BIG DATA + ADVERTISING The pros and cons of our current legislation

By Maggie Butler

We've all seen it -- the mysterious advertisements on Facebook that also happen to look a lot like the product that we just spent 10 minutes looking at on Amazon. How did Facebook know that we were just looking at that pair of shoes? Well, thanks to large datasets with a vast amount of information about consumers, advertisers can purchase data to tailor their messages to a desired target audience. And that's not all that big data can do. It's been credited for things like developing new products and services, predicting market trends, tailoring services and opportunities to individuals, energy saving, advances in education, and so much more. There are obviously a great amount of benefits to using big data. But what about the risks? The use of big data can affect our privacy and can lead to discrimination. And what kinds of laws or protections surround big data in an ever-changing digital sphere?

For better or for worse, there is a lot of information about consumers out there.

Data about consumers is constantly being collected and stored in datasets. It's everything from race, age, sex, marital status, number of children, education, income and geographic location, to habits, search history, likes, dislikes, the amount of time spent on a particular webpage, credit history, or in-store and online purchases. Advancements in technology and "The Internet of Things" has made it easier to gather private and personal data about consumers, which is then sold and used by businesses for targeted marketing, developing new services and goods and predicting trends.

Since our private, personal data is more easily accessible now that we are constantly connected, it's important to consider the risks, understand our rights and ensure that the legislation keeps up with a changing digital atmosphere.

Benefits

There are lots of reasons to love big data. It has helped improve technology, products and services by tracking troubleshoot areas and finding efficiencies. It has helped inventors imagine apps that we use on the daily like Uber, Lyft, Waze and Google Maps. It has made dating easier, getting the news more convenient and finding a parking spot less time-consuming. Shopping has become a breeze because the products you want basically come directly to you thanks to big data and advertisers understanding your purchasing habits. And, when was the last time you went to a bank? Now all of your banking can be done via smartphone with fingerprint account protection. Advertisers are able to expose you to the products and services that you are interested in with little to no work required.

An argument can be made that big data is offering opportunities to people who may not have had equal access in the past. Some companies choose to use data to ensure that they are hiring from a diverse pool of applicants, or to market to a group of people that may not have the same resources and opportunities as others. These are ways that big data can be used for good.

Advertisers especially benefit from big data because they have the ability to target a very specific audience, which allows them to save money on campaigns and enjoy larger margins. If an advertiser sells their product to a very particular population, big data makes it easier to target this group of people based on demographic, geographic and personal information that these consumers share. So, instead of purchasing an expensive, national T.V. spot, companies can spend their money wisely and purchase digital ads that will only be seen by their target market on websites like Facebook, Instagram, Pandora and Spotify. These types of targeted ads ensure that the consumers who see them will be interested and the product or service would add value to their lives. This is much more cost-effective for advertisers and has a greater chance of creating higher returns.

Risks

While there are many reasons to love how data has made our lives easier, there are also risks that we should consider. The most obvious concern is security -- all of the sensitive data floating around about consumers can potentially set us up for fraud. The data could also help thieves or hackers target vulnerable audiences. Another concern is privacy. Some people may not want their personal information accessible to businesses or other citizens. It is also a bit disconcerting that companies are making profits off of our personal information.

Bose and Uber are just two brands that have been in the news lately for gathering data on consumers without their knowledge and violating user privacy protections.

The most concerning piece about big data, however, is its potential to discriminate and reiterate existing biases. When data sets are created, they often use already-existing data to compare historical trends with current findings to draw conclusions. If the historical data is laced with biases, this can skew the correlations and result in discrimination. This is simply creating new justifications for excluding specific populations from opportunity. Much of the data that exists on consumers is gathered via smart phones and the Internet. However, not everyone has equal access to these kinds of resources, which means that there are significant gaps in the data for underserved populations.

Take, for instance, the use of GPS data to determine which roads are in need of pothole repairs. In low-income, underserved communities, people are less likely to own a smartphone. By using this model, only wealthier areas would be repaired, while lower-income areas would experience unintentional discrimination. The lack of smartphones, and therefore lack of data, in these areas would result in the conclusion that these areas do not need attention, only further discriminating lower-income communities.

Correlation ≠ causation.

The amount of data that exists is so vast that it can be overwhelming. It takes well-trained professionals to analyze and interpret the data to find meaningful relationships. Not all correlations in data have meaning and correlation does not necessarily equal causation. A risk in big data is determining that a correlation is meaningful when it really is not. A lot of data is interpreted through algorithms, which have the potential to be inaccurate. What if you were labeled as someone who is likely to owe the government money or likely to be involved in terrorism based on an algorithm? Or, what if a creditor decided that you are unreliable to lend money to because you have never owned a credit card, even if you always pay all of your bills on time? When data is used in a way that compares correlations to make predictions and draw conclusions, groups of people that fit a certain criteria are likely to be denied opportunities based on the actions of others who share similar characteristics.

Current legislation

Fair Credit Reporting Act

  • Consumer Reporting Agencies (CRAs) that compile and sell consumer reports must ensure maximum possible accuracy in their reporting.
  • CRAs must allow consumers to access and correct data about themselves upon request.
  • Companies who are using data from CRAs to determine eligibility for things like credit, jobs, loans and tenancy must disclose disqualifying characteristics or give notices for risk-based pricing upon request.
  • When it comes to advertising, this law applies for systems like finance, healthcare, housing and employment. When advertising for these specific industries, it is important to ensure that consumers are aware of how their data is being used.

Equal Opportunity Laws

  • Many laws exist that prohibit discrimination based on protected characteristics like sex, race, disabilities, age, marital status, etc.
  • This includes policies that are facially neutral but have an unbalanced impact on a particular population
  • Advertisements alone are unlikely to violate equal opportunity laws except in the cases of employment, lending, housing and other opportunities of the like. If ads could impact lending patterns or discourage populations from pursuing an application based on disqualifying criteria, then it is likely violating equal opportunity laws.

FTC Act

  • Section 5 of the Federal Trade Commission (FTC) Act prohibits unfair or deceptive (likely to mislead a reasonable consumer) acts or practices in commerce.
  • If a company has a material promise that they will not collect, use or sell their customers' data, as soon as they break this promise, they are violating the FTC Act.
  • Failure to disclose information may also violate the FTC Act, especially if it results in injury.
  • Failure to secure data can result in injury, so companies must take precautions to ensure that data is as secure as possible.
All cases regarding these laws are fact-specific and should be treated on a case-by-case basis. The FTC regulates all of these laws and will test each case individually to determine whether a company is using data deceptively or unfairly.
Recommendations

In Europe, there is an increased value of privacy protection for consumers. The European Union has instated a law that "gives citizens back their control over their personal data." In the EU, data can only be gathered under strict conditions for a legitimate purpose. Citizens have the right to complain and take legal action when their data is used unfairly. Websites are required to have a notice at the top of the webpage when they will be using cookies, and consumers can choose whether to accept or reject the webpage from gathering data. The European Union has created a Right to Be Forgotten law that says Google must allow citizens to ask for their personal information to be removed from search results, otherwise they will not allow the company to operate in Europe.

The following is a video from the European Commission's webpage on data protection:

Would these types of laws work in the United States? Probably not. There is already so much data out there free for businesses to access, and the datasets are growing rapidly. Freedoms of speech and press, which go hand in hand with access to information, are held at higher value than privacy protection in the U.S. Restricting information gathering can inhibit innovation and create a chilling effect for companies to create new things or use the data for good.

"If we give undue credence to hypothetical harms, we risk distracting ourselves from genuine harms and discouraging the development of the very tools that promise new benefits to low income, disadvantaged, and vulnerable individuals." - Maureen K. Ohlhausen, FTC Commissioner

But, how can we ensure that the data is in fact being used for good and that citizens' rights are being protected? We can demand of companies that they ensure that their data is representative and accounts for biases. We can stand up when companies' reliance on big data creates ethical or fairness concerns, and we can refuse to support companies that use our data unfairly.

Although the exact laws that exist in Europe may not be successful here, maybe the United States could create a law that requires websites to inform consumers when they are using cookies to gather data. This way, if consumers disagree with the practice, they can opt out. Although this would likely limit what can be seen by those who opt out, it provides a solution that both advertisers/businesses can appreciate, as well as consumers.

Credits:

Created with images by blickpixel - "board electronics computer" • Trocaire - "DSC_3193" • Hwellrich - "woman happy shopping" • Yaneev - "map precision conquering" • Photo-Mix - "google on your smartphone search internet" • dagon_ - "kid child happy" • Franck_Michel - "New York facets - Graduation day at Columbia" • RobertG NL - "Married!" • Unsplash - "home office workstation office" • DariuszSankowski - "navigation car drive" • ShonEjai - "lock padlock heart" • tjHmmer - "Bose" • odejacob - "pothole road kazakhstan" • Visual Content - "Legal Gavel & Open Law Book" • Leamsii - "checklist paper notebook" • user1477335500 - "lightbulb design loft" • garryknight - "Signature"

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