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September 18, 2014

Concerns About Big Data Abuses Grow

George Leopold

The tension between the rise of big data and concerns over privacy and fairness continues to mount as federal regulators convened this week to ponder whether big data is a “tool for inclusion or exclusion.”

That was the title of a Sept. 15 Federal Trade Commission workshop examining the impact of big data on U.S. consumers, particularly the poor and underserved. “A growing number of companies are increasingly using big data analytics techniques to categorize consumers and make predictions about their behavior,” FTC Chairwoman Edith Ramirez stated in opening the workshop.

“As part of the FTC’s ongoing work to shed light on the full scope of big data practices, our workshop will examine the potentially positive and negative effects of big data on low income and underserved populations.”

The workshop also examined the question of whether big data is being used improperly to categorize consumers “in ways that may affect them unfairly, even unlawfully.” The agency has been focusing specifically on financial institutions, online and brick and mortar retailers along with lead generators who use big data in a variety of ways.

Under FTC scrutiny are practices like customer loyalty programs that reward some customers with perks like shorter wait times at the expense of others. Another potential abuse is using big data to offer discounted mortgage rates if a consumer has an account with a competing financial institution.

In a variation on so-called “red lining” abuses that plagued the lending sector for decades, credit scoring also has been cited as a possible abuse of big data tools. Critics cited unregulated “aggregate scoring models” as a means of assessing credit risk rather than the credit background of individual consumers.

Another issue regulators are considering is whether existing laws can prevent such abuses or whether “there are gaps in the legal framework?”

Consumer protection, privacy and civil rights groups have been pushing the FTC to crack down on abusive practices like data brokering, which critics claim can use big data technologies to gain greater access to personal medical information than can consumers.

The Leadership Conference on Civil and Human Rights released a report during the FTC workshop titled, Civil Rights and Big Data, and Our Algorithmic Future. The report focuses on the impact of big data in areas like financial services, employment, criminal justice and government data collection.

In areas like criminal justice, law enforcement officials have said big data could be used, for example, to deliver “data-driven reforms” aimed at fixing the nation’s sentencing guidelines and relieve prison overcrowding.

The report nevertheless warned that greater use of data analytics is leading to a range of abuses, including:

  • A hidden bias of insurers against low-income drivers;
  • Data brokers targeting vulnerable communities;
  • Disparate impact of the E-Verify employment eligibility program on foreign-born workers;
  • Hiring algorithms that put jobs out reach for applicants;
  • The secrecy of police technologies;
  • Body-worn cameras and police accountability; and
  • Domestic dragnet surveillance

“At their best, new data-driven tools can strengthen the values of equal opportunity and equal justice. But we see some risks,” Wade Henderson, president and CEO of The Leadership Conference on Civil and Human Rights, said in releasing the report. “To ensure that big data serves the best interests of each of us, civil rights must be a key part of any public policy framework.”

As public pressure mounts to crack down on big data practitioners like data brokers, stricter rules on how data analytics can be used in the marketplace seem inevitable.

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