Last year there was discussion of a possible (now unlikely) return of the FCC’s “Fairness Doctrine” that used to apply to broadcasters. This year, we should all be aware of the FTC’s stepped-up rhetoric toward an “Unfairness Doctrine” for privacy–an increased effort toward enforcing the “unfair” part of Section 5 of the FTC Act, which prohibits unfair or deceptive practices.
Historically, the approach of the FTC toward privacy has been one of notice and consent and to hold companies to the word of their privacy policies — if companies say one thing and then do another, the FTC goes after them for being deceptive. This is the “deceptive” part of the FTC’s power to enforce the law against unfair or deceptive commercial practices.
For privacy, we really haven’t seen the “unfair” part being enforced. But if public comments from high-ranking officials is any indicator (and it is), that’s about to change.
A recent New York Times article summarizes its interview with FTC Chairman Jon Leibowitz and David Vladeck, chief of the FTC’s Bureau of Consumer Protection. It’s another insight into how aggressive the commission wants to be toward privacy.
Advise-and-consent “depended on the fiction that people were meaningfully giving consent,” Mr. Vladeck said. “The literature is clear” that few people read privacy policies, he said.
But even if people did read privacy policies, Vladeck still doesn’t think it is fair that people give consent to data practices, often in exchange for free services:
There is also a problem with companies conflating consent, Mr. Vladeck said. For example, if a Web site asks people to agree to a transaction and to let their data be sold in one form. “I don’t necessarily think that’s fair,” Mr. Vladeck said.
The FTC wants to make things less “unfair” by flipping upside-down the way that most users consent to information collection and use:
“Philosophically, we wonder if we’re moving to a post-disclosure era and what that would look like,” Mr. Vladeck said. “What’s the substitute for it?”
He said the commission was still looking into the issue, but it hoped to have an answer by June or July, when it plans to publish a report on the subject. Mr. Leibowitz gave a hint as to what might be included: “I have a sense, and it’s still amorphous, that we might head toward opt-in,” Mr. Leibowitz said. [emphasis added]
Requiring opt-in is a radical departure from the FTC’s prior focus, which has been directed at the consequences of the use and misuse of consumer information. And it will lead to a radical reversal of the participation rates of users in sharing data for targeted advertising.
Behavioral economists teach us that defaults matter. An overwhelming majority of people do not affirmatively select a different option if there’s a default presented to us.
A default of opt-in means that consumers will likely not share their information. While this may in fact be the goal of the FTC, the effect will be the transformation of free services to fee services online. And requiring opt-in does nothing to incentivize data brokers and other companies that share data to engage in good practices.