Most people do not appreciate what is meant by the term Big Data so the Federal Trade Commission (FTC) issued a report which highlights that “potential benefits to consumers are significant, but businesses must ensure that their big data use does not lead to harmful exclusion or discrimination.”  On January 6, 2016 the FTC released its report entitled “Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues” included the following applicable laws that may be impacted by Big Data:

  1. The Fair Credit Reporting Act
  2. Equal Opportunity Laws
  3. The Federal Trade Commission Act

The Big Data report also included these Questions for Legal Compliance:

If you compile big data for others who will use it for eligibility decisions (such as credit, employment, insurance, housing, government benefits, and the like), are you complying with the accuracy and privacy provisions of the FCRA? FCRA requirements include requirements to (1) have reasonable procedures in place to ensure the maximum possible accuracy of the information you provide, (2) provide notices to users of your reports, (3) allow consumers to access information you have about them, and (4) allow consumers to correct inaccuracies.

If you receive big data products from another entity that you will use for eligibility decisions, are you complying with the provisions applicable to users of consumer reports? For example, the FCRA requires that entities that use this information for employment purposes certify that they have a “permissible purpose” to obtain it, certify that they will not use it in a way that violates equal opportunity laws, provide pre-adverse action notice to consumers, and thereafter provide adverse action notices to those same consumers.

If you are a creditor using big data analytics in a credit transaction, are you complying with the requirement to provide statements of specific reasons for adverse action under ECOA?

Are you complying with ECOA requirements related to requests for information and record retention?

If you use big data analytics in a way that might adversely affect people in their ability to obtain credit, housing, or employment:

*Are you treating people differently based on a prohibited basis, such as race or national origin?

*Do your policies, practices, or decisions have an adverse effect or impact on a member of a protected class, and if they do, are they justified by a legitimate business need that cannot reasonably be achieved by means that are less disparate in their impact?

Are you honoring promises you make to consumers and providing consumers material information about your data practices?

Are you maintaining reasonable security over consumer data?

Are you undertaking reasonable measures to know the purposes for which your customers are using your data?

*If you know that your customer will use your big data products to commit fraud, do not sell your products to that customer. If you have reason to believe that your data will be used to commit fraud, ask more specific questions about how your data will be used.

*If you know that your customer will use your big data products for discriminatory purposes, do not sell your products to that customer. If you have reason to believe that your data will be used for discriminatory purposes, ask more specific questions about how your data will be used.

Obviously Big Data is growing and apparently legal risks will grow as well.