Federal Trade Commission Initiates Privacy Rulemaking to Curb Commercial Surveillance

Nelson Mullins Riley & Scarborough LLP

In a long-anticipated action, the Democratic-led Federal Trade Commission voted 3-2 on a party-line vote to issue an Advanced Notice of Proposed Rulemaking, which seeks to limit “commercial surveillance.”  The FTC asks if new rules are needed to protect against the “business of collecting, analyzing, and profiting from information about people.”  Specifically, the Commission seeks comment regarding how businesses (1) collect, aggregate, protect, use, analyze, and retain consumer data, as well as (2) transfer, share, sell, or otherwise monetize that data in ways that are unfair or deceptive.

The rulemaking would formally establish uniform privacy and data security requirements and provide the Commission the authority to seek financial penalties against first-time violations.  The August 11, 2022 action came with mixed reactions from Congress, which currently has data privacy legislation in the Senate Chamber.  House Energy and Commerce Committee Republican Leader Cathy McMorris Rodgers (R-WA), criticized the vote and stated that action “should be achieved by the American people speaking through their elected representatives and not through executive action.”  Frank Pallone (D-NJ), Chairman of the House Energy and Commerce Committee, appreciated the FTC’s action, but agreed with his Republican colleague that ultimately, “Congress has a responsibility to pass comprehensive federal privacy legislation.”

Chairwoman Khan recognized the sentiments of congressional members in a Twitter thread and stated, “[i]f Congress passes a strong federal privacy law—as I hope it does—then we’d reassess the value-add of this work and whether it remains a sound use of resources.”  In the meantime, the FTC has begun its rulemaking process.  However, the FTC’s complex rulemaking process can take upwards of six years, so don’t expect a final rule to be published any time soon. The public will have the opportunity to submit comments sixty (60) days after the notice is published in the Federal Register. The FTC will also be hosting a virtual public forum on September 8, in which the public is welcome to make remarks.

Our Technology, Outsourcing, Procurement, and Privacy Team will follow up with a more detailed advisory examining the FTC’s proposals and how they may impact businesses. Keep an eye out for our detailed summary soon.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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