because your comment will be placed on the public record, you are 
solely responsible for making sure that your comment does not include 
any sensitive or confidential information. In particular, your comment 
should not contain sensitive personal information, such as your or 
anyone else's Social Security number; date of birth; driver's license 
number or other state identification number or foreign country 
equivalent; passport number; financial

[[Page 51286]]

account number; or credit or debit card number. You are also solely 
responsible for making sure your comment does not include any sensitive 
health information, such as medical records or other individually 
identifiable health information. In addition, your comment should not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential''--as provided in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2)--including in particular competitively sensitive information 
such as costs, sales statistics, inventories, formulas, patterns, 
devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted publicly at https://www.regulations.gov-as legally required 
by FTC Rule 4.9(b)--we cannot redact or remove your comment, unless you 
submit a confidentiality request that meets the requirements for such 
treatment under FTC Rule 4.9(c), and the General Counsel grants that 
request.
    Visit the FTC website to read this document and the news release 
describing it. The FTC Act and other laws that the Commission 
administers permit the collection of public comments to consider and 
use in this proceeding as appropriate. The Commission will consider all 
timely and responsive public comments it receives on or before October 
21, 2022. For information on the Commission's privacy policy, including 
routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

VI. The Public Forum

    The Commission will hold a public forum on Thursday, September 8, 
2022, from 2 p.m. until 7:30 p.m. eastern time. In light of the ongoing 
COVID-19 pandemic, the forum will be held virtually, and members of the 
public are encouraged to attend virtually by visiting https://www.ftc.gov/news-events/events/2022/09/commercial-surveillance-data-security-anpr-public-forum. The public forum will address in greater 
depth the topics that are the subject of this document as well as the 
rulemaking process with a goal of facilitating broad public 
participation in response to this ANPR and any future rulemaking 
proceedings the Commission undertakes. A complete agenda will be posted 
at the aforementioned website and announced in a press release at a 
future date. Individuals or entities that would like to participate in 
the public forum by offering two-minute public remarks, should email 
[email protected]. Please note that this email is only for 
requests to participate in the public forum and is not a means of 
submitting comments in response to this ANPR. Please see Item V above 
for instructions on submitting public comments.
    Forum panelists will be selected by FTC staff, and public remarks 
are first come, first serve. The Commission will place a recording of 
the proceeding on the public record. Requests to participate in the 
public remarks must be received on or before August 31, 2022. 
Individuals or entities selected to participate will be notified on or 
before September 2, 2022. Because disclosing sources of funding 
promotes transparency, ensures objectivity, and maintains the public's 
trust, prospective participants, if chosen, will be required to 
disclose the source of any support they received in connection with 
participation at the forum. This funding information will be included 
in the published biographies as part of the forum record.

    By direction of the Commission.
Joel Christie,
Acting Secretary.

    Note:  The following statements will not appear in the Code of 
Federal Regulations:

Statement of Chair Lina M. Khan

    Today, the Federal Trade Commission initiated a proceeding to 
examine whether we should implement new rules addressing data practices 
that are unfair or deceptive.
    The Commission brought its first internet privacy case 24 years ago 
against GeoCities, one of the most popular websites at the time.\1\ In 
the near quarter-century since, digital technologies and online 
services have rapidly evolved, with transformations in business models, 
technical capabilities, and social practices. These changes have 
yielded striking advancements and dazzling conveniences--but also tools 
that enable entirely new forms of persistent tracking and routinized 
surveillance. Firms now collect personal data on individuals on a 
massive scale and in a stunning array of contexts, resulting in an 
economy that, as one scholar put it, ``represents probably the most 
highly surveilled environment in the history of humanity.'' \2\ This 
explosion in data collection and retention, meanwhile, has heightened 
the risks and costs of breaches--with Americans paying the price.\3\
---------------------------------------------------------------------------

    \1\ Press Release, Fed. Trade Comm'n, internet Site Agrees to 
Settle FTC Charges of Deceptively Collecting Personal Information in 
Agency's First Internet Privacy Case (Aug. 13, 1998), https://www.ftc.gov/news-events/news/press-releases/1998/08/internet-site-agrees-settle-ftc-charges-deceptively-collecting-personal-information-agencys-first.
    \2\ Neil Richards, Why Privacy Matters 84 (2021). See also Oscar 
Gandy, The Panoptic Sort: A Political Economy of Personal 
Information (2021).
    \3\ See, e.g., Press Release, Fed. Trade Comm'n, Equifax to Pay 
$575 Million as Part of Settlement with FTC, CFPB, and States 
Related to 2017 Data Breach (July 22, 2019), https://www.ftc.gov/news-events/news/press-releases/2019/07/equifax-pay-575-million-part-settlement-ftc-cfpb-states-related-2017-data-breach.
    See also Eamon Javers, The Extortion Economy: Inside the Shadowy 
World of Ransomware Payouts, CNBC (Apr. 6, 2021), https://www.cnbc.com/2021/04/06/the-extortion-economy-inside-the-shadowy-world-of-ransomware-payouts.html; Dan Charles, The Food Industry May 
Be Finally Paying Attention To Its Weakness To Cyberattacks, NPR 
(July 5, 2021), https://www.npr.org/2021/07/05/1011700976/the-food-industry-may-be-finally-paying-attention-to-its-weakness-to-cyberattack; William Turton & Kartikay Mehrotra, Hackers Breached 
Colonial Pipeline Using Compromised Password, Bloomberg (June 4, 
2021), https://www.bloomberg.com/news/articles/2021-06-04/hackers-breached-colonial-pipeline-using-compromised-password.
---------------------------------------------------------------------------

    As the country's de facto law enforcer in this domain, the FTC is 
charged with ensuring that our approach to enforcement and policy keeps 
pace with these new market realities. The agency has built a wealth of 
experience in the decades since the GeoCities case, applying our 
century-old tools to new products in order to protect Americans from 
evolving forms of data abuses.\4\ Yet the growing digitization of our 
economy--coupled with business models that can incentivize endless 
hoovering up of sensitive user data and a vast expansion of how this 
data is used \5\--means potentially unlawful practices may be 
prevalent, with case-by-case enforcement failing to adequately deter 
lawbreaking or remedy the resulting harms.
---------------------------------------------------------------------------

    \4\ See Advanced Notice of Proposed Rulemaking, Trade Regulation 
Rule on Commercial Surveillance and Data Security, _FR_Sec.  III(a) 
[hereinafter ``ANPR'']. See also Daniel J. Solove & Woodrow Hartzog, 
The FTC and the New Common Law of Privacy, 114 Colum. L. Rev. 583 
(2014).
    \5\ Remarks of Chair Lina M. Khan, IAPP Global Privacy Summit 
2022 (Apr. 11, 2022), https://www.ftc.gov/news-events/news/speeches/remarks-chair-lina-m-khan-prepared-delivery-iapp-global-privacy-summit-2022.

---------------------------------------------------------------------------

[[Page 51287]]

    Indeed, a significant majority of Americans today feel they have 
scant control over the data collected on them and believe the risks of 
data collection by commercial entities outweigh the benefits.\6\ 
Evidence also suggests the current configuration of commercial data 
practices do not actually reveal how much users value privacy or 
security.\7\ For one, the use of dark patterns and other conduct that 
seeks to manipulate users underscores the limits of treating present 
market outcomes as reflecting what users desire or value.\8\ More 
fundamentally, users often seem to lack a real set of alternatives and 
cannot reasonably forego using technologies that are increasingly 
critical for navigating modern life.\9\
---------------------------------------------------------------------------

    \6\ Brooke Auxier et al., Americans and Privacy: Concerned, 
Confused and Feeling Lack of Control Over Their Personal 
Information, Pew Res. Center (Nov. 15, 2019), https://www.pewresearch.org/internet/2019/11/15/americans-and-privacy-concerned-confused-and-feeling-lack-of-control-over-their-personal-information/ (noting that 81% of Americans believe that they ``have 
very little/no control over the data companies collect'' and that 
``the potential risks of companies collecting data about them 
outweigh the benefits'').
    \7\ See, e.g., Daniel Solove, The Myth of the Privacy Paradox, 
89 Geo. Wash. L. Rev. 1, 22-32 (2021).
    \8\ The FTC recently brought a case against Age of Learning, 
Inc., an educational subscription service that allegedly utilized 
dark patterns to scam millions of dollars from families. See 
Stipulated Order for Permanent Injunction and Monetary Judgement, 
FTC v. Age of Learning, Inc., No. 2:20-cv-7996 (C.D. Cal. Sept. 8, 
2020). See also Zeynep Tufekci, The Latest Data Privacy Debacle, 
N.Y. Times (Jan. 30, 2018), http://www.nytimes.com/2018/01/30/opinion/strava-privacy.html (``Data privacy is more like air quality 
or safe drinking water, a public good that cannot be effectively 
regulated by trusting in the wisdom of millions of individual 
choices.'').
    \9\ Bhaskar Chakravorti, Why It's So Hard for Users to Control 
Their Data, Harv. Bus. Rev. (Jan. 30, 2020), https://hbr.org/2020/01/why-companies-make-it-so-hard-for-users-to-control-their-data 
(noting that ``even if users wanted to negotiate more data agency, 
they have little leverage. Normally, in well-functioning markets, 
customers can choose from a range of competing providers. But this 
is not the case if the service is a widely used digital 
platform.''); see also Solove, supra note 7, at 29 (``In one survey, 
81% of respondents said that they had at least once 'submitted 
information online when they wished that they did not have to do 
so.' People often are not afforded much choice or face a choice 
between two very bad options.'').
---------------------------------------------------------------------------

    The data practices of today's surveillance economy can create and 
exacerbate deep asymmetries of information--exacerbating, in turn, 
imbalances of power. And the expanding contexts in which users' 
personal data is used--from health care and housing to employment and 
education--mean what's at stake with unlawful collection, use, 
retention, or disclosure is not just one's subjective preference for 
privacy, but one's access to opportunities in our economy and society, 
as well as core civil liberties and civil rights.
    The fact that current data practices can have such consequential 
effects heightens both the importance of wielding the full set of tools 
Congress has given us, as well as the responsibility we have to do so. 
In particular, Section 18 of the FTC Act grants us clear authority to 
issue rules that identify specific business practices that are unlawful 
by virtue of being ``unfair'' or ``deceptive.'' \10\ Doing so could 
provide firms with greater clarity about the scope of their legal 
obligations. It could also strengthen our ability to deter lawbreaking, 
given that first-time violators of duly promulgated trade regulation 
rules--unlike most first-time violators of the FTC Act \11\--are 
subject to civil penalties. This would also help dispense with 
competitive advantages enjoyed by firms that break the law: all 
companies would be on the hook for civil penalties for law violations, 
not just repeat offenders.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 57a. Commissioner Slaughter's statement cogently 
lays out why our authority here is unambiguous. See Statement of 
Commissioner Rebecca Kelly Slaughter Regarding the Commercial 
Surveillance and Data Security Advance Notice of Proposed Rulemaking 
(Aug. 11, 2022), at 5-6. See also Kurt Walters, Reassessing the 
Mythology of Magnuson-Moss: A Call to Revive Section 18 Rulemaking 
at the FTC, 16 Harv. L. & Pol'y Rev. (forthcoming 2022).
    \11\ 15 U.S.C. 53, 57b, 45(l). The FTC's penalty offense 
authority also provides a basis for seeking civil penalties from 
some first-time violators. 15 U.S.C. 45(m)(1)(B).
---------------------------------------------------------------------------

    Today's action marks the beginning of the rulemaking proceeding. In 
issuing an Advance notice of proposed rulemaking (ANPR), the Commission 
is seeking comments from the public on the extent and effects of 
various commercial surveillance and data security practices, as well as 
on various approaches to crafting rules to govern these practices and 
the attendant tradeoffs. Our goal at this stage is to begin building a 
rich public record to inform whether rulemaking is worthwhile and the 
form potential proposed rules should take. Robust public engagement 
will be critical--particularly for documenting specific harmful 
business practices and their prevalence, the magnitude and extent of 
the resulting consumer harm, the efficacy or shortcomings of rules 
pursued in other jurisdictions, and how to assess which areas are or 
are not fruitful for FTC rulemaking.
    Because Section 18 lays out an extensive series of procedural 
steps, we will have ample opportunity to review our efforts in light of 
any new developments. If Congress passes strong federal privacy 
legislation--as I hope it does--or if there is any other significant 
change in applicable law, then the Commission would be able to reassess 
the value-add of this effort and whether continuing it is a sound use 
of resources. The recent steps taken by lawmakers to advance federal 
privacy legislation are highly encouraging, and our agency stands ready 
to continue aiding that process through technical assistance or 
otherwise sharing our staff's expertise.\12\ At minimum, the record we 
will build through issuing this ANPR and seeking public comment can 
serve as a resource to policymakers across the board as legislative 
efforts continue.
---------------------------------------------------------------------------

    \12\ Maria Curi, Landmark Tech Privacy Protection Bill Approved 
by House Panel, Bloomberg (July 20, 2022), https://news.bloomberglaw.com/privacy-and-data-security/landmark-tech-privacy-protection-bill-approved-by-house-panel.
---------------------------------------------------------------------------

    The ANPR poses scores of broad and specific questions to help 
elicit and encourage responses from a diverse range of stakeholders. I 
look forward to engaging with and learning from the record we develop 
on the wide range of issues covered. Highlighted below are a few topics 
from the ANPR on which I am especially eager for us to build a record:
     Procedural protections versus substantive limits: Growing 
recognition of the limits of the ``notice and consent'' framework 
prompts us to reconsider more generally the adequacy of procedural 
protections, which tend to create process requirements while 
sidestepping more fundamental questions about whether certain types of 
data collection and processing should be permitted in the first 
place.\13\ Are there contexts in which our unfairness authority reaches 
a greater set of substantive limits on data collection? \14\ When might 
bans and prohibitions on certain data practices be most appropriate? 
\15\
---------------------------------------------------------------------------

    \13\ Woodrow Hartzog & Neil Richards, Privacy's Constitutional 
Moment and the Limits of Data Protection, 61 B.C. L. Rev. 1687, 1693 
(2020) (``[D]ata protection regimes seek to permit more ethical 
surveillance and data processing at the expense of foundational 
questions about whether that surveillance and processing should be 
allowed in the first place.''); Solove, supra note 7, at 29 (``The 
fact that people trade their privacy for products or services does 
not mean that these transactions are desirable in their current 
form. . . [T]he mere fact that people make a tradeoff doesn't mean 
that the tradeoff is fair, legitimate, or justifiable. For example, 
suppose people could trade away food safety regulation in exchange 
for cheaper food. There would be a price at which some people would 
accept greater risks of tainted food. The fact that there is such a 
price doesn't mean that the law should allow the transaction.'').
    \14\ ANPR at section IV(b) Q.21; ANPR at section IV(d) Q.43; 
ANPR at section IV(d) Q.48.
    \15\ ANPR at section IV(d) Q.76.
---------------------------------------------------------------------------

     Administrability: Information asymmetries between 
enforcers and market participants can be especially stark in the 
digital economy. How can

[[Page 51288]]

we best ensure that any rules we pursue can be easily and efficiently 
administered and that these rules do not rest on determinations we are 
not well positioned to make or commitments we are not well positioned 
to police? How have jurisdictions successfully managed to police 
obligations such as ``data minimization''? \16\
---------------------------------------------------------------------------

    \16\ ANPR at section IV(d) Q.49.
---------------------------------------------------------------------------

     Business models and incentives: How should we approach 
business models that are premised on or incentivize persistent tracking 
and surveillance, especially for products or services consumers may not 
be able to reasonably avoid? \17\
---------------------------------------------------------------------------

    \17\ ANPR at section IV(a) Q.11.
---------------------------------------------------------------------------

     Discrimination based on protected categories: Automated 
systems used by firms sometimes discriminate based on protected 
categories--such as race, color, religion, national origin, or sex--
including in contexts where this discrimination is unlawful.\18\ How 
should we consider whether new rules should limit or forbid 
discrimination based on protected categories under our Section 5 
unfairness authority? \19\
---------------------------------------------------------------------------

    \18\ ANPR at section I nn.38-45. See also Fed. Trade Comm 'n, 
Serving Communities of Color: A Staff Report on the Federal Trade 
Commission's Efforts to Address Fraud and Consumer Issues Affecting 
Communities of Color, at 1-3 (Oct. 2021), https://www.ftc.gov/system/files/documents/reports/serving-communities-color-staff-report-federal-trade-commissions-efforts-address-fraud-consumer/ftc-communities-color-report_oct_2021-508-v2.pdf; Latanya Sweeney, 
Discrimination in Online Ad Delivery: Google Ads, Black Names and 
White Names, Racial Discrimination, and Click Advertising, 11 Queue 
10, 29 (Mar. 2013); Muhammad Ali et al., Discrimination Through 
Optimization: How Facebook's Ad Delivery Can Lead to Skewed 
Outcomes, 3 Proc. ACM on Hum.-Computer Interaction (2019).
    \19\ ANPR at section IV(d) Q.65-72. See 15 U.S.C. 45(n) (``In 
determining whether an act or practice is unfair, the Commission may 
consider established public policies as evidence to be considered 
with all other evidence. Such public policy considerations may not 
serve as a primary basis for such determination.''). Cf. Joint 
Statement of Chair Lina M. Khan and Commissioner Rebecca Kelly 
Slaughter In the Matter of Napleton Automotive Group (Mar. 31, 
2022), https://www.ftc.gov/news-events/news/speeches/joint-statement-chair-lina-m-khan-commissioner-rebecca-kelly-slaughter-matter-napleton-automotive. Other agencies are also examining these 
practices. See Assistant Attorney General Kristen Clark, Keynote 
Address on AI and Civil Rights for the Department of Commerce's 
National Telecommunications and Information Administration's Virtual 
Listening Session (Dec. 14, 2021), https://www.justice.gov/opa/speech/assistant-attorney-general-kristen-clarke-delivers-keynote-ai-and-civil-rights-department; Dep't of Lab., Off. of Fed. Contract 
Compliance Programs, internet Applicant Recordkeeping Rule, FAQ, 
https://www.dol.gov/agencies/ofccp/faqs/internet-applicants; Press 
Release, Equal Emp. Opportunity Comm'n, EEOC Launches Initiative on 
Artificial Intelligence and Algorithmic Fairness (Oct. 28, 2021), 
https://www.eeoc.gov/newsroom/eeoc-launches-initiative-artificial-intelligence-and-algorithmic-fairness.
---------------------------------------------------------------------------

     Workplace surveillance: Reports suggest extensive 
tracking, collection, and analysis of consumer data in the workplace 
has expanded exponentially.\20\ Are there particular considerations 
that should govern how we consider whether data abuses in the workplace 
may be deceptive or unfair? \21\
---------------------------------------------------------------------------

    \20\ ANPR at section I nn.14-15. See, e.g., Danielle Abril & 
Drew Harwell, Keystroke Tracking, Screenshots, and Facial 
Recognition: The Box May Be Watching Long After the Pandemic Ends, 
Wash. Post (Sept. 24, 2021), https://www.washingtonpost.com/technology/2021/09/24/remote-work-from-home-surveillance/; Adam 
Satariano, How My Boss Monitors Me While I Work From Home, N.Y. 
Times (May 6, 2020), https://www.nytimes.com/2020/05/06/technology/employee-monitoring-work-from-home-virus.html.
    \21\ ANPR at sections I, IV(a) Q.12.
---------------------------------------------------------------------------

    To facilitate wide-ranging participation, we are seeking to make 
this process widely accessible. Our staff has published a ``frequently 
asked questions'' resource to demystify the rulemaking process and 
identify opportunities for the public to engage.\22\ We will also host 
a virtual public forum on September 8, where people will be able to 
provide oral remarks that will be part of the ANPR record.\23\
---------------------------------------------------------------------------

    \22\ The FAQ can be found both in English, available at https://www.ftc.gov/enforcement/rulemaking/public-participation-section-18-rulemaking-process, as well as in Spanish, available at https://www.ftc.gov/es/participacion-publica-en-el-proceso-de-reglamentacion-de-la-ftc-conforme-la-seccion-18.
    \23\ The public forum will include a brief presentation on the 
rulemaking process and this ANPR comment period, panel discussions, 
and a public remarks section. More information can be found at 
https://www.ftc.gov/news-events/events/2022/09/commercial-surveillance-data-security-anpr-public-forum.
---------------------------------------------------------------------------

    I am grateful to our agency staff for their work on this ANPR and 
my colleagues on the Commission for their engagement and input. 
Protecting Americans from unlawful commercial surveillance and data 
security practices is critical work, and I look forward to undertaking 
this effort with both the necessary urgency and rigor.

Statement of Commissioner Rebecca Kelly Slaughter

    Three years ago, I gave a speech outlining: why I believed that 
case-by-case enforcement in the space of data abuses was not effective; 
how I hoped to see Congress pass a long-overdue federal privacy law; 
and that, until such a law is signed, the Commission should use its 
authority under Section 18 to initiate a rulemaking process.\1\ I am 
delighted that Congress appears to be making substantial and 
unprecedented progress toward a meaningful privacy law, which I am 
eager to see pass.\2\ Nonetheless, given the uncertainty of the 
legislative process and the time a Section 18 rulemaking necessarily 
takes, the Commission should not wait any longer than it already has to 
develop a public record that could support enforceable rules. So I am 
equally delighted that we are now beginning the Section 18 process by 
issuing this advance notice of proposed rulemaking (``ANPR'') on 
commercial surveillance and data security.\3\
---------------------------------------------------------------------------

    \1\ See Rebecca Kelly Slaughter, The Near Future of U.S. Privacy 
Law, Silicon Flatirons-University of Colorado Law School (Sept. 6, 
2019), https://www.ftc.gov/system/files/documents/public_statements/1543396/slaughter_silicon_flatirons_remarks_9-6-19.pdf.
    \2\ See Rebecca Klar, House Panel Advances Landmark Federal Data 
Privacy Bill, The Hill (July 20, 2022), https://thehill.com/policy/technology/3567822-house-panel-advances-landmark-federal-data-privacy-bill/.
    \3\ Fed. Trade Comm'n, Trade Regulation Rule on Commercial 
Surveillance and Data Security, 87 FR (forthcoming 2022) 
[hereinafter ``ANPR''].
---------------------------------------------------------------------------

    It is indisputable that the Federal Trade Commission has expertise 
in regulating this sector; it is widely recognized as the nation's 
premier ``privacy enforcer.'' \4\ I commend agency staff for their 
dogged application of our nearly 100-year-old consumer-protection 
statute (and handful of sector-specific privacy laws) to build that 
reputation.
---------------------------------------------------------------------------

    \4\ When Congress passed the Children's Online Privacy 
Protection Act (``COPPA'') in 1998 it assigned sector-specific 
privacy enforcement and rulemaking powers to the FTC on top of our 
UDAP authority. Bills being debated in both House and Senate 
Commerce Committees build on our ``comparative expertise'' in this 
field and seek to streamline and enhance our privacy enforcement and 
rulemaking processes. See West Virginia v. EPA, 142 S. Ct. 2587, 
2613 (2022) (`` 'When an agency has no comparative expertise' in 
making certain policy judgments, we have said, `Congress presumably 
would not' task it with doing so.'' (quoting Kisor v. Wilkie, 139 S. 
Ct. 2400, 2417 (2019))).
---------------------------------------------------------------------------

    Historically, much of that work operated through the 
straightforward application of those basic consumer-protection 
principles to privacy. The FTC ensured that companies told users what 
they were doing with the users' data, insisted that they secure users' 
consent, and policed companies' promises. But case-by-case enforcement 
has not systemically deterred unlawful behavior in this market. As our 
own reports make clear, the prevailing notice-and-choice regime has 
failed to protect users,\5\ and the modes by which sensitive 
information can be discovered,

[[Page 51289]]

derived, and disclosed have only grown in number and complexity.\6\
---------------------------------------------------------------------------

    \5\ An FTC staff 6(b) study on ISP privacy uncovered that 
companies routinely bury important disclosures in endless terms-of-
service and that choice, even when purportedly offered, is 
``illusory.'' Fed. Trade Comm'n, A Look at What ISPs Know About You: 
Examining the Privacy Practices of Six Major internet Service 
Providers 27 (Oct. 21, 2021), https://www.ftc.gov/system/files/documents/reports/look-what-isps-know-about-youexamining-privacy-practices-six-major-internet-service-providers/p195402_isp_6b_staff_report.pdf.
    \6\ See Kristin Cohen, Location, Health, and Other Sensitive 
Information: FTC Committed to Fully Enforcing the Law Against 
Illegal Use and Sharing of Highly Sensitive Data, Fed. Trade Comm'n 
(July 11, 2022), https://www.ftc.gov/business-guidance/blog/2022/07/location-health-other-sensitive-information-ftc-committed-fully-enforcing-law-against-illegal-use (``Smartphones, connected cars, 
wearable fitness trackers, ``smart home'' products, and even the 
browser you're reading this on are capable of directly observing or 
deriving sensitive information about users.'').
---------------------------------------------------------------------------

    Data abuses such as surreptitious biometric or location 
tracking,\7\ unaccountable and discriminatory algorithmic decision-
making,\8\ or lax data security practices \9\ have been either caused 
by, exacerbated by, or are in service of nearly unfettered commercial 
data collection, retention, use, and sharing. It is up to the 
Commission to use the tools Congress explicitly gave us, however rusty 
we are at wielding them, to prevent these unlawful practices. That is 
why I have consistently, for years, called for the Commission to begin 
the process to consider clear, bright-line rules against unfair or 
deceptive data practices pursuant to our Section 18 authority.\10\
---------------------------------------------------------------------------

    \7\ See, e.g., Mobile Advertising Network InMobi Settles FTC 
Charges It Tracked Hundreds of Millions of Consumers' Locations 
Without Permission, FTC (June 22, 2016), https://www.ftc.gov/newsevents/press-releases/2016/06/mobile-advertising-network-inmobi-settles-ftc-charges-it-tracked.
    \8\ See, e.g., Elisa Jillson, Aiming for Truth, Fairness, and 
Equity in Your Company's Use of AI (Apr. 19, 2021), https://www.ftc.gov/business-guidance/blog/2021/04/aiming-truth-fairness-equity-your-companys-use-ai.
    \9\ See, e.g., Press Release, FTC Finalizes Action Against 
CafePress for Covering Up Data Breach, Lax Security (June 24, 2022), 
https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-finalizes-action-against-cafepress-covering-data-breach-lax-security-0.
    \10\ See, e.g., Rebecca Kelly Slaughter, The Near Future of U.S. 
Privacy Law, Silicon Flatirons-University of Colorado Law School, 
(Sept. 6, 2019) https://www.ftc.gov/system/files/documents/public_statements/1543396/slaughter_silicon_flatirons_remarks_9-6-19.pdf; Remarks of Commissioner Rebecca Kelly Slaughter on 
Algorithms and Economic Justice, UCLA School of Law (Jan. 24, 2020), 
https://www.ftc.gov/system/files/documents/public_statements/1564883/remarks_of_commissioner_rebecca_kelly_slaughter_on_algorithmic_and_economic_justice_01-24-2020.pdf; Opening Statement of 
Commissioner Rebecca Kelly Slaughter, United States Senate Committee 
on Commerce, Science, and Transportation Hearing on Oversight of the 
Federal Trade Commission (Aug. 5, 2020), https://www.ftc.gov/system/files/documents/public_statements/1578979/opening_statement_of_commissioner_rebecca_slaughter_senate_commerce_oversight_hearing.pdf; FTC Data Privacy Enforcement: A Time of 
Change, N.Y.U. School of Law (Oct. 16, 2020), https://www.ftc.gov/system/files/documents/public_statements/1581786/slaughter_-_remarks_on_ftc_data_privacy_enforcement_-_a_time_of_change.pdf; 
Protecting Consumer Privacy in a Time of Crisis, Future of Privacy 
Forum, (Feb. 10, 2021) https://www.ftc.gov/system/files/documents/public_statements/1587283/fpf_opening_remarks_210_.pdf; Keynote 
Remarks of FTC Acting Chairwoman Rebecca Kelly Slaughter, Consumer 
Federation of America's Virtual Consumer Assembly (May 4, 2021), 
https://www.ftc.gov/system/files/documents/public_statements/1589607/keynote-remarks-acting-chairwoman-rebecca-kelly-slaughte-cfa-virtual-consumer-assembly.pdf; Rebecca Kelly Slaughter, 
Algorithms and Economic Justice: A Taxonomy of Harms and a Path 
Forward for the Federal Trade Commission, Yale J. L. & Tech. (Aug. 
2021), https://yjolt.org/sites/default/files/23_yale_j.l._tech._special_issue_1.pdf; Statement of Rebecca Kelly 
Slaughter Regarding the Report to Congress on Privacy and Security 
(Oct. 1, 2021), https://www.ftc.gov/system/files/documents/public_statements/1597012/rks_statement_on_privacy_report_final.pdf; 
Disputing the Dogmas of Surveillance Advertising, National 
Advertising Division (Oct. 1, 2021), https://www.ftc.gov/system/files/documents/public_statements/1597050/commissioner_slaughter_national_advertising_division_10-1-2021_keynote_address.pdf; Wait But Why? Rethinking Assumptions About 
Surveillance Advertising, IAPP Privacy Security Risk Keynote (Oct. 
22, 2021), https://www.ftc.gov/system/files/documents/public_statements/1597998/iapp_psr_2021_102221_final2.pdf; NTIA 
Listening Session on Privacy, Equity, and Civil Rights Keynote 
Address of Commissioner Rebecca Kelly Slaughter, NTIA, (Dec. 14, 
2021), https://www.ftc.gov/system/files/documents/public_statements/1599831/slaughter-ntia-keynote.pdf.
---------------------------------------------------------------------------

    Section 18 rulemaking's virtue lies in being open, iterative, and 
public. By the same token it is, by congressional design, laborious and 
time-consuming. But we intend to follow the record where it leads and, 
if appropriate, issue Trade Regulation Rules to proscribe unlawful 
conduct. The Commission has proactively taken steps to use this 
authority as Congress directed. During my time as Acting Chair, we 
created a Rulemaking Group within the Office of General Counsel, which 
has already been indispensable in building the agency's capacity during 
this process.\11\ Working with that Group, the Commission updated our 
Rules of Practice to enhance transparency and shed self-imposed 
roadblocks to avoid unnecessary and costly delay in these 
proceedings.\12\
---------------------------------------------------------------------------

    \11\ Press Release, FTC Acting Chairwoman Slaughter Announces 
New Rulemaking Group (Mar. 25, 2021), https://www.ftc.gov/news-events/news/press-releases/2021/03/ftc-acting-chairwoman-slaughter-announces-new-rulemaking-group.
    \12\ Statement of Commissioner Rebecca Kelly Slaughter joined by 
Chair Lina Khan and Commissioner Rohit Chopra Regarding the Adoption 
of Revised Section 18 Rulemaking Procedures (July 1, 2021), https://www.ftc.gov/system/files/documents/public_statements/1591522/joint_rules_of_practice_statement_final_7121_1131am.pdf.
---------------------------------------------------------------------------

    As happy as I am to see us finally take this first step of opening 
this record, it is not something I take lightly. An initiative like 
this entails some risk, though I believe further inaction does as well. 
I have heard arguments, including from my fellow Commissioners, that 
conducting a rulemaking in the data space is inappropriate, either 
because Congress is currently debating privacy legislation or even 
because the topic is simply too consequential or the issues too vast 
for the Commission to appropriately address. In this statement, I 
challenge some of these assumptions and then raise some of the issues 
in which I am especially interested.

On Timing

    The best time to initiate this lengthy process was years ago, but 
the second-best time is now. Effective nationwide rules governing the 
collection and use of data are long overdue. As the nation's principal 
consumer-protection agency, we have a responsibility to act.

Restoring Effective Deterrence

    The question of effective enforcement is central to this 
proceeding. Case-by-case enforcement, while once considered a prudent 
expression of our statutory authority, has not proved effective at 
deterring illegal conduct in the data space. Trade Regulation Rules can 
help remedy this problem by providing clear and specific guidance about 
what conduct the law proscribes and attaching financial consequences to 
violations of the law.
    Providing a financial penalty for first-time lawbreaking is now, in 
the wake of the loss of our Section 13(b) authority, a particular 
necessity. Last year, the Supreme Court ruled that we can no longer 
seek monetary relief in federal court for violations of the FTC Act 
under our 13(b) authority.\13\ I have testified in Congress that the 
loss of this authority is devastating for consumers who now face a 
significantly steeper uphill battle to be made whole after suffering a 
financial injury stemming from illegal conduct.\14\ But the loss of 
13(b) also hampers our ability to deter unlawful conduct in the first 
place. In its absence, and without a statutory fix, first-time 
violators of the FTC Act are unlikely to face monetary consequences for 
their unlawful practices.\15\ Trade Regulation Rules enforced under

[[Page 51290]]

Section 19 can enable such consequences.\16\
---------------------------------------------------------------------------

    \13\ AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341, 1347 (2021).
    \14\ Rebecca Kelly Slaughter, Opening Statement of Acting 
Chairwoman Rebecca Kelly Slaughter [on] The Urgent Need to Fix 
Section 13(b) of the FTC Act, United States House Committee on 
Energy and Commerce
    Subcommittee on Consumer Protection and Commerce (Apr. 27, 
2021), https://www.ftc.gov/system/files/documents/public_statements/1589456/opening_statement_april_27_house_13b_hearing_427.pdf.
    \15\ See ANPR at 23 (``For instance, after a hacker steals 
personal consumer data from an inadequately secured database, an 
injunction stopping the conduct and requiring the business to take 
affirmative steps to improve its security going forward can help 
prevent future breaches but does not remediate the harm that has 
already occurred or is likely to occur.'').
    \16\ In the course of removing our 13(b) equitable monetary 
relief authority, the Supreme Court admonished the Commission to 
stop complaining about the ``cumbersome'' Section 19 process and 
either use our authority in earnest, ask Congress for a fix, or 
both. AMG Cap. Mgmt., 141 S. Ct. at 1352 (``Nothing we say today, 
however, prohibits the Commission from using its authority under 
Sec.  5 and Sec.  19 to obtain restitution on behalf of consumers. 
If the Commission believes that authority too cumbersome or 
otherwise inadequate, it is, of course, free to ask Congress to 
grant it further remedial authority.'').
---------------------------------------------------------------------------

Rulemaking in the Time of ADPPA

    For years, Congress has nibbled around the edges of comprehensive 
federal privacy legislation; it is now engaged in the advanced stages 
of consideration of such legislation. All members of the Commission 
have repeatedly called on Congress to act in this space. I have 
advocated for legislation that sets clear rules regarding data 
minimization, use restrictions, and secondary uses; that gives us the 
ability to seek civil penalties for law violations; that gives us 
flexible APA rulemaking authority so we can act swiftly to address new 
conduct; and most importantly gives the agency the resources to 
meaningfully enforce the law.
    The House may be the closest it has been in years to seeing 
legislation like this reach the finish line.\17\ I not only welcome 
it--I prefer Congressional action to strengthen our authority. But I 
know from personal experience that the road for a bill to become a law 
is not a straight or easy one.\18\ In the absence of that legislation, 
and while Congress deliberates, we cannot sit idly by or press pause 
indefinitely on doing our jobs to the best of our ability. As I 
mentioned above, I believe that we have a duty to use the authorities 
Congress has already given us to prevent and address these unfair or 
deceptive practices how we best see fit.
---------------------------------------------------------------------------

    \17\ Gilad Eldman, Don't Look Now, but Congress Might Pass an 
Actually Good Privacy Bill, Wired (July 21, 2022), https://www.wired.com/story/american-data-privacy-protection-act-adppa/.
    \18\ See Margaret Harding McGill, Online Privacy Bill Faces 
Daunting Roadblocks, Axios (Aug. 4, 2022), https://www.axios.com/2022/08/04/online-privacy-bill-roadblocks-congress.
---------------------------------------------------------------------------

    I am certain that action by the Federal Trade Commission will not 
clip the wings of Congressional ambition. Our work here is 
complementary to Congress' efforts.\19\ The bills supported by the 
leaders of both Commerce Committees empower the FTC to be a more 
effective privacy regulator,\20\ as will the record we develop pursuant 
to this ANPR. Section 18 rulemaking, even more so than more common APA 
rulemaking, gives members of the public the opportunity to be active 
participants in the policy process. The open record will allow us to 
hear from ordinary people about the data economy harms they have 
experienced. We can begin to flex our regulatory muscle by evaluating 
which of those harms meet the statutory prohibitions on unfair or 
deceptive conduct and which of those are prevalent in the market. The 
study, public commentary, and dialogue this proceeding will launch can 
meaningfully inform any superseding rulemaking Congress eventually 
directs us to take as well as the Congressional debate should the 
current legislative progress stall.
---------------------------------------------------------------------------

    \19\ A group of nine Senators wrote that these are ``parallel'' 
efforts and encouraged the Commission to ``take advantage of every 
took in its toolkit to protect consumers' privacy.'' Notably, a 
majority of these members have either introduced or cosponsored FTC-
empowering privacy legislation. Senators Booker, Blumenthal, Coons, 
Luj[aacute]n, Markey, Klobuchar, Schatz, Warren, and Wyden, 
2021.09.20 FTC Privacy Rulemaking (Sept. 20, 2021), https://www.blumenthal.senate.gov/imo/media/doc/2021.09.20%20-%20FTC%20-%20Privacy%20Rulemaking.pdf.
    \20\ See, e.g., American Data Privacy and Protection Act, 
H.R.8152, 117th Congress (2022); See Consumer Online Privacy Rights 
Act, S.3195, 117th Congress (2021).
---------------------------------------------------------------------------

Our Authority and the Scope of This Proceeding

    Some have balked at this ANPR as overly ambitious for an agency 
that has not previously issued rules in this area, or as coloring 
outside the lines of our statute in the topics it addresses, especially 
in light of the Supreme Court decision in West Virginia v. EPA. But our 
authority is as unambiguous as it is limited, and so our regulatory 
ambit is rightfully constrained--the questions we ask in the ANPR and 
the rules we are empowered to issue may be consequential, but they do 
not implicate the ``major questions doctrine.'' \21\
---------------------------------------------------------------------------

    \21\ West Virginia, 142 S. Ct. at 2614 (2022) (``Given these 
circumstances [of a novel claim of authority by an agency] . . . the 
Government must--under the major questions doctrine--point to `clear 
congressional authorization' to regulate in that manner.''). The FTC 
is exercising here, however, its central authority: to define unfair 
or deceptive acts or practices, as it has done in enforcement 
matters for nearly 100 years under Section 5 and in rulemaking under 
Section 18 for nearly 50.
---------------------------------------------------------------------------

Section 18 Rulemaking

    In its grant of Section 18 rulemaking authority to the Commission 
in 1975 under the Magnuson-Moss Warranty--Federal Trade Commission 
Improvement Act, Congress explicitly empowered the FTC to ``define with 
specificity acts or practices which are unfair or deceptive acts or 
practices in or affecting commerce . . . .'' \22\ Those terms, and 
therefore our delegated authority, are not defined by ``modest words,'' 
``vague terms,'' ``subtle devices,'' or ``oblique or elliptical 
language.'' \23\ Determining what acts ``in commerce'' are unfair or 
deceptive is central to our statutory mission and their meaning is 
prescribed by our statutes and nearly 100 years of judicial 
interpretation.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 57a(a)(1)(B).
    \23\ West Virginia, 142 S. Ct. at 2609 (internal quotation marks 
omitted).
---------------------------------------------------------------------------

    It is worth reiterating these standards, both as a matter of legal 
principle and as a note for those participating in this process. A 
``deceptive'' act is one that (1) makes a ``representation, omission, 
or practice that is likely to mislead the consumer'' (2) who is 
``acting reasonably in the circumstances'' and (3) is ``material,'' 
meaning it would ``affect the consumer's conduct or decision with 
regard to a product or service.'' \24\
---------------------------------------------------------------------------

    \24\ FTC Policy Statement on Deception (Oct. 14, 1983), appended 
to In re Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 (1984), 
https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf.
---------------------------------------------------------------------------

    Congress updated the FTC Act in 1994, adopting into statute the 
Commission's policy statement on ``unfairness.'' An act may be 
``unfair'' and in violation of the FTC Act if that act (1) ``causes or 
is likely to cause substantial injury to consumers,'' (2) ``is not 
reasonably avoidable by consumers themselves,'' and (3) is not ``not 
outweighed by countervailing benefits to consumers or to competition.'' 
\25\
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 45(n).
---------------------------------------------------------------------------

    Even after finding that a practice is unfair or deceptive we face 
an additional hurdle to issuing a Notice of proposed rulemaking leading 
to a possible Trade Regulation Rule. We may issue proposed rules to 
prevent unfair or deceptive practices only if we find that such 
practices are ``prevalent.'' We can find a practice prevalent if the 
FTC has ``issued cease and desist orders regarding such acts or 
practices,'' or we can determine prevalence through ``any other 
information available to the Commission'' that ``indicates a widespread 
pattern of unfair or deceptive acts or practices.'' \26\
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 57a(b)(3).
---------------------------------------------------------------------------

    We cannot invent the law here. I want to underscore this. In this 
rulemaking we can address only unfair or deceptive practices that we 
could have otherwise found unlawful in the ordinary enforcement of our 
Section 5 authority on a case-by-case basis. But the purpose of Section 
18 rulemaking is not merely to memorialize unlawful activity that we 
have already fully adjudicated.\27\

[[Page 51291]]

The ANPR allows us to look at harms systematically and address the root 
of that unlawful activity. The limiting principle for the scope of 
conduct we may regulate is the contours of the law itself: acts that 
are both deceptive or unfair and prevalent.
---------------------------------------------------------------------------

    \27\ In fact, we have a different statute for that process: our 
penalty offense authority. See Fed. Trade Comm'n, Notices of Penalty 
Offenses, https://www.ftc.gov/enforcement/penalty-offenses.
---------------------------------------------------------------------------

Scope of the ANPR

    The scope of the ANPR is reflective of the broad set of issues that 
arise from unfettered commercial data collection and use. That a public 
inquiry into this market asks a wide range of questions--inquiring 
about issues like collection and consent, algorithms, ad-delivery, 
demographic data, engagement, and the ecosystem's effects on kids and 
teens--should not be surprising. This is broadly the same scope of 
issues the Commission is currently examining in our social media and 
video streaming study initiated under Chair Simons in 2020.\28\
---------------------------------------------------------------------------

    \28\ See Lesley Fair, FTC issues 6(b) orders to social media and 
video streaming services (Dec. 14, 2020), https://www.ftc.gov/business-guidance/blog/2020/12/ftc-issues-6b-orders-social-media-and-video-streaming-services.
---------------------------------------------------------------------------

    I believe it is appropriate ask those questions, and more, in this 
ANPR. I expect that the record will alert us, and Congress, to 
widespread harms that may otherwise have not reached our attention. 
Some of those harms may be better addressed under our other sector-
specific privacy authorities or under our competition authority. A 
holistic look at the data economy allows us to better understand the 
interplay between our consumer protection and competition missions and, 
should we get to that stage, propose better and more effective rules.

Are data abuse rules different?

    Some have argued that this exercise of our rulemaking authority is 
permissible to address some unfair or deceptive practices in some other 
sector of the market but not this one.\29\ The rules the agency has 
historically issued already touch hundreds of millions of Americans' 
lives. FTC rules cover business conduct in funerals,\30\ the marketing 
of new opportunities to consumers,\31\ the eyeglasses market,\32\ and 
unfair credit practices.\33\ These rules cover sectors with hundreds of 
billions in economic output. The Franchise Rule,\34\ for example, helps 
govern the business conduct of a sector that employs over 8 million 
people and contributes over 3% to the country's GDP.\35\ This is all to 
say that the ``bigness'' of an industry, or the potential significance 
of rulemaking in that industry, should have little bearing on the legal 
question about the scope of our authority.\36\ As a policy matter, 
``bigness,'' if anything, should compel extra scrutiny of business 
practices on our part, not a free pass, kid gloves, or a punt to 
Congress. Though their products and services touch all our lives, 
technology companies are not exempt from generally applicable laws. If 
we have the authority to police their business practices by case-by-
case enforcement to protect the public from potentially unfair or 
deceptive practices, and we do, then we have the authority to examine 
how ex ante rules may also govern those practices.
---------------------------------------------------------------------------

    \29\ See Jordan Crenshaw, Congress Should Write Privacy Rules, 
Not the FTC, U.S. Chamber of Commerce (Sept. 17, 2021), https://www.uschamber.com/technology/data-privacy/congress-should-write-privacy-rules-not-the-ftc.
    \30\ 16 CFR part 453.
    \31\ 16 CFR part 437.
    \32\ 16 CFR part 456.
    \33\ 16 CFR part 444.
    \34\ 16 CFR part 436.
    \35\ See Int'l Francise Ass'n, 2022 Franchising Economic Outlook 
(Feb. 15, 2022) https://www.franchise.org/franchise-information/franchise-business-outlook/2022franchising-economic-outlook.
    \36\ West Virginia, 142 S. Ct. at 2628 (Kagan, J., dissenting) 
(``A key reason Congress makes broad delegations . . . is so an 
agency can respond, appropriately and commensurately, to new and big 
problems. Congress knows what it doesn't and can't know when it 
drafts a statute; and Congress therefore gives an expert agency the 
power to address issues--even significant ones--as and when they 
arise.'').
---------------------------------------------------------------------------

Issues of Particular Interest

    I want to encourage public participation in this comment period, 
especially from the voices we hear from less at the Commission. Having 
information in the record from a diverse set of communities and 
commenters will strengthen the record and help lay a firm foundation 
for potential agency action. I encourage the public to engage with all 
the issues we have teed up in the ANPR and to think about how 
commercial surveillance and abusive data practices affect them not only 
as consumers of products and services but also as workers, small 
business owners, and potential competitors to dominant firms.\37\ I'm 
eager to see and evaluate the record in its entirety, but there are 
some issues I have had a particular interest in during my time at the 
Commission. I've highlighted some of them below.
---------------------------------------------------------------------------

    \37\ People are far more than simply consumers of products and 
services. Effective consumer protection has to think about people as 
workers and potential entrepreneurs too. See Statement of 
Commissioner Rebecca Kelly Slaughter Regarding Advance Notice of 
Proposed Rulemaking on the Use of Earnings Claims (Feb. 17, 2022), 
https://www.ftc.gov/system/files/ftc_gov/pdf/RKS%20Earnings%20Claim%20Statement.pdf.
---------------------------------------------------------------------------

Minimization and Purpose and Use Specifications

    I have spoken at length about my interest in ideas around data 
minimization.\38\ The ANPR asks several questions related to the 
concept, and I am eager to see comments about potentially unlawful 
practices in this area, the state of data collection in the industry, 
and how that relates to user expectations of the products or services 
on offer.\39\
---------------------------------------------------------------------------

    \38\ See Rebecca Kelly Slaughter, Keynote Closing Remarks of 
Commissioner Rebecca Slaughter at IAPP 2021, IAPP (Oct. 22, 2021), 
https://www.ftc.gov/system/files/documents/public_statements/1597998/iapp_psr_2021_102221_final2.pdf.
    \39\ See ANPR at 31.
---------------------------------------------------------------------------

Civil Rights, Vulnerable Populations, and Discriminatory Algorithms

    Data abuses are a civil rights issue, and commercial surveillance 
can be especially harmful from a civil rights and equity perspective. 
The FTC's own reports have explored these issues for years.\40\ The 
FTC's mission to protect consumers from unfair or deceptive practices 
in commerce must include examining how commercial practices affect the 
marginalized and vulnerable. Discrimination based on protected-class 
status is obviously unfair in the colloquial sense and may sometimes be 
unfair in Section 5 terms as well.\41\ As I have written, failure to 
closely scrutinize the impact of data-driven decision-making tools can 
create discriminatory outcomes.\42\ The ANPR

[[Page 51292]]

asks several questions about the prevalence of such practices, the 
extent of our authority in this area, and how the FTC, working with 
other enforcement agencies, may ameliorate those potential harms.\43\
---------------------------------------------------------------------------

    \40\ See Fed. Trade Comm'n, Big Data: A Tool for Inclusion or 
Exclusion? Understanding the Issues, (Jan. 2016), https://www.ftc.gov/system/files/documents/reports/big-data-tool-inclusion-or-exclusionunderstanding-issues/160106big-data-rpt.pdf. See also 
Fed. Trade Comm'n, A Look At What ISPs Know About You: Examining the 
Privacy Practices of Six Major internet Service Providers (Oct. 21, 
2021), https://www.ftc.gov/system/files/documents/reports/look-what-isps-know-about-youexamining-privacy-practices-six-major-internet-service-providers/p195402_isp_6b_staff_report.pdf.
    \41\ Commercial practices that discriminate against people based 
on their immutable characteristics neatly fit into Section 5's 
prohibitions. They may cause or be likely to cause substantial 
injury to consumers, may not be reasonably avoidable by those 
consumers, and may not be outweighed by benefits to consumers or 
competition. See Joint Statement of Chair Lina M. Khan and 
Commissioner Rebecca Kelly Slaughter, In the Matter of Napleton 
Automotive Group (Mar. 31, 2022), https://www.ftc.gov/news-events/news/speeches/joint-statement-chair-lina-m-khan-commissioner-rebecca-kelly-slaughter-matter-napleton-automotive.
    \42\ See Rebecca Kelly Slaughter, Algorithms and Economic 
Justice: A Taxonomy of Harms and a Path Forward for the Federal 
Trade Commission, Yale J. L. & Tech. (Aug. 2021), https://yjolt.org/sites/default/files/23_yale_j.l._tech._special_issue_1.pdf.
    \43\ See ANPR at 36.
---------------------------------------------------------------------------

Kids and Teens

    As I remarked at COPPA's 20th anniversary, our experience enforcing 
the Children's Online Privacy Protection Act (``COPPA'') surely has 
lessons for any potential rulemaking.\44\ What can the statutory scheme 
in COPPA tell us about how to structure potential rules? As a parent, I 
also have concerns for children as they pass outside the COPPA safety 
zone of under-13 years old. Are there harms we should examine that 
affect young teenagers in particular? \45\
---------------------------------------------------------------------------

    \44\ See Rebecca Kelly Slaughter, COPPA at 20: Protecting 
Children's Privacy in the New Digital Era, Georgetown Univ. Law 
Ctr., (Oct. 24, 2018) https://www.ftc.gov/system/files/documents/public_statements/1417811/opening_remarks_of_commissioner_slaughter_georgetown_law_coppa_at_20_event.pdf.
    \45\ See ANPR at 27.
---------------------------------------------------------------------------

Conclusion

    The path the Commission is heading down by opening this rulemaking 
process is not an easy one. But it is a necessary one. The worst 
outcome, as I said three years ago, is not that we get started and then 
Congress passes a law; it is that we never get started and Congress 
never passes a law. People have made it clear that they find this 
status quo unacceptable.\46\ Consumers and businesses alike deserve to 
know, with real clarity, how our Section 5 authority applies in the 
data economy. Using the tools we have available benefits the whole of 
the Commission's mission; well-supported rules could facilitate 
competition, improve respect for and compliance with the law, and 
relieve our enforcement burdens.
---------------------------------------------------------------------------

    \46\ See Lee Raine, Americans' Complicated Feelings About Social 
Media in an Era of Privacy Concerns, Pew Research Center (Mar. 27, 
2018), https://www.pewresearch.org/fact-tank/2018/03/27/americans-complicated-feelings-about-social-media-in-an-era-of-privacy-concerns (``Some 80% of social media users said they were concerned 
about advertisers and businesses accessing the data they share on 
social media platforms, and 64% said the government should do more 
to regulate advertisers.''); Brooke Auxier et al., Americans and 
Privacy: Concerned, Confused and Feeling Lack of Control Over Their 
Personal Information, Pew Research Center (Nov. 15, 2019), https://www.pewresearch.org/internet/2019/11/15/americans-and-privacy-concerned-confused-and-feeling-lack-of-control-over-their-personal-information (``Some 81% of the public say that the potential risks 
they face because of data collection by companies outweigh the 
benefits. . .''). These are not just theoretical concerns: The lack 
of effective data protection is harming the vitality of the tech 
sector. See Andrew Perrin, Half of Americans have decided not to use 
a product or service because of privacy concerns, Pew Research 
Center (Apr. 14, 2020), https://www.pewresearch.org/fact-tank/2020/04/14/half-of-americans-have-decided-not-to-use-a-product-or-service-because-of-privacy-concerns/.
---------------------------------------------------------------------------

    I have an open mind about this process and no certainty about where 
our inquiry will lead or what rules the record will support, as I 
believe is my obligation. But I do know that it is past time for us to 
begin asking these questions and to follow the facts and evidence where 
they lead us. I expect that the Commission will take this opportunity 
to think deeply about people's experiences in this market and about how 
to ensure that the benefits of progress are not built on an 
exploitative foundation. Clear rules have the potential for making the 
data economy more fair and more equitable for consumers, workers, 
businesses, and potential competitors alike.
    I am grateful to the Commission staff for their extensive work 
leading up to the issuance of this ANPR,\47\ as well as to the Chair 
for her leadership in pushing this project across the starting line, 
and to my fellow Commissioners for their thoughtful engagement with the 
document. Both the Chair and Commissioner Bedoya brought their 
expertise and vision to this endeavor, which is reflected throughout 
the final product. And, although I do not agree with my dissenting 
colleagues Commissioners Phillips and Wilson, I very much appreciate 
their constructive engagement, which has helped improve not only my own 
thinking but also the substance of the ANPR. I look forward to 
continued dialogue with all of them.
---------------------------------------------------------------------------

    \47\ I would like to particularly acknowledge the hard work of 
Olivier Sylvain, Rashida Richardson, Gaurav Laroia, Janice Kopec, 
Austin King, Aaron Rieke, Bobbi Spector, Audrey Austin, Kristin 
Cohen, Mark Eichorn, Jim Trilling, and Peder Magee. And I would be 
remiss if I did not recognize the extraordinary contributions of 
Kurt Walters, who, as a law clerk in my office in summer 2019, began 
the process of debunking myths around Section 18 rulemaking, 
resulting in his law review article that is cited by several of my 
colleagues. See Kurt Walters, Reassessing the Mythology of Magnuson-
Moss: A Call to Revive Section 18 Rulemaking at the FTC, 16 Harv. L. 
& Pol'y Rev. (forthcoming 2022), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3875970.
---------------------------------------------------------------------------

Statement of Commissioner Alvaro M. Bedoya

    Our nation is the world's unquestioned leader on technology. We are 
the world's unquestioned leader in the data economy. And yet we are 
almost alone in our lack of meaningful protections for this 
infrastructure. We lack a modern data security law. We lack a baseline 
consumer privacy rule. We lack civil rights protections suitable for 
the digital age. This is a landscape ripe for abuse.
    Now it is time to act. Today, we are beginning the hard work of 
considering new rules to protect people from unfair or deceptive 
commercial surveillance and data security practices.
    My friend Commissioner Phillips argues that this advance notice of 
proposed rulemaking (``ANPR'') ``recast[s] the Commission as a 
legislature,'' and ``reaches outside the jurisdiction of the FTC.'' \1\ 
I respectfully disagree. Today, we're just asking questions, exactly as 
Congress has directed us to do.\2\ At this most preliminary step, 
breadth is a feature, not a bug. We need a diverse range of public 
comments to help us discern whether and how to proceed with notices of 
proposed rulemaking. There is much more process to come.
---------------------------------------------------------------------------

    \1\ Dissenting Statement of Commissioner Noah Joshua Phillips, 
Commercial Surveillance and Data Security Advance Notice of Proposed 
Rulemaking (Aug. 11, 2022).
    \2\ Federal Trade Commission Improvements Act of 1980, Public 
Law 96-252, 94 Stat. 374.
---------------------------------------------------------------------------

    In 1975, Congress passed the Magnuson-Moss Warranty--Federal Trade 
Commission Improvement Act (the ``Magnuson-Moss Act'').\3\ That Act 
made explicit the Commission's authority to prescribe rules prohibiting 
unfair or deceptive trade practices. It also set out steps for doing 
so, including providing informal oral hearings with a limited right of 
cross examination, which were consistent with best practices of that 
time.\4\ In the decade following its passage, the Magnuson-Moss Act was 
viewed as ``substantially increasing the agency's rulemaking powers.'' 
\5\
---------------------------------------------------------------------------

    \3\ Magnuson-Moss Warranty--Federal Trade Commission Improvement 
Act, Public Law 93-637, 88 Stat. 2183 (1975).
    \4\ Id. at sec. 202 (adding Sec.  18(c) of the FTC Act).
    \5\ Kurt Walters, Reassessing the Mythology of Magnuson-Moss: A 
Call to Revive Section 18 Rulemaking at the FTC, 16 Harvard L. & 
Pol'y Rev. (forthcoming 2022) (manuscript at 13), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3875970.
---------------------------------------------------------------------------

    Together with Congress's modest amendments to this process in 1980 
\6\ and 1994,\7\ federal law now gives us a clear roadmap for this 
work.\8\ We will follow it to the letter.
---------------------------------------------------------------------------

    \6\ Public Law 96-252, 94 Stat. 374 (1980).
    \7\ Federal Trade Commission Act Amendments of 1994, Public Law 
103-312, Sections 3, 5, 108 Stat. 1691, 1691-92.
    \8\ 15 U.S.C. 57a (2018).
---------------------------------------------------------------------------

    The bipartisan American Data Privacy and Protection Act (ADPPA) is 
the strongest privacy bill that has ever been this close to passing. I 
hope it does pass. I hope it passes soon. What Chairman Frank Pallone, 
Ranking Member Cathy McMorris Rodgers, Senator Roger

[[Page 51293]]

Wicker and their colleagues have accomplished is formidable and 
promising. This ANPR will not interfere with that effort. I want to be 
clear: Should the ADPPA pass, I will not vote for any rule that 
overlaps with it. There are no grounds to point to this process as 
reason to delay passage of that legislation.
    Turning finally to the substance of the ANPR itself: It is a 
priority for me that the Commission, throughout this rulemaking 
process, stays focused on the needs of people who are most at risk of 
being left behind by new technology in the modern economy.\9\ So while 
I will be interested in answers to all of our questions, I am keenly 
interested to learn about:
---------------------------------------------------------------------------

    \9\ Alvaro M. Bedoya, Remarks of Commissioner Alvaro M. Bedoya 
at the National Association of Attorneys General Presidential Summit 
(Aug. 9, 2022), https://www.ftc.gov/news-events/news/speeches/remarks-commissioner-alvaro-m-bedoya-national-association-attorneys-general-presidential-summit.
---------------------------------------------------------------------------

    1. Emerging discrimination issues (Questions 65-72), especially 
from civil rights experts and affected communities. I agree with 
Commissioner Slaughter and Chair Khan that our unfairness authority is 
a powerful tool for combatting discrimination.\10\ It clearly is.\11\ 
Given significant gaps in federal antidiscrimination laws, especially 
related to internet platforms and technology companies,\12\ I believe 
the Commission must act to protect people's civil rights.
---------------------------------------------------------------------------

    \10\ See Statement of Chair Lina M. Khan Joined by Commissioner 
Rebecca Kelly Slaughter, Matter of Napleton Automotive Group (Mar. 
31, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/Statement%20of%20Chair%20Lina%20M.%20Khan%20Joined%20by%20RKS%20in%20re%20Napleton_Finalized.pdf (``[W]e take this as an opportunity to 
offer how the Commission should evaluate under its unfairness 
authority any discrimination that is found to be based on disparate 
treatment or have a disparate impact.''); Rebecca Kelly Slaughter, 
Algorithms and Economic Justice: A Taxonomy of Harms and a Path 
Forward for the Federal Trade Commission (Aug. 2021), https://law.yale.edu/sites/default/files/area/center/isp/documents/algorithms_and_economic_justice_master_final.pdf.
    \11\ When a business substantially injures a person because of 
who they are, and that injury is not reasonably avoidable or 
outweighed by a countervailing benefit, that business has acted 
unlawfully. See Federal Trade Commission, Policy Statement on 
Unfairness (Dec. 17, 1980), https://www.ftc.gov/legal-library/browse/ftc-policy-statement-unfairness (``[t]o justify a finding of 
unfairness the injury must satisfy three tests. It must be 
substantial; it must not be outweighed by any countervailing 
benefits to consumers or competition that the practice produces; and 
it must be an injury that consumers themselves could not reasonably 
have avoided.'').
    \12\ For example, Title VII of the Civil Rights Act of 1964 
covers employers and employment agencies, but does not directly 
address hiring technology vendors, digital sourcing platforms, and 
other companies that intermediate people's access to employment 
opportunity. See Title VII of the Civil Rights Act of 1964, 42 
U.S.C. 2000e-2. Similarly, the Equal Credit Opportunity Act (ECOA) 
primarily covers ``creditors.'' See ECOA, 15 U.S.C. 1691(a) (2014). 
This scope creates similar coverage questions, including in 
financial markets related to hiring education. See, e.g., Stephen 
Hayes & Kali Schellenberg, Discrimination is ``Unfair'': 
Interpreting UDA(A)P to Prohibit Discrimination, Student Borrower 
Protection Center (Apr. 2021), at 11, https://protectborrowers.org/wp-content/uploads/2021/04/Discrimination_is_Unfair.pdf.
---------------------------------------------------------------------------

    2. The mental health of kids and teens (Question 17), especially 
from youth development experts and psychologists. A growing body of 
evidence suggests that teenagers, particularly teenage girls, who spend 
more than two or three hours daily on social media, suffer from 
increased rates of depression, anxiety, and thoughts of suicide and 
self-harm.\13\ This is a nuanced issue, and peer-reviewed research is 
still developing.\14\ But this nuance does not diminish the urgency of 
this work, and in fact heightens our need for comments on it. I 
appreciate especially the partnership of Commissioner Wilson in this 
area.
---------------------------------------------------------------------------

    \13\ Jean M. Twenge et al., Increases in Depressive Symptoms, 
Suicide-Related Outcomes, and Suicide Rates Among U.S. Adolescents 
After 2010 and Links to Increased New Media Screen Time, 6 Clinical 
Psychological Science 1, 3, 10 (Jan. 2018), https://doi.org/10.1177/2167702617723376; Hugues Sampasa-Kanyiga & Rosamund Lewis, Frequent 
use of social networking sites is associated with poor psychological 
functioning among children and adolescents, 18(7) Cyberpsychology, 
Behavior, and Social Networking 380 (Jul. 2015), https://www.researchgate.net/publication/280059931_Frequent_Use_of_Social_Networking_Sites_Is_Associated_with_Poor_Psychological_Functioning_Among_Children_and_Adolescents.
    \14\ See, e.g., Amy Orban & Andrew K. Przybylski, The 
association between adolescent well-being and digital technology 
use, 3 Nature Human Behaviour 173 (Feb. 2019), https://www.nature.com/articles/s41562-018-0506-1 (criticizing Twenge et al. 
at supra note 13).
---------------------------------------------------------------------------

    3. How to protect non-English speaking communities from fraud and 
other abusive data practices (Question 58), especially from affinity 
groups, internet platforms, and experts in fraud prevention practices. 
We know that many non-English language communities are 
disproportionately targeted in the offline world, and I am worried the 
story is even worse online. I'd like to hear more about how new rules 
might encourage more effective enforcement by both the Commission and 
private firms against scams and fraud.
    4. How to protect against unfair or deceptive practices related to 
biometrics (Questions 37-38). A new generation of remote biometric 
technology is transforming our ability to move in public with some 
semblance of privacy. I'd welcome proposals for how rules may address 
and prevent abuse and harmful invasions of privacy.
    I want to recognize Commissioner Slaughter for her early vision on 
this rulemaking process,\15\ Chair Khan for her leadership in moving 
this effort forward, and all the agency staff who worked on it. 
Although my Republican colleagues are voting against this ANPR, I want 
them and the public to know I'll still seek their input throughout the 
process that follows.
---------------------------------------------------------------------------

    \15\ See, e.g., Rebecca Kelly Slaughter, The Near Future of U.S. 
Privacy Law, Silicon Flatirons-University of Colorado Law School 
(Sept. 6, 2019), https://www.ftc.gov/system/files/documents/public_statements/1543396/slaughter_silicon_flatirons_remarks_9-6-19.pdf (``I believe the time has come to consider a Mag-Moss data-
protection rule.'').
---------------------------------------------------------------------------

    I am most grateful to the members of the public, civil society, and 
small businesses community who will take the time to comment on this 
ANPR. We need your input. We will read it carefully and with interest.

Dissenting Statement of Commissioner Noah Joshua Phillips

    Legislating comprehensive national rules for consumer data privacy 
and security is a complicated undertaking. Any law our nation adopts 
will have vast economic significance. It will impact many thousands of 
companies, millions of citizens, and billions upon billions of dollars 
in commerce. It will involve real trade-offs between, for example, 
innovation, jobs, and economic growth on the one hand and protection 
from privacy harms on the other. (It will also require some level of 
social consensus about which harms the law can and should address.) 
Like most regulations, comprehensive rules for data privacy and 
security will likely displace some amount of competition. Reducing the 
ability of companies to use data about consumers, which today 
facilitates the provision of free services, may result in higher 
prices--an effect that policymakers would be remiss not to consider in 
our current inflationary environment.\1\
---------------------------------------------------------------------------

    \1\ German Lopez, Inflation's 40-Year High, N.Y. Times (Apr. 13, 
2022), https://www.nytimes.com/2022/04/13/briefing/inflation-forty-year-high-gas-prices.html.
---------------------------------------------------------------------------

    National consumer privacy laws pose consequential questions, which 
is why I have said, repeatedly,\2\ that Congress--

[[Page 51294]]

not the Federal Trade Commission (``FTC'' or ``Commission'')--is where 
national privacy law should be enacted. I am heartened to see Congress 
considering just such a law today,\3\ and hope this Commission process 
does nothing to upset that consideration.
---------------------------------------------------------------------------

    \2\ See, e.g., Statement of Commissioner Noah Joshua Phillips 
Regarding the Report to Congress on Privacy and Security (Oct. 1, 
2021), https://www.ftc.gov/system/files/documents/public_statements/1597020/commissioner_phillips_dissent_to_privacy_report_to_congress_updated_final_93021_for_posting.pdf; Sen. Roger Wicker, Rep. Cathy McMorris 
Rodgers & Noah Phillips, FTC must leave privacy legislating to 
Congress, Wash. Exam'r (Sept. 29, 2021), https://www.washingtonexaminer.com/opinion/op-eds/ftc-must-leave-privacy-legislating-to-congress; Prepared Oral Statement of Commissioner 
Noah Joshua Phillips Before the House Committee on Energy and 
Commerce Subcommittee on Consumer Protection and Commerce, Hearing 
on ``Transforming the FTC: Legislation to Modernize Consumer 
Protection'' (July 28, 2021), https://www.ftc.gov/system/files/documents/public_statements/1592981/prepared_statement_0728_house_ec_hearing_72821_for_posting.pdf.
    \3\ See Rebecca Klar, House panel advances landmark federal data 
privacy bill, The Hill (July 20, 2022), https://thehill.com/policy/technology/3567822-house-panel-advances-landmark-federal-data-privacy-bill/; Press Release, House Committee on Energy and 
Commerce, House and Senate Leaders Release Bipartisan Discussion 
Draft of Comprehensive Data Privacy Bill (June 3, 2022), https://energycommerce.house.gov/newsroom/press-releases/house-and-senate-leaders-release-bipartisan-discussion-draft-of.
---------------------------------------------------------------------------

    So I don't think we should do this. But if you're going to do it, 
do it right. The Commercial Surveillance and Data Security advance 
notice of proposed rulemaking (``ANPR'') issued today by a majority of 
commissioners provides no notice whatsoever of the scope and parameters 
of what rule or rules might follow; thereby, undermining the public 
input and congressional notification processes. It is the wrong 
approach to rulemaking for privacy and data security.
    What the ANPR does accomplish is to recast the Commission as a 
legislature, with virtually limitless rulemaking authority where 
personal data are concerned. It contemplates banning or regulating 
conduct the Commission has never once identified as unfair or 
deceptive. That is a dramatic departure even from recent Commission 
rulemaking practice. The ANPR also contemplates taking the agency 
outside its bailiwick. At the same time, the ANPR virtually ignores the 
privacy and data security concerns that have animated our enforcement 
regime for decades. A cavalcade of regulations may be on the way, but 
their number and substance are a mystery.

The ANPR Fails To Provide Notice of Anything and Will Not Elicit a 
Coherent Record

    The ANPR fails to live up to the promise in its name, to give 
advance notice to the public (and Congress) of what the Commission 
might propose. The FTC Act requires an ANPR to ``contain a brief 
description of the area of inquiry under consideration, the objective 
which the Commission seeks to achieve, and possible regulatory 
alternatives under consideration by the Commission.'' \4\ This ANPR 
flunks even that basic test. The areas of inquiry are vast and 
amorphous, and the objectives and regulatory alternatives are just not 
there. It is impossible to discern from this sprawling document--which 
meanders in and out of the jurisdiction of the FTC and goes far afield 
from traditional data privacy and security--the number and scope of 
rules the Commission envisions.\5\ The document stands in stark 
contrast to the focus that characterizes recent ANPRs issued by the 
Commission, which addressed far more limited topics like impersonating 
a government entity or private business, deceptive earnings claims, or 
the scope of the Telemarketing Sales Rule.\6\ I supported each of 
those.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 57a(b)(2)(A)(i).
    \5\ The Commission is not even limiting itself to Section 18 
rules that must follow the procedures laid out in Magnuson-Moss 
Warranty Act, Public Law 93-637, 88 Stat. 2183. The ANPR notes that 
it is requesting information on how commercial surveillance harms 
competition, which could inform competition rulemaking. Other 
commissioners may believe the Commission may promulgate such rules, 
including without an ANPR. I do not. See Prepared Remarks of 
Commissioner Noah Joshua Phillips at FTC Non-Compete Clauses in the 
Workplace Workshop (Jan. 9, 2020), https://www.ftc.gov/system/files/documents/public_statements/1561697/phillips_-_remarks_at_ftc_nca_workshop_1-9-20.pdf.
    \6\ See Trade Regulation Rule on Impersonation of Government and 
Businesses, 86 FR 72901 (Dec. 23, 2021), https://www.federalregister.gov/documents/2021/12/23/2021-27731/trade-regulation-rule-on-impersonation-of-government-and-businesses; 
Deceptive or Unfair Earnings Claims, 87 FR 13951 (Mar. 11, 2022), 
https://www.federalregister.gov/documents/2022/03/11/2022-04679/deceptive-or-unfair-earnings-claims; Telemarketing Sales Rule, 87 FR 
33662 (June 3, 2022), https://www.federalregister.gov/documents/2022/06/03/2022-10922/telemarketing-sales-rule.
---------------------------------------------------------------------------

    A well-crafted ANPR is calibrated to develop a thorough record. But 
this ANPR addresses too many topics to be coherent. It requests 
information ranging from what practices companies currently use to 
``surveil consumers'' \7\ to whether there should be a rule granting 
teens an ``erasure mechanism,'' \8\ what extent any new commercial 
surveillance rule would impede or enhance innovation,\9\ the 
administrability of any data minimization or purpose limitation 
requirements,\10\ the ``nature of the opacity of different forms of 
commercial surveillance practices,'' \11\ and whether the Commission 
has ``adequately addressed indirect pecuniary harms, including . . . 
psychological harms.'' \12\
---------------------------------------------------------------------------

    \7\ See section IV, Q.1 of this document, ANPR for Trade 
Regulation Rule on Commercial Surveillance and Data Security. 
[hereinafter ANPR].
    \8\ Id. at section IV, Q.14.
    \9\ Id. at section IV, Q.26.
    \10\ Id. at section IV, Q.49.
    \11\ Id. at section IV, Q.86.
    \12\ I am not sure what this means. Should the Commission be 
obtaining monetary redress for the cost of consumers' therapy? Id. 
at section IV, Q.9. Where conduct is not deceptive, the FTC Act only 
permits us to regulate conduct that causes ``substantial injury''. 
15 U.S.C. 45(n).
---------------------------------------------------------------------------

    The ANPR provides no clue what rules the FTC might ultimately 
adopt. In fact, the Commission expressly states that the ANPR does not 
identify the full scope of approaches it could undertake, does not 
delineate a boundary on issues on which the public can comment, and in 
no way constrains the actions it might take in an NPRM or final 
rule.\13\ This scattershot approach creates two obvious problems: 
stakeholders cannot discern how to engage meaningfully and provide 
comment, and the lack of focus for their comments will give the 
Commission a corollary ability to proceed in any direction it chooses. 
I earnestly cannot see how this document furthers an effort to fashion 
discrete and durable privacy and data security rules.
---------------------------------------------------------------------------

    \13\ ANPR at 24.
---------------------------------------------------------------------------

    The ANPR poses some 95 questions about the myriad topics it 
purports to address, but many simply fail to provide the detail 
necessary for commenters to prepare constructive responses. Take the 
ANPR's blanket request for cost-benefit analyses:

    [T]he Commission invites public comment on (a) the nature and 
prevalence of harmful commercial surveillance and lax data security 
practices, (b) the balance of costs and countervailing benefits of 
such practices for consumers and competition, as well as the costs 
and benefits of any given potential trade regulation rule, and (c) 
proposals for protecting consumers from harmful and prevalent 
commercial surveillance and lax data security practices.\14\
---------------------------------------------------------------------------

    \14\ Id.

    This question asks the public to comment on the costs and benefits 
of any business practice and any possible regulation involving 
``commercial surveillance,'' a term defined so broadly (and with such 
foreboding \15\) that it captures any collection or use of consumer 
data.\16\ It goes on to ask commenters how the Commission should 
evaluate the answers, as if the FTC Act does not provide a framework 
for fashioning such regulations (it does) and the Commission does not 
know how to apply it (I hope we do).\17\
---------------------------------------------------------------------------

    \15\ In adopting this academic pejorative, the ANPR trades a 
serious attempt to understand business practices it would regulate 
for the chance to liken untold companies large and small to J. Edgar 
Hoover's COINTELPRO.
    \16\ ``For the purposes of this ANPR `commercial surveillance' 
refers to the collection, aggregation, analysis, retention, 
transfer, or monetization of consumer data and the direct 
derivatives of that information.'' ANPR at 13.
    \17\ Id. at section IV, Qs.24-29.
---------------------------------------------------------------------------

    These kinds of questions are not conducive to stakeholders 
submitting data and analysis that can be compared and considered in the 
context of a

[[Page 51295]]

specific rule. The Commission would be more likely to receive helpful 
data if it asked commenters for the costs and benefits of some defined 
kind of conduct, or a particular rule to regulate it--say, information 
collected by exercise apps, or a rule limiting the use of third-party 
analytics by those apps.\18\ Without specific questions about business 
practices and potential regulations, the Commission cannot hope for 
tailored responses providing a full picture of particular practices. 
Determining the appropriateness and scope of any subsequent proposed 
rule will prove difficult.
---------------------------------------------------------------------------

    \18\ Cf. In the matter of Flo Health, Inc., FTC File No. 1923133 
(2021), https://www.ftc.gov/legal-library/browse/cases-proceedings/192-3133-flo-health-inc (Flo Health violated Section 5 by sharing 
consumer health information with data analytics providers, despite 
promising consumers that it would keep the data private).
---------------------------------------------------------------------------

The ANPR Recasts the FTC as a Legislature

    The ANPR kickstarts the circumvention of the legislative process 
and the imposition upon the populace of the policy preferences of a 
majority of unelected FTC commissioners. The Supreme Court recently 
noted ``a particular and recurring problem [of] agencies asserting 
highly consequential power beyond what Congress could reasonably be 
understood to have granted.'' \19\ Apparently, the FTC is next up to 
the plate. Our Section 18 authority to regulate ``unfair or deceptive 
acts or practices'' \20\ goes only so far; and the ANPR contemplates 
reaching well beyond, including to common business practices we have 
never before even asserted are illegal. Reading the FTC Act to provide 
the Commission with the ``sweeping and consequential authority'' \21\ 
to mandate changes across huge swaths of the economy will test the 
limits of our congressional delegation.
---------------------------------------------------------------------------

    \19\ West Virginia v. EPA, 2022 WL 2347278 (June 30, 2022) (slip 
op. at 20).
    \20\ 15 U.S.C. 57a.
    \21\ West Virginia v. EPA, 2022 WL 2347278, at 17.
---------------------------------------------------------------------------

    The ANPR's many references to international and state privacy laws 
signal the majority's view that the scope of the rules passed by the 
unelected commissioners of an independent agency should be on par with 
statutes passed by elected legislators. Even as we vote, Congress is 
considering actively legislation concerning the very matters the ANPR 
purports to address.\22\ I sincerely hope that this ill-advised process 
does not upset that very much needed one.
---------------------------------------------------------------------------

    \22\ 168 Cong. Rec. D823 (daily ed. July 20, 2022). Cf. West 
Virginia v. EPA, 2022 WL 2347278 at 20 (stating that the EPA's 
discovery of power to restructure the energy market ``allowed it to 
adopt a regulatory program that Congress had conspicuously and 
repeatedly declined to enact itself.'').
---------------------------------------------------------------------------

    The ANPR colors well outside the lines of conduct that has been the 
subject of many (or, in a number of prominent cases, any) \23\ 
enforcement actions, where real world experience provides a guide.\24\ 
Unlike our December 2021 ANPR targeting fraudsters that impersonate the 
government, for example, the Commission does not have 20 years of cases 
covering the same conduct.\25\ The Auto Rule NPRM issued last month 
also targeted conduct that was the basis of repeated Commission 
enforcement.\26\
---------------------------------------------------------------------------

    \23\ Observers have, in the past, taken the FTC to task for 
trying to create ``law'' through settlements it reaches following 
investigations with private parties. See, e.g., Justin (Gus) 
Hurwitz, Data Security and the FTC's UnCommon Law, 101 Iowa L. Rev. 
955 (2016). That is a real concern. But those criticisms seem quaint 
in retrospect, as this ANPR contemplates banning or regulating 
conduct that hasn't even been the subject of enforcement.
    \24\ For example, while the Commission has explored facial 
recognition and automated decision-making in workshops and reports, 
it has never found that the use of facial recognition technology or 
automated decision-making themselves to be unfair. Despite this 
conspicuous lack of enforcement actions, if questions such as 38 or 
60 of this ANPR are any indication, the Commission might rush 
straight to limiting or prohibiting their use. See ANPR at section 
IV, Q.38 and Q.60.
    \25\ The absence of this record itself undermines one of the 
traditional arguments for rules, i.e., that enforcement efforts have 
not proven sufficient. See, e.g., Trade Regulation Rule on 
Impersonation of Government and Businesses, 86 FR 72901 (Dec. 23, 
2021), https://www.federalregister.gov/documents/2021/12/23/2021-27731/trade-regulation-rule-on-impersonation-of-government-and-businesses.
    \26\ Motor Vehicle Dealers Trade Regulation Rule, 87 FR 42012 
(July 13, 2022), https://www.federalregister.gov/documents/2022/07/13/2022-14214/motor-vehicle-dealers-trade-regulation-rule.
---------------------------------------------------------------------------

    This ANPR, meanwhile, attempts to establish the prevalence 
necessary to justify broad commercial surveillance rulemaking by citing 
an amalgam of cases concerning very different business models and 
conduct.\27\ Under Section 18, the agency must show that the unfair 
acts or practices in question are prevalent, a determination that can 
only be made if the Commission has previously ``issued cease and desist 
orders regarding such acts or practices,'' or if it has any other 
information that ``indicates a widespread pattern of unfair or 
deceptive acts or practices.'' \28\ Where the agency has little (or no) 
experience, prudence counsels in favor of investigation to explore 
costs and benefits and to determine illegality. The ANPR aims for 
regulation without even any experience, to say nothing of court 
decisions ratifying the application of Section 5 to the business 
conduct in question. As this process moves forward, the Commission 
would do well to keep in mind that ``[a]gencies have only those powers 
given to them by Congress, and `enabling legislation' is generally not 
an `open book to which the agency [may] add pages and change the plot 
line.''' \29\
---------------------------------------------------------------------------

    \27\ See, e.g., In re Craig Brittain, FTC File No. 1323120 
(2015), https://www.ftc.gov/legal-library/browse/cases-proceedings/132-3120-craig-brittain-matter (company solicited ``revenge'' porn 
and charged consumers to take down images); U.S. v. AppFolio, Inc., 
Civ. Action No. 1:20-cv-03563 (D.D.C. 2020), https://www.ftc.gov/legal-library/browse/cases-proceedings/1923016-appfolio-inc 
(consumer reporting agency failed to implement reasonable procedures 
to ensure maximum possible accuracy of its tenant screening 
reports).
    \28\ 15 U.S.C. 57a(b)(3).
    \29\ West Virginia v. EPA, 2022 WL 2347278 at 19, (quoting E. 
Gellhorn & P. Verkuil, Controlling Chevron-Based Delegations, 20 
Cardozo L. Rev. 909, 1011 (1999)).
---------------------------------------------------------------------------

    Take, for example, the ANPR's treatment of ``personalized'' or 
``targeted'' advertising.\30\ The majority seems open to banning--ahem, 
``limiting''-- targeted advertising. Limiting or banning targeted 
advertising will be a heavy lift for many reasons, not the least of 
which is that we have never brought a case alleging that targeted 
advertising is unfair. The Commission has brought cases where companies 
deceptively collected, used, or shared personal data for purposes 
including targeted advertising, but that is not the same.\31\ Perhaps 
in recognition of these potential difficulties, the ANPR requests ideas 
on what potential legal theories might support limits on the use of 
automated systems in targeted advertising.\32\
---------------------------------------------------------------------------

    \30\ I recognize that all advertising is ``targeted'', why--for 
example--readers of Car & Driver in the pre-digital era saw ads for 
cars, driving gloves, and floor mats. In this dissent, I use the 
phrase ``targeted advertising'' to describe the ubiquitous conduct 
at issue in the ANPR, i.e., advertising served on the web and 
through apps based on data collected about people.
    \31\ See, e.g., U.S. v. OpenX Technologies, Inc., Civ. Action 
No. 2:21-cv-09693 (C.D. Cal. 2021), https://www.ftc.gov/enforcement/cases-proceedings/1923019/openx-technologies-inc; In the Matter of 
Goldenshores Technologies, LLC, and Erik M. Geidl, FTC File No. 
1323087 (2014), https://www.ftc.gov/legal-library/browse/cases-proceedings/132-3087-goldenshores-technologies-llc-erik-m-geidl-matter.
    \32\ See ANPR section IV, Q.62.
---------------------------------------------------------------------------

    Consider also the ANPR's discussion of consent, one of the 
traditional bedrocks of privacy policy. Whether notice and consent is 
the optimal approach to consumer privacy in every context is worthy of 
serious debate. Instead of discussing the merits and shortcomings of 
transparency and choice, the majority simply concludes that ``consent 
may be irrelevant.'' \33\ The ANPR bolsters this view with claims that 
other privacy regimes are moving away from an emphasis on consent. 
Really? While there are certainly privacy laws that include data

[[Page 51296]]

minimization requirements or restrict secondary uses of data, many 
still allow for consent. For example, the Children's Online Privacy 
Protection Act of 1998 requires parents to give verified parental 
consent before a business collects information from a child.\34\ The 
European Union's General Data Protection Regulation (``GDPR'') allows 
businesses to process data if they have the consumer's consent, which 
must be freely given, specific, informed, and unambiguous.\35\
---------------------------------------------------------------------------

    \33\ Id. at 6.
    \34\ Children's Online Privacy Protection Rule, 16 CFR 312.5, 
https://www.govinfo.gov/content/pkg/CFR-2012-title16-vol1/pdf/CFR-2012-title16-vol1-sec312-5.pdf.
    \35\ See Complete Guide to GDPR Compliance, https://gdpr.eu/gdpr-consent-requirement/?cn-reloaded=1.
---------------------------------------------------------------------------

    The ANPR appears skeptical that consumers can be trusted to make 
their own choices, seeking information on what ``commercial 
surveillance'' practices are illegal, ``irrespective of whether 
consumers consent to them.'' \36\ Should the majority be thwarted in 
its quest to make consent pass[eacute], the ANPR contemplates at least 
having different consent standards for individuals ``in crisis'' or 
``especially vulnerable to deception.'' \37\ This is paternalistic to 
say the least: Heaven forfend adults make decisions and permit 
companies to use their data to serve them targeted ads. But even if you 
disagree with that view, the point is that a consequential decision to 
take away that choice from individuals--like many of the decisions that 
need to be weighed in creating a national privacy law--is best left to 
Congress. The FTC is not a legislature.
---------------------------------------------------------------------------

    \36\ See ANPR at section IV, Q.76.
    \37\ Id. at section IV, Q.79.
---------------------------------------------------------------------------

    The ANPR also contemplates rewriting the Children's Online Privacy 
Protection Act (``COPPA'').\38\ Consistent with its dismissal of 
consent as a legal basis for collecting data, its discussion of 
children and teens is hostile to the idea that parents can consent to 
the collection, use, or sharing of data about their children.\39\ In 
enacting COPPA, with its explicit provision for verifiable parental 
consent, Congress determined that parents can make decisions about the 
collection and sharing of their children's personal data.\40\ The FTC 
cannot and should not attempt to overrule Congress through rulemaking--
or parents, who routinely have to make all sorts of decisions about our 
children.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 6502.
    \39\ I suppose there is some logic to the majority's view that 
if you can't consent to personalized advertising for yourself, then 
you can't consent for your children either. I disagree with both 
conclusions.
    \40\ 15 U.S.C. 6502.
---------------------------------------------------------------------------

    To be fair, the ANPR raises the important issue of whether there 
should be more rules that protect the privacy of teenagers. COPPA only 
covers children under thirteen, and there are plenty of data privacy 
and security issues that impact youth ages 13 to 16 online. But here 
the ANPR is out of order. Just days ago, the Senate Commerce Committee 
considered legislation to amend COPPA, including to extend protections 
to minors up to age 16.\41\ Congress is working on these answers. And, 
lest we forget, so are we. The privacy of children was a central 
concern of the social media 6(b)s, a project we have not yet 
completed.\42\ The Commission also has had ongoing for years a review 
of the COPPA Rule. The Commission received over 170,000 comments upon 
it, the most of any request for input issued in the history of the 
agency. This ANPR threatens to supersede that process. We should first 
complete our homework on those projects before starting over the 
process of writing new rules.
---------------------------------------------------------------------------

    \41\ See Cristiano Lima, Senate panel advances bills to boost 
children's safety online, Wash. Post (July 27, 2022), https://www.washingtonpost.com/technology/2022/07/27/senate-child-safety-bill/.
    \42\ See Lesley Fair, FTC issues 6(b) orders to social media and 
video streaming services, Fed. Trade Comm'n Business Blog (Dec. 14, 
2020), https://www.ftc.gov/business-guidance/blog/2020/12/ftc-issues-6b-orders-social-media-and-video-streaming-services.
---------------------------------------------------------------------------

The ANPR is FTC Overreach

    The ANPR reaches outside the jurisdiction of the FTC. It seeks to 
recast the agency as a civil rights enforcer, contemplating policing 
algorithms for disparate impact without a statutory command.\43\ This 
raises immediate concerns. First, do we have the authority? When 
Congress seeks to ban discrimination, it says so directly.\44\ The FTC 
Act does not mention discrimination. Second, the civil rights laws 
Congress has adopted to fight discrimination delineate the bases upon 
which discrimination is illegal.\45\ The FTC Act does not. Third, our 
antidiscrimination laws cover aspects of commerce where Congress has 
expressed concern about the impact of discrimination, for example 
housing, employment, and the extension of credit.\46\ The FTC Act 
applies broadly to any unfair or deceptive act or practice in or 
affecting commerce. Finally, the FTC Act does not specify whether it is 
a regime of disparate treatment or disparate impact.
---------------------------------------------------------------------------

    \43\ Illegal discrimination is pernicious, which is why we have 
statutes and agencies that protect consumers from being wrongly 
denied employment, housing, or credit due to a protected 
characteristic.
    \44\ See, e.g., The Fair Housing Act, 42 U.S.C. 3601 et seq., 
which prohibits discrimination in housing because of race, religion, 
sex, national origin, familial status or disability. The Age 
Discrimination in Employment Act, 29 U.S.C. 621 et seq., prohibits 
employment discrimination against individuals aged 40 years or 
older.
    \45\ For example, Title VII of the Civil Rights Act of 1964, 
Public Law 88-352, prohibits employment discrimination ``because of 
such individual's race, color, religion, sex, or national origin.'' 
The Americans with Disabilities Act, 42 U.S.C. 12101, prohibits 
discrimination against people with disabilities in employment, 
transportation, public accommodations, communications, and access to 
state and local governments' programs and services.
    \46\ The FTC does enforce the Equal Credit Opportunity Act 
(``ECOA''), an antidiscrimination law covering the extension of 
credit. ECOA bars discrimination ``with respect to any aspect of a 
credit transaction'' on the basis of race, color, religion, national 
origin, sex, marital status, age, or because of receipt of public 
assistance. 15 U.S.C. 1691 et seq.
---------------------------------------------------------------------------

    When determining what conduct violates an antidiscrimination law, 
all of these questions are critical. The FTC Act, which is not such a 
law, answers none of them. All of that raises the prospect of 
interpreting the FTC Act to bar disparate impact, including on bases 
that most would regard as perfectly reasonable or at the very least 
benign. So, for example, an algorithm resulting in ads for concert 
tickets being shown more often to music lovers would constitute illegal 
discrimination against those who are not music lovers. So might a 
dating app that uses an algorithm to help users find people of the same 
faith. Under the theory presupposed in the ANPR, such conduct would be 
illegal.
    The ANPR seeks comment on whether the Commission might bar or limit 
the deployment of any system that produces disparate outcomes, 
irrespective of the data or processes on which the outcomes were based. 
(Is this what people mean when they say ``algorithmic justice''? \47\) 
This could very well mean barring or limiting any technology that uses 
algorithms to make decisions that apply to people. The ANPR requests 
comment on whether the FTC should ``forbid or limit the development, 
design, and use of automated decision-making systems that generate or 
otherwise facilitate outcomes that violate Section 5.'' \48\ In other 
words, the Commission wonders if it should put the kibosh on the 
development of artificial intelligence. Stopping American innovation in 
its tracks seems to me neither to reflect the law nor to be sound 
public policy.
---------------------------------------------------------------------------

    \47\ Charles C.W. Cooke, `Algorithmic Justice', Nat'l Rev. (Apr. 
26, 2022), https://www.nationalreview.com/corner/algorithmic-justice/.
    \48\ See ANPR at section IV, Q.60.
---------------------------------------------------------------------------

    The Chair's statement suggests that, through this process, we can 
and should regulate the relations between

[[Page 51297]]

employers and employees where data are concerned.\49\ The only related 
question in the ANPR asks ``[h]ow, if at all, should potential new 
trade regulation rules address harms to different consumers across 
different sectors.'' \50\ That question does not seem designed to 
obtain the information that would be necessary to regulate employers' 
use of data concerning their employees, so perhaps the concept is off 
the table right out of the gate. But if not, I disagree with the 
premise that the FTC Act confers upon us jurisdiction to regulate any 
aspect of the employer-employee relationship that happens to involve 
data.\51\
---------------------------------------------------------------------------

    \49\ Statement of Chair Lina M. Khan Regarding the Commercial 
Surveillance and Data Security Advance Notice of Proposed Rulemaking 
(Aug. 11, 2022).
    \50\ ANPR at section IV, Q.12.
    \51\ The Chair's statement cites to the Amazon Flex case to 
support the notion that the Commission has authority to regulate the 
relationship between employers and employees. But that settled 
enforcement action concerned independent contractors. See In the 
matter of Amazon.com, Inc. and Amazon Logistics, Inc., FTC File No. 
1923123 (2021), https://www.ftc.gov/legal-library/browse/cases-proceedings/1923123-amazon-flex. While this Commissioner is no 
expert in labor and employment law, my understanding is that the 
distinction between independent contractors and employees is 
fundamental.
---------------------------------------------------------------------------

    But wait, there's more. The Commission is also apparently 
considering prohibiting social media, search, or other companies from 
owning or operating any business that engages in activities such as 
personalized advertising.\52\ The ANPR seeks comment on whether we 
should limit finance, healthcare, and search services from cross-
selling commercial products.\53\ It contemplates requiring companies to 
disclose their intellectual property and trade secrets.\54\ How any of 
these naked restraints on competition fall within our ken of policing 
``unfair or deceptive acts or practices'' is completely unclear.
---------------------------------------------------------------------------

    \52\ Id. at section IV, Q.39.
    \53\ Id. at [Q.46].
    \54\ China probably approves. Id. at section IV, Q.86.
---------------------------------------------------------------------------

    My preference would be that before we draft an ANPR, we be clear 
about the scope of our legal authority and that our proposal would be 
guided by those limitations. The ANPR looks instead like a mechanism to 
fish for legal theories that might justify outlandish regulatory 
ambition outside our jurisdiction and move far beyond where Commission 
enforcement has tread. Any ideas of how we might have the authority to 
ban targeted advertising? \55\ Are we constrained by the First 
Amendment or Section 230 of the Communications Decency Act? \56\ The 
ANPR is open to all creative ideas.\57\
---------------------------------------------------------------------------

    \55\ Id. at section IV, Q.62.
    \56\ Id. at section IV, Q.63-64.
    \57\ Law enforcement agencies should stay within the clearly 
delineated bounds of the law. There are no points for creativity.
---------------------------------------------------------------------------

The ANPR Gives Short Shrift to Critical Policy Issues Within its Scope

    The ANPR lavishes attention on areas that have not been a focus of 
our enforcement and policy work, but shortchanges data security, one 
area ripe for FTC rulemaking. Over the past 20 years, the Commission 
has brought around 80 data security cases, hosted workshops, and done 
significant outreach to the business community on the topic of data 
security. A data security rule could protect consumers from the harms 
stemming from data breaches and provide businesses with greater clarity 
about their obligation to protect personal data. It could incentivize 
better data security by increasing the cost of bad security. I would 
welcome such a rulemaking if fashioned well. Instead of focusing on 
this important area, the ANPR gives data security short shrift. Six 
questions. That's it. A data security ANPR would surely have been more 
than six questions, a good indication that this ANPR is just not enough 
to make a data security rule. For example, our ANPR on impersonation 
fraud asked 13 questions about a far narrower topic. This is a missed 
opportunity to develop the record needed for a rule requiring companies 
to implement data security safeguards to protect consumers' personal 
data.
    Perhaps the most shocking aspect of this ANPR is not what it 
contains, but what it leaves out: privacy. Missing from this document 
is any meaningful discussion about whether there should be different 
rules based on the sensitivity of data, a traditional area of privacy 
concern reflected in particular federal laws, which provide greater 
protection for data considered more sensitive, like health data, 
financial data, and data collected from children.\58\ Almost as an 
afterthought, the ANPR asks ``which kinds of data'' might be subject to 
any potential rules, but there is no attempt at real engagement on the 
topic.\59\ There is no question asking how ``sensitive data'' should be 
defined. The ANPR seeks information about whether the Commission should 
put restrictions on fingerprinting,\60\ but is incurious about whether 
a rule should treat medical history and a social security number 
differently than an IP address or zip code.\61\ ANPR questions focused 
on treating data differently based on sectors rather than on the 
sensitivity of the data itself fail to recognize that health data is 
collected and held across multiple sectors. One of the first steps in 
any serious attempt to develop a baseline privacy standard should be to 
determine what information is sensitive and might justify higher levels 
of protection.
---------------------------------------------------------------------------

    \58\ See Health Breach Notification Rule, 16 CFR part 318; 
Gramm-Leach Bliley Act, Public Law 106-102, 112 Stat. 1338 (1999); 
Fair Credit Reporting Act, 15 U.S.C. 1681-1681x; Children's Online 
Privacy Protection Act, 15 U.S.C. 6501-6505.
    \59\ See ANPR at section IV, Q.10.
    \60\ While fingerprints would likely constitute sensitive data 
under a privacy rule, I will be interested to learn how 
fingerprinting itself is an unfair or deceptive practice under 
Section 5.
    \61\ The decision not to ask about how to define sensitive data 
is particularly odd given the agency's recent statements vowing to 
aggressively pursue cases involving the use and sharing of 
``location, health, and other sensitive information.'' If the goal 
is to forbid the sharing of location data, in particular location 
data relating to reproductive health, a rule defining sensitive data 
would seem invaluable to that project. See Kristin Cohen, Location, 
health, and other sensitive information: FTC committed to fully 
enforcing the law against illegal use and sharing of highly 
sensitive data, Fed. Trade Comm'n Business Blog (July 11, 2022), 
https://www.ftc.gov/business-guidance/blog/2022/07/location-health-other-sensitive-information-ftc-committed-fully-enforcing-law-against-illegal-use.
---------------------------------------------------------------------------

    In another departure from most privacy frameworks, the ANPR 
includes little discussion of how a rule should incorporate important 
principles like access, correction, deletion, and portability. The 
majority is so focused on justifying limiting or banning conduct now 
apparently disfavored that they spare no thought for how best to 
empower consumers. If you were hoping that the FTC would use its 
expertise and experience to develop rules that would give consumers 
greater transparency and control over their personal data, you must be 
very disappointed.

Conclusion

    When adopting regulations, clarity is a virtue. But the only thing 
clear in the ANPR is a rather dystopic view of modern commerce. This 
document will certainly spark some spirited conversations, but the 
point of an ANPR is not simply to pose provocative questions. This is 
not an academic symposium. It is the first step in a rulemaking 
process, and the law entitles the public to some sense of where the FTC 
is going.
    I would have supported an ANPR for a data security rule. I would 
have been more sympathetic to an ANPR that was focused on consumer 
privacy as reflected in our long record of enforcement and policy 
advocacy--say, a rule that, for example, would require transparency or 
that would, depending

[[Page 51298]]

on the sensitivity of the information or the purposes for which it was 
collected, put some limits on the collection and use of consumer 
information. These ideas would be consistent with, among other things, 
Commission enforcement experience. I cannot support an ANPR that is the 
first step in a plan to go beyond the Commission's remit and outside 
its experience to issue rules that fundamentally alter the internet 
economy without a clear congressional mandate. That's not 
``democratizing'' the FTC or using all ``the tools in the FTC's 
toolbox.'' It's a naked power grab. I dissent.

Dissenting Statement of Commissioner Christine S. Wilson

    Throughout my tenure as an FTC Commissioner, I have encouraged 
Congress to pass comprehensive privacy legislation.\1\ While I have 
great faith in markets to produce the best results for consumers, Econ 
101 teaches that the prerequisites of healthy competition are sometimes 
absent. Markets do not operate efficiently, for example, when consumers 
do not have complete and accurate information about the characteristics 
of the products and services they are evaluating.\2\ Neither do markets 
operate efficiently when the costs and benefits of a product are not 
fully borne by its producer and consumers--in other words, when a 
product creates what economists call externalities.\3\ Both of these 
shortcomings are on display in the areas of privacy and data security. 
In the language of economists, both information asymmetries and the 
presence of externalities lead to inefficient outcomes with respect to 
privacy and data security.
---------------------------------------------------------------------------

    \1\ See Oral Statement of Commissioner Christine S. Wilson as 
Prepared for Delivery Before the U.S. House Energy and Commerce 
Subcommittee on Consumer Protection and Commerce (July 28, 2021), 
https://www.ftc.gov/system/files/documents/public_statements/1592954/2021-07-28_commr_wilson_house_ec_opening_statement_final.pdf; Oral Statement 
of Commissioner Christine S. Wilson Before the U.S. Senate Committee 
on Commerce, Science and Transportation (Apr. 20, 2021), https://www.ftc.gov/system/files/documents/public_statements/1589180/opening_statement_final_for_postingrevd.pdf; Oral Statement of 
Commissioner Christine S. Wilson Before the U.S. Senate Committee on 
Commerce, Science and Transportation (Aug. 5, 2020), https://www.commerce.senate.gov/services/files/25112CF8-991F-422C-8951-25895C9DE11D; Oral Statement of Commissioner Christine S. Wilson as 
Prepared for Delivery Before the U.S. House Energy and Commerce 
Subcommittee on Consumer Protection and Commerce (May 8, 2019), 
https://www.ftc.gov/system/files/documents/public_statements/1519254/commissioner_wilson_may_2019_ec_opening.pdf.
    \2\ Robert Pindyck & Daniel Rubinfeld, Microeconomics 625-626 
(8th ed. 2017).
    \3\ Id. at 626.
---------------------------------------------------------------------------

    Federal privacy legislation would provide transparency to consumers 
regarding the full scope of data collection, and how collected data are 
used, shared, sold, and otherwise monetized. In addition, a 
comprehensive privacy law would give businesses much-needed clarity and 
certainty regarding the rules of the road in this important area, 
particularly given the patchwork of state laws that is emerging. And 
Congressional action would help fill the emerging gaps in sector-
specific approaches created by evolving technologies and emerging 
demands for information. Perhaps most importantly, a national privacy 
law would help curb violations of our civil liberties.\4\
---------------------------------------------------------------------------

    \4\ See Christine Wilson, Op-Ed, Coronavirus Demands a Privacy 
Law, Wall St. J., May 13 2020, available at https://www.wsj.com/articles/congress-needs-to-pass-a-coronavirus-privacy-law-11589410686; Christine S. Wilson, Privacy and Public/Private 
Partnerships in a Pandemic, Keynote Remarks Privacy + Security Forum 
(May 7, 2020), https://www.ftc.gov/system/files/documents/public_statements/1574938/wilson_-_remarks_at_privacy_security_academy_5-7-20.pdf; Christine Wilson, 
Privacy in the Time of Covid-19, Truth On The Market (Apr. 15, 
2020), https://truthonthemarket.com/author/christinewilsonicle/.
---------------------------------------------------------------------------

    While I have long been concerned about data collection and usage, 
the events of 2020 laid bare new dangers and served only to deepen my 
concerns. During that tumultuous year, I wrote and spoke on several 
occasions regarding pressing privacy and civil liberties issues.\5\ In 
the face of continued Congressional inaction, I became willing to 
consider whether the Commission should undertake a Section 18 
rulemaking to address privacy and data security. But even then, I 
emphasized that an FTC rulemaking would be vastly inferior to federal 
privacy legislation.\6\ And I continue to believe that Congressional 
action is the best course.
---------------------------------------------------------------------------

    \5\ Id.
    \6\ Oral Statement of Commissioner Christine S. Wilson as 
Prepared for Delivery Before the U.S. House Energy and Commerce 
Subcommittee on Consumer Protection and Commerce (July 28, 2021), 
https://www.ftc.gov/system/files/documents/public_statements/1592954/2021-07-28_commr_wilson_house_ec_opening_statement_final.pdf.
---------------------------------------------------------------------------

    I am heartened that Congress is now considering a bipartisan, 
bicameral bill that employs a sound, comprehensive, and nuanced 
approach to consumer privacy and data security. The American Data 
Privacy and Protection Act (ADPPA) rightly has earned broad acclaim in 
the House Committee on Energy and Commerce and the Subcommittee on 
Consumer Protection and Commerce, and is moving to a floor vote in the 
House.\7\ I am grateful to Ranking Member Roger Wicker, Chairman Frank 
Pallone, Chair Jan Schakowsky, Ranking Member Cathy McMorris Rodgers, 
and Ranking Member Gus Bilirakis for their thoughtful work, and I hope 
to see this bill become a law. The momentum of ADPPA plays a 
significant role in my ``no'' vote on the advance notice of proposed 
rulemaking (ANPRM) announced today. I am gravely concerned that 
opponents of the bill will use the ANPRM as an excuse to derail the 
ADPPA.
---------------------------------------------------------------------------

    \7\ Press Release, Bipartisan E&C Leaders Hail Committee Passage 
of the American Data Privacy and Protection Act (Jul. 20, 2022), 
https://energycommerce.house.gov/newsroom/press-releases/bipartisan-ec-leaders-hail-committee-passage-of-the-american-data-privacy.
---------------------------------------------------------------------------

    While the potential to derail the ADPPA plays a large role in my 
decision to dissent, I have several other misgivings about proceeding 
with the ANPRM. First, in July 2021, the Commission made changes to the 
Section 18 Rules of Practice that decrease opportunities for public 
input and vest significant authority for the rulemaking proceedings 
solely with the Chair.\8\ Second, the Commission is authorized to issue 
a notice of proposed rulemaking when it ``has reason to believe that 
the unfair or deceptive acts or practices which are the subject of the 
proposed rulemaking are prevalent.'' \9\ Many practices discussed in 
this ANPRM are presented as clearly deceptive or unfair despite the 
fact that they stretch far beyond practices with which we are familiar, 
given our extensive law enforcement experience. Indeed, the ANPRM 
wanders far afield of areas for which we have clear evidence of a 
widespread pattern of unfair or deceptive practices. Third, regulatory 
\10\ and enforcement \11\ overreach increasingly has drawn sharp 
criticism from courts. Recent Supreme Court decisions indicate FTC 
rulemaking overreach likely will not

[[Page 51299]]

fare well when subjected to judicial review. And fourth, Chair Khan's 
public statements \12\ give me no basis to believe that she will seek 
to ensure that proposed rule provisions fit within the Congressionally 
circumscribed jurisdiction of the FTC. Neither has Chair Khan given me 
reason to believe that she harbors any concerns about harms that will 
befall the agency (and ultimately consumers) as a consequence of her 
overreach.
---------------------------------------------------------------------------

    \8\ See Dissenting Statement of Commissioners Christine S. 
Wilson and Noah Joshua Phillips Regarding the Commission Statement 
on the Adoption of Revised Section 18 Rulemaking Procedures (July 9, 
2021), https://www.ftc.gov/system/files/documents/public_statements/1591702/p210100_wilsonphillips_joint_statement_-_rules_of_practice.pdf (detailing the changes to the Rules and 
concerns that the changes ``fast-track regulation at the expense of 
public input, objectivity, and a full evidentiary record.'').
    \9\ 15 U.S.C. 57a(b)(3).
    \10\ West Virginia v. EPA, 2022 WL 2347278 (June 30, 2022) 
(striking down EPA regulations as outside of the agency's 
Congressionally mandated authority).
    \11\ AMG Capital Management, LLC v. FTC, 141 S. Ct. 1341 (2021) 
(finding that the FTC exceeded its law enforcement authority under 
Section 13(b) of the FTC Act).
    \12\ See, e.g., Koenig, Bryan, FTC's Khan More Worried About 
Inaction Than Blowback, Law360 (Apr. 22, 2022), https://www.law360.com/articles/1486611/ftc-s-khan-more-worried-about-inaction-than-blowback; Scola, Nancy, Lina Khan Isn't Worried About 
Going Too Far, NY Magazine (Oct. 27, 2021), https://nymag.com/intelligencer/article/lina-khan-ftc-profile.html.
---------------------------------------------------------------------------

    While baseline privacy legislation is important, I am pleased that 
Congress also is considering legislation that would provide heightened 
privacy protections for children.\13\ Recent research reveals that 
platforms use granular data to track children's online behavior, serve 
highly curated feeds that increase engagement, and (in some instances) 
push kids towards harmful content.\14\ More broadly, the research 
reveals a ``catastrophic wave of mood disorders (anxiety and 
depression) and related behaviors (self-harm and suicide)'' among 
minors, and particularly teenage girls, who spend a significant amount 
of time on social media daily.\15\ The Kids Online Safety Act makes 
particularly noteworthy contributions, and I applaud Senators Richard 
Blumenthal and Marsha Blackburn on their work.
---------------------------------------------------------------------------

    \13\ Kids Online Safety Act, S.3663, 117th Congress (2021-22), 
https://www.congress.gov/bill/117th-congress/senate-bill/3663/text;Children and Teens' Online Privacy Protection Act, S.1628, 
117th Congress (2021-22), https://www.congress.gov/bill/117th-congress/senate-bill/1628/text; see also Cristiano Lima, Senate 
panel advances bills to boost children's safety online, Wash. Post 
(Jul. 27, 2022), https://www.washingtonpost.com/technology/2022/07/27/senate-child-safety-bill/.
    \14\ See, e.g., Testimony of Jonathan Haidt, Teen Mental Health 
is Plummeting, and Social Media is a Major Contributing Cause, 
Before the Senate Judiciary Committee, Subcommittee on Technology, 
Privacy, and the Law (May 4, 2022), https://www.judiciary.senate.gov/imo/media/doc/Haidt%20Testimony.pdf.
    \15\ Id.
---------------------------------------------------------------------------

    I appreciate that my newest colleague, Commissioner Alvaro Bedoya, 
brings to the Commission deep experience in the field of privacy and 
data security and shares my concerns about protecting children 
online.\16\ I look forward to working with him, FTC staff, and our 
fellow Commissioners to take constructive steps in this area, including 
advancing key research, heightening awareness, bringing enforcement 
actions, and concluding the Commission's ongoing review of the 
Children's Online Privacy Protection Act.
---------------------------------------------------------------------------

    \16\ I have given several speeches discussing these concerns. 
See Christine S. Wilson, The FTC's Role in Supporting Online Safety 
(Nov. 21, 2019), https://www.ftc.gov/system/files/documents/public_statements/1557684/commissioner_wilson_remarks_at_the_family_online_safety_institute_11-21-19.pdf; Christine S. Wilson, Opening Remarks at FTC Workshop: The 
Future of the COPPA Rule (Oct. 7, 2019), https://www.ftc.gov/system/files/documents/public_statements/1547693/wilson__ftc_coppa_workshop_opening_remarks_10-7-19.pdf; see also 
Christine S. Wilson, Remarks at Global Antitrust Institute, FTC v. 
Facebook (Dec. 11, 2019), https://www.ftc.gov/system/files/documents/public_statements/1557534/commissioner_wilson_remarks_at_global_antitrust_institute_12112019.pdf (discussing, inter alia, my work with staff to secure the 
provisions of the settlement that provide heightened review for 
products targeted to minors).

[FR Doc. 2022-17752 Filed 8-19-22; 8:45 am]
BILLING CODE 6750-01-P