New data regulations; What could go wrong?

The Federal Trade Commission (FTC) has spoken. In a lengthy piece released a few months ago, the FTC took on the $150B data broker industry. Many of the companies focus on data collected for behavioral marketing/targeted advertising but credit bureaus comprise a significant segment of the industry.

The title is descriptive–“Data Brokers: A Call for Transparency and Accountability”

Regulators have chafed at this industry’s opaque data collection and management practices for decades. The extent to which they buy and sell data with and from each other is a major concern. In other words, data may be collected by one broker for a seemingly innocuous purpose and later finds its way to a broker using the data to adversely profile the subject.

Now as many incumbents are adopting super-powerful big data systems, the FTC and others are more urgently calling for new regulations.

I am pleased to see this level of attention. Anything that exposes the industry’s practices in a way that leads to greater understanding is a good thing. The FTC even provides helpful tips on how a more “compliant” system could work. People could access their data, correct it, and exert some control over how and where it may be used.

So far so good.

But then, near the very end of the report, the FTC notes that Congress would have to consider how these newly open systems would preserve data security and fidelity. Remarkable. Data brokers justify opaque systems for exactly that reason. Historically, the assumption has been you cannot assure anyone that data are secure and trustworthy unless managed in a tightly controlled system.

The good news is that technologies already exist to allow for an open access system without sacrificing security and fidelity. However, it seems more likely this kind of great outcome will come through innovation and not regulations.

To drive home a final and important point. Today’s data technologies are more complicated than ever before. The scope, provenance, and structure of data are more complicated than ever before. When those of us in the space struggle to keep up, how is it Congress could figure out this rather delicate balance?

More regulations than we have to day could be useful. Still, I hope more innovative companies will release great technologies that resolve the matter of open yet secure and trustworthy, showing the way for regulators before to much gets “cast in stone.”


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