FTC Starts Process to Adopt Privacy Rules

Written by: Richard Sheinis, Esq.

In September 2021, Senator Richard Blumenthal and eight other Democratic Senators sent a letter to FTC Chair Lina Kahn requesting that the agency begin a rulemaking process to address data privacy.  Blumenthal and the other Senators stated that consumer privacy had become a consumer crisis with tech companies routinely breaking their promises to consumers and neglecting their legal obligations.

On December 10, the FTC filed an “Advance Notice of Proposed Rulemaking” that initiates the process for adopting rules on privacy and artificial intelligence.  The process itself, however, would not begin until sometime in 2022.  The FTC stated it seeks to “curb lax security practices, limit privacy abuses, and ensure that algorithmic decision-making does not result in unlawful discrimination.”

The question is whether rules established by the FTC, will take the place of Congress eventually passing federal privacy legislation.  While Congress has been big on proposing data privacy legislation, they have been woefully short on action.  The concern is that FTC rules will lead Congress to believe that federal legislation in this area is not necessary.  It would be unfortunate if the FTC rulemaking process encouraged Congress to sit further back on their heels.  FTC rules will not be adopted overnight, and will most likely be challenged in court.

The best approach would be the adoption of federal legislation, perhaps followed by FTC regulations to supplement, not replace, legislation.  Regardless of whether we continue down the route of FTC rulemaking, or the passing of federal legislation, one thing for certain is that it will still be several years before we have federal data privacy requirements to govern the practices of businesses that collect and process personal information.