Commercial Surveillance and Data Security Rulemaking

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.

• Which practices do companies use to surveil consumers?
• Which measures do companies use to protect consumer data?
• Which of these measures or practices are prevalent? Are some practices more prevalent in some sectors than in others?
• How, if at all, do these commercial surveillance practices harm consumers or increase the risk of harm to consumers?
• Are there some harms that consumers may not easily discern or identify? Which are they?
• Are there some harms that consumers may not easily quantify or measure? Which are they?
• 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?
• Which areas or kinds of harm, if any, has the Commission failed to address through its enforcement actions?
• Has the Commission adequately addressed indirect pecuniary harms, including potential physical harms, psychological harms, reputational injuries, and unwanted intrusions?
• 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?
• 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?
• 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?

• 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 encourage the sharing of personal information?
• 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?
• 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?
• Which sites or services, if any, implement child-protective measures or settings even if they do not direct their content to children and teenagers?
• 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?
• To what extent should trade regulation rules distinguish between different age groups among children (e.g., 13 to 15, 16 to 17, etc.)?
• 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?
• 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?
• 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?
• Should new rules impose differing obligations to protect information collected from children depending on the risks of the particular collection practices?
• 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?

• 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?
• 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?
• 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?
• 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?
• Should the analysis of cost and benefits differ in the context of information about children? If so, how?
• What are the benefits or costs of refraining from promulgating new rules on commercial surveillance or data security?

Rulemaking Generally

• 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?

Data Security

• 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.
• 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?
• 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?
• 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?
• 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?
• 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?

Collection, Use, Retention, and Transfer of Consumer Data

• 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?
• 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?
• 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?
• 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?
• To what alternative advertising practices, if any, would companies turn in the event new rules somehow limit first- or third-party targeting?
• How cost-effective is contextual advertising as compared to targeted advertising?
• 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?
• 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?
• 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?
• 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?
• To what extent would data minimization requirements or purpose limitations protect consumer data security?
• 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?
• 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?
• 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?
• 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?
• 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?

• 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?
• What are the best ways to measure algorithmic error? Is it more pronounced or happening with more frequency in some sectors than others?
• 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?
• 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?
• 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?
• 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?
• 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?
• 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?
• 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?
• Which, if any, legal theories would support limits on the use of automated systems in targeted advertising given potential constitutional or other legal challenges?
• 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?
• 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?

• 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?
• 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?
• 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)?
•  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)?
• 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?
• How, if at all, would restrictions on discrimination by automated decision-making systems based on protected categories affect all consumers?
• 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?
• 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?

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? In which circumstances, if any, is consumer consent likely to be effective? Which factors, if any, determine whether consumer consent is effective? To what extent does current law prohibit commercial surveillance practices, irrespective of whether consumers consent to them? To what extent should new trade regulation rules prohibit certain specific commercial surveillance practices, irrespective of whether consumers consent to them? 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? 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? 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)? Have opt-out choices proved effective in protecting against commercial surveillance? If so, how and in what contexts? 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? 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?

• To what extent should the Commission consider rules that require companies to make information available about their commercial surveillance practices? What kinds of information should new trade regulation rules require companies to make available and in what form?
• In which contexts are transparency or disclosure requirements effective? In which contexts are they less effective?
• 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?
• 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?
• 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?
• 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?
• 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?
• 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?
• 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?
• 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?
• 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?

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?

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. 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?