How can companies protect themselves against privacy litigation?
The FTC’s proposed privacy framework provides some welcome guidance. In order to reduce the burden on consumers resulting from long, legalistic privacy policies and ensure basic privacy protections, the FTC recommends that ‘companies should adopt a “privacy by design” approach by building privacy protections into their everyday business practices.’ Companies can protect themselves by providing reasonable security for consumer data, limiting and monitoring collection and retention of such data, and implementing reasonable procedures to promote data accuracy. In order to accomplish these goals, companies should consider assigning personnel to oversee privacy issues and training employees in privacy practices, among other things. The FTC is also encouraging companies to broadly disclose their privacy policies and to honor consumer requests to opt out of information gathering procedures like click tracking.
The big picture is that it is increasingly imperative that companies accurately describe what information they collect and what they do with that information in a manner that can be easily understood by consumers. Companies cannot store consumer data in an unencrypted manner and they must implement vigorous security protection for all consumer data and information that they collect and store.
Going forward, what should businesses in particular be aware of?
The trend in the future is for increased regulation of privacy and businesses’ use of consumer data. For example, the FTC is proposing a universal opt-out provision akin to the Do Not Call Registry that would allow Internet users to opt out of being tracked by companies and advertisers. The FTC has also made clear that when a company makes representations about how it treats consumers’ personal information, it has to live up to those promises or face FTC action.
The landscape of privacy regulation is rapidly changing and companies need to carefully examine what consumer data they collect and how they use it in order to avoid potential liability.
Kit Winter is a member with Dykema Gossett PLLC. Reach him at (213) 457-1736 or [email protected].
