commercial surveillance

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The Federal Trade Commission (FTC) has long expressed a concern about the potential misuse of location data.  For example, in a 2022 blog post, “Location, health, and other sensitive information: FTC committed to fully enforcing the law against illegal use and sharing of highly sensitive data,” the agency termed the entire location data ecosystem “opaque” and has investigated the practices and brought enforcement actions against mobile app operators and data brokers with respect to sensitive data.

One such FTC enforcement began with an August 2022 complaint against Kochava, Inc. (“Kochava”), a digital marketing and analytics firm, seeking an order halting Kochava’s alleged acquisition and downstream sale of “massive amounts” of precise geolocation data collected from consumers’ mobile devices. In that complaint, the FTC alleged that Kochava, in its role as a data broker, collects a wealth of information about consumers and their mobile devices by, among other means, purchasing data from outside entities to sell to its own customers.  Among other things, the FTC alleged that the location data provided by Kochava to its customers was not anonymized and that it was possible, using third party services, to use the geolocation data combined with other information to identify a mobile device user or owner.

In May 2023, an Idaho district court granted Kochava’s motion to dismiss the FTC’s complaint, with leave to amend. Subsequently, the FTC filed an amended complaint, and Kochava requested that the court keep the amended complaint under seal, which it did until it could rule on the merits of the parties’ arguments.

On November 3, 2023, the court granted the FTC’s motion to unseal the amended complaint, finding no “compelling reason” to keep the amended complaint under seal and rejecting Kochava’s arguments that the amended complaint’s allegations were “knowingly false” or “misleading.” (FTC v. Kochava Inc., No. 22-00377 (D. Idaho Nov. 3, 2023)). As a result, the FTC’s amended complaint has been unsealed to the public.

On August 29, 2022, the Federal Trade Commission (FTC) announced that it had filed a complaint against Kochava, Inc. (“Kochava”), a digital marketing and analytics firm, seeking an order halting Kochava’s alleged acquisition and downstream sale of “massive amounts” of precise geolocation data collected from consumers’ mobile devices.

The complaint alleges that the data is collected in a format that would allow third parties to track consumers’ movements to and from sensitive locations, including those related to reproductive health, places of worship, and their private residences, among others.  The FTC alleged that “consumers have no insight into how this data is used” and that they do not typically know that inferences about them and their behaviors will be drawn from this information.  The FTC claimed that the sale or license of this sensitive data, which could present an “unwarranted intrusion” into personal privacy, was an unfair business practice under Section 5 of the FTC Act.

On August 11, 2022, the Federal Trade Commission (FTC) issued an Advance Notice of Proposed Rulemaking (ANPR) and announced it was exploring a rulemaking process to “crack down on harmful commercial surveillance” and lax data security.  The agency defines commercial surveillance as “the collection, aggregation, analysis, retention, transfer, or monetization of consumer data and the direct derivatives of that information.”

The FTC View

The FTC has not released any proposed rules but seeks public comment on the harms stemming from commercial surveillance and whether new rules are needed to protect consumer data privacy. As part of the ANPR, and before setting out a host of questions for public comment, the FTC offers its take on the opaque ecosystem surrounding the collection of mobile data and personal information (which the FTC asserts is often done without consumers’ full understanding). The FTC discusses the subsequent sharing and sale of information to data aggregators and brokers that then sell data access or data analysis products to marketers, researchers, or other businesses interested in gaining insights from alternative data sources. The agency argues that based on news reporting, published research and its own enforcement actions, the benefits of the current consumer data marketplace may be outweighed by “harmful commercial surveillance and lax data security practices,” thus potentially requiring rules to protect consumers and to offer more regulatory clarity to companies beyond the FTC’s case-by-case enforcement. As FTC Chair Lina Khan said in her statement accompanying the ANPR: “[T]he 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 —means that potentially unlawful practices may be prevalent, with case-by-case enforcement failing to adequately deter lawbreaking or remedy the resulting harms.”

FTC Invitation for Comment

After describing the FTC view on the issues, the Commission invites public comment on whether it should implement new trade regulation rules or other regulatory alternatives concerning the ways companies (1) collect, aggregate, protect, use, analyze, and retain consumer data, as well as (2) transfer, share, sell, or otherwise monetize that data in ways that are unfair or deceptive.  Within the ANPR are a myriad of questions (too numerous to list here; a fact sheet is available here and the press release also offers a breakdown). Though, perhaps the multimillion-dollar questions asked by the agency are: Which kinds of data should be subject to a potential privacy rule?  To what extent, if at all, should a new regulation impose limitations on companies’ collection, use, and retention of consumer data?