A new FTC report, “Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues,” warns that certain uses of big data consisting of consumer information may implicate various federal consumer protection laws. In the report, the FTC puts companies on notice that it intends “to monitor areas where big data practices could violate existing laws” and “bring enforcement actions where appropriate.”
The report discusses the potential applicability of the Fair Credit Reporting Act (FCRA), the Equal Credit Opportunity Act (ECOA), and Section 5 of the FTC Act to big data practices (which prohibits unfair or deceptive acts or practices). The CFPB also has FCRA and ECOA enforcement authority, as well as authority to enforce the Dodd-Frank Act prohibition of unfair, deceptive, or abusive acts or practices. As a result, companies subject to CFPB jurisdiction face the possibility that the CFPB could also begin using that authority to target big data practices (perhaps using the FTC’s report as a roadmap). In addition, companies supervised by the CFPB could face scrutiny of their big data practices in CFPB examinations and potential supervisory actions.
In its July 2014 report on the use of remittance histories in credit scores, the CFPB noted that use of remittance histories could have a disproportionately negative impact on certain racial or national origin groups and thereby implicate fair lending concerns. At the American Bar Association’s Consumer Financial Services Committee meeting in Park City, Utah earlier this week, a CFPB representative commented on the potential discriminatory impact of using big data in credit decisions. My colleague Joseph Schuster, who attended the meeting, will be blogging about those comments.
For more on the FTC’s report, see our legal alert. On February 17, 2016, from 12 p.m. to 1 p.m ET, Ballard Spahr attorneys will hold a webinar, “Big Problems with Big Data? FTC Report Warns Against Using Big Data in Ways That Violate Federal Consumer Protection Laws.” The webinar registration form is available here.