Firms Told to Reveal Data Handling Secrets

Dennis Faas's picture

The Federal Trade Commission (FTC) says it wants consumers to know exactly what private details about them a company is collecting, storing,  using, and sharing.

The new regulations would be part of a plan to encourage businesses to be more transparent, open and honest about how they treat their customers' personal information.

The FTC already has sufficient powers to establish mandatory regulations about how businesses treat their customers.

In this matter, however, the agency has sought approval from Congress, suggesting that the contemplated changes would be substantial enough to go beyond the commission's current powers. (Source:

Modern Data Collection Allows Highly Targeted Advertising

In a new report on ways that online technology has affected consumer privacy, the FTC directs its attention toward information brokers: companies that buy and sell collections of data about individuals.

The wide range of information that can be -- and routinely is -- gathered about people's online activities makes such data, most commonly used for marketing, particularly valuable today.

Properly analyzed and utilized, personal data on consumers allows companies to spend money advertising to people most likely to be interested in their products or services, and avoid spending money that would otherwise be wasted.

This would go a long way toward solving the age-old advertising problem attributed to Wanamaker's Department Store: "We know we're wasting half our advertising budget; we just don't know which half."

For example, in the days before the Internet, a company marketing romance novels might place ads in women's magazines. But many of those magazine readers would never even consider buying a romance novel.

Now, such a company could instead send emails targeted only to people who have bought such novels in the past.

FTC Encourages Corporate Openness, Honesty

The FTC is hoping that firms collecting personal data on individuals avoid abusing data privacy when advertising, by following three main principles:

  1. A company should be more open about the data it collects, and should allow individuals to see all the data concerning them, upon request.
  2. Consumers should have more control and choice regarding the data collected about them, such as by having 'Do Not Track' buttons on browsers, which either inform websites the user doesn't consent to having his or her activity tracked and recorded, or simply block such tracking from taking place.
  3. Companies should build consumer privacy considerations into their data collection process, evaluating at every stage of developing or amending a website or other online service the consumer privacy safeguards that are needed. (Source:
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