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FTC: Most Americans Don’t Know How Much Companies Track And Sell Their Data

As Americans face ubiquitous data collection with too little transparency or control, Edith Ramirez, the head of the Federal Trade Commission, wants a comprehensive privacy law.

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The Federal Trade Commission exists to protect American consumers, and one of its biggest concerns in the tech age is protecting your privacy. But when FTC Chair Edith Ramirez speaks with businesses in Silicon Valley about adopting stronger protections, she often gets pushback: Companies are worried about the costs of privacy, and the potential for new government rules to restrict innovation.

But Ramirez believes that protecting Americans’ privacy builds the trust that pulls emerging technology into the mainstream, converting fears of techno-dystopia into economic success and a better quality of life.

“I think that consumer protection and innovation can go hand in hand,” she told BuzzFeed News in an interview that will air on C-SPAN's Communicators. “If consumers aren’t confident in, let’s say, a particular internet of things device that’s collecting information, they’re are not going to purchase that device.”

In a time of rampant identity theft and giant data breaches, there’s an overwhelming sense that we’ve lost control over how our personal information is used by powerful corporations. Ramirez says Congress and the tech industry need to do a lot more to help us navigate our frenetic, interconnected world.

As part of her agency’s dual mission of promoting competition and protecting consumers, Ramirez is advocating for a comprehensive data security law. In addition to establishing federal standards for how firms can collect, share, and store Americans’ information, the FTC wants greater authority to punish businesses with civil penalties when they put our data at risk. A baseline privacy law would also give the FTC room to develop new rules to keep pace with developing technologies and companies’ ubiquitous data collection practices. However, the government’s domestic surveillance programs would not be affected by these consumer protections.

Ramirez is especially concerned with what are known as data brokers, which are third parties that don’t deal with people online directly, but collect and repackage our personal information on a massive scale, and in turn sell that information to companies, marketers, and other data brokers. Most people, Ramirez says, don’t understand how that data harvesting is taking place, and she describes the potential consequences as “one of the most serious issues confronting us today.”

She warned that our data information may also find its way to our employers, insurance companies, and creditors, institutions that can impact our lives in lasting, and devastating ways. “So much of the data collection that’s taking place happens behind a curtain. It’s largely invisible to consumers.”

How Does the FTC Protect Your Privacy Right Now?

For the most part, companies that interact with consumers directly are free to provide data about their customers to third parties, and there’s no law giving us the right to opt-out of such data sharing agreements. “Right now, there is no federal legislation in the area that tackles these issues comprehensively,” Ramirez said.

The FTC can take enforcement action against businesses if they deceive consumers. For instance, if a social network states in its privacy policy that it won’t share your information with third parties, but is found to do so anyway, the FTC can go after that company for breaking its promise to consumers. But without that explicit violation, there’s no general prohibition against third party data sharing, which limits the FTC’s power to act.

In 2014, the FTC reached a settlement with Snapchat after the company was accused of misrepresenting its product. Among other things, it said snaps would “disappear forever,” when, in fact, the Commission found that recipients of photos and videos could save them indefinitely. As part of the settlement, Snapchat agreed to not misrepresent the so-called “ephemeral” nature of snaps, and to establish within the company a comprehensive privacy program.

However, critics say all this limited enforcement does is discourage companies from over-promising in their privacy policies, rather than quashing their privacy-violating behavior that harms Americans. When asked to address this issue, Ramirez said, “We’re not here to be prescriptive about what a company does or does not do. We certainly want to make sure that if they make a promise…you need to actually comply with that.”

Ramirez hopes that companies will attempt to outpace one another with features and products that cater to our concerns over data protection. “It’s an issue on which I think a company can differentiate itself. And speaking also as a competition agency, we want to see more and encourage more competition in the area of privacy,” she said.

In the wake of the Snowden revelations, and with the increasing prevalence of colossal hacks in the news, Americans have become more concerned about privacy and data protection than ever before. And Silicon Valley has taken notice, with several companies like Apple and WhatsApp offering enhanced privacy features as a way to stand apart from their competitors.

What Comes Next?

Ramirez has seen progress — like how many mobile apps follow the FTC’s voluntary guidelines to ask for consent to use your phone’s geo-location — but she says the industry can still do better.

“Companies are not doing what they should to be open about their data practices,” she said. And I also feel that they’re not offering consumers appropriate choice when it comes to ... mak[ing] decisions about what happens with their data.”

But don’t hold your breath for sweeping privacy legislation to happen anytime soon. Several efforts in Congress to pass even modest proposals have stalled, and the November election is also likely to delay any new laws.

However, there is something to look forward to. Ramirez is supporting a Federal Communications Commission plan that may give Americans some serious new protections online.

Unveiled this spring, the proposal would require broadband companies like Comcast, Verizon, and Time Warner to disclose how they track your online activity, like web browsing and downloads. They would also have to ask your permission before sharing online activity data with certain business and advertising partners.

As you might expect, broadband companies oppose the plan, arguing that it would place onerous obligations on their businesses, and would unfairly disadvantage them, since other internet companies that engage in online advertising and data collection, like Google and Facebook, would be exempt from the rules.

For Ramirez, it's a welcome effort, even if the plan isn’t perfect. “Generally the approach that they took is something that we are in line with, and by that I mean: They focus on the importance of transparency; they focus on the importance of providing choice to consumers,” Ramirez said.

Hamza Shaban is a technology policy reporter for BuzzFeed News and is based in Washington, DC.

Contact Hamza Shaban at Hamza.Shaban@buzzfeed.com.

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