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FTC consumer chief calls industry's false privacy choices "coercion"

Wow. The FTC's consumer chief gave a powerful speech this week that essentially said "privacy notice and choice" are not enough in a surveillance-based economy. "When we’re expecting consumers to have to choose between participating in the digital economy and protecting their privacy, we’re not giving them a choice at all – what we’re really describing is coercion."

Cover image by g4||4is "Privacy. The "i" is a lock" via Flickr. Some rights reserved.

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Ed Mierzwinski
Senior Director, Federal Consumer Program

Author: Ed Mierzwinski

Senior Director, Federal Consumer Program

202-461-3821

Started on staff: 1977
B.A., M.S., University of Connecticut

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.

We're excited that Congress has confirmed the fifth FTC commissioner, privacy expert Alvaro Bedoya, giving Chair Lina Khan a majority to implement her plans to protect consumers and the economy.

But first: Wow. The FTC's consumer chief gave a powerful speech recently that essentially said "privacy notice and choice" are not enough in a surveillance-based economy. "When we’re expecting consumers to have to choose between participating in the digital economy and protecting their privacy, we’re not giving them a choice at all – what we’re really describing is coercion."

FTC Bureau of Consumer Protection Director Sam Levine's talk highlighted the need for a "new paradigm to confront the challenges of the surveillance economy."

"Even when consumers do have a real choice, our surveillance economy has led to companies getting very good at shaping what choices we make. We are increasingly seeing businesses use practices like “dark patterns” to manipulate or trick consumers into “choosing” to allow more data collection and forgoing more privacy-protective settings. This can lead to a vicious cycle, where firms collect more and more data on us, which gives them more and more power to manipulate us further."

The talk goes on to say how the new FTC is pushing back, hard. Its recent enforcement actions include:

  • A lawsuit against Flo Health. The FTC "alleged that that the company pledged to keep private the reproductive health information it collected from consumers, while in reality, the company’s app disclosed that information to Facebook, Google, and other third parties."
  • A case against WW: "the company formerly known as Weight Watchers...marketed a weight loss app for use by children as young as eight and then collected their personal information without parental permission. The settlement order requires WW International and Kurbo to delete personal information illegally collected from children under 13, destroy any algorithms derived from the data, and pay a $1.5 million penalty."
  • Since the speech last week, this week the FTC and the Department of Justice announced a $150 million penalty against social media giant Twitter, for collecting phone numbers for "security purposes" and deceptively using them for targeted advertising. The firm had promised to honor user privacy choices in a 2011 FTC order.

 
Can you believe that so many large companies broke their solemn privacy promises? Why do companies violate the law? Of course you believe and of course you know why! It's a simple way to better harvest and monetize our data and earn more revenue. Not everyone gets caught and, at least for a company as big as Twitter, $150 million is simply a cost of doing business.
 
But their actions take a toll. It's not just taking our money. It's how they take it and how it affects consumers, children, potential competitors and the overall economy.
 
Sam Levine goes on to explain that some consumers are manipulated by "dark patterns" that make it much harder to cancel a subscription than to sign up for a "free" offer (our group complaint to FTC and our consumer tips on avoiding dark patterns); and how other consumers are "boxed" into categories by inferences that limit their choices and opportunities.
 
Sam Levine: "In the commercial context, this can mean that certain services are simply not offered to certain groups. And in the political context, it is easy to see how this practice can fuel polarization."
The speech goes on to detail privacy harms in the surveillance economy, which go well beyond identity theft, (which is bad enough):

"Privacy means more than “I have nothing to hide.” Rather, it is crucial we recognize that the surveillance economy imposes very real costs on individuals – including consumers, workers, and young people – as well as on our society in general, including around our critical infrastructure, our political and religious liberties, and our social cohesion."

And harms to the economy and competition are explained:

"Experience has shown that a surveillance-based economy can entrench the dominance of firms with the greatest access to, and control over, personal information and the ability to attract and monetize consumer attention. These firms can leverage their power to position themselves as gatekeepers that smaller competitors must rely on to reach consumers."

And then there are the harms to children and teens; companies selling dreams, sneakers and breakfast cereal want to capture them while they're young: "...firms that rely on surveillance-based business models have a financial incentive to keep young people engaged, which can lead to addiction and other serious harms." 

This blog is just a snapshot of a comprehensive and thoughtful piece on what needs to be done and what the FTC is doing.

Sam Levine gets it. But do Senators and Representatives? During Congressional hearings after the 2017 Equifax breach, I recall some members of Congress finally understanding that "we're not customers of data brokers, we're their products." I wonder, does Congress still remember those hearings? Just a few years later, the data brokers, telecoms and Big Tech's selling, search and social media platforms are trying to jam "privacy" legislation through Congress that preserves the surveillance business model as business as usual, leaving consumers to be coerced and manipulated.

Thank you, Sam Levine, for sounding the alarm and presenting solutions that the FTC seeks. Congress should read the speech instead of listening to the phalanx of lobbyists and their chorus of hired (but we're still independent!) "think tanks and experts." Congressional decisions on privacy will affect our digital rights and so much more. Worth repeating:

"Privacy means more than “I have nothing to hide.” Rather, it is crucial we recognize that the surveillance economy imposes very real costs on individuals – including consumers, workers, and young people – as well as on our society in general, including around our critical infrastructure, our political and religious liberties, and our social cohesion." 

Ed Mierzwinski
Senior Director, Federal Consumer Program

Author: Ed Mierzwinski

Senior Director, Federal Consumer Program

202-461-3821

Started on staff: 1977
B.A., M.S., University of Connecticut

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.