Data analytics are getting more sophisticated and are being used in every industry. The more data in the world, the more it can be analyzed—it’s dubbed “big data.” In that context, the Federal Trade Commission (FTC) recently issued a report (Big Data: A Tool for Inclusion or Exclusion), on big data and outlined the benefits and risks associated with using big data to discriminate against individuals. In particular, the FTC wants companies to address whether or not there is an inherent bias in its big data analytics.
The FTC cautioned businesses not to use big data to unfairly treat or exclude lower income individuals or other under-served people, such as using the data to refuse to extend credit or through unfair employment practices. The report noted that information such as zip codes, social media or shopping history, if inaccurate or biased, can have an adverse effect on certain communities or ethnic groups that are more vulnerable than others. Further, this information can be used to determine whether credit will be extended, which may unfairly or inaccurately portray certain credit risks.
The warning is that these practices can violate consumer protection laws and the FTC has made it abundantly clear that it is going to step up its consumer protection enforcement in the coming year.