New Data Privacy Regulations
When Mark Zuckerberg testified before both the House and the Senate last month, it became immediately obvious that few US lawmakers had any appetite to regulate the pervasive surveillance taking place on the Internet.
Right now, the only way we can force these companies to take our privacy more seriously is through the market. But the market is broken. First, none of us do business directly with these data brokers. Equifax might have lost my personal data in 2017, but I can’t fire them because I’m not their customer or even their user. I could complain to the companies I do business with who sell my data to Equifax, but I don’t know who they are. Markets require voluntary exchange to work properly. If consumers don’t even know where these data brokers are getting their data from and what they’re doing with it, they can’t make intelligent buying choices.
This is starting to change, thanks to a new law in Vermont and another in Europe. And more legislation is coming.
Vermont first. At the moment, we don’t know how many data brokers collect data on Americans. Credible estimates range from 2,500 to 4,000 different companies. Last week, Vermont passed a law that will change that.
The law does several things to improve the security of Vermonters’ data, but several provisions matter to all of us. First, the law requires data brokers that trade in Vermonters’ data to register annually. And while there are many small local data brokers, the larger companies collect data nationally and even internationally. This will help us get a more accurate look at who’s in this business. The companies also have to disclose what opt-out options they offer, and how people can request to opt out. Again, this information is useful to all of us, regardless of the state we live in. And finally, the companies have to disclose the number of security breaches they’ve suffered each year, and how many individuals were affected.
Admittedly, the regulations imposed by the Vermont law are modest. Earlier drafts of the law included a provision requiring data brokers to disclose how many individuals’ data it has in its databases, what sorts of data it collects and where the data came from, but those were removed as the bill negotiated its way into law. A more comprehensive law would allow individuals to demand to exactly what information they have about them—and maybe allow individuals to correct and even delete data. But it’s a start, and the first statewide law of its kind to be passed in the face of strong industry opposition.
Vermont isn’t the first to attempt this, though. On the other side of the country, Representative Norma Smith of Washington introduced a similar bill in both 2017 and 2018. It goes further, requiring disclosure of what kinds of data the broker collects. So far, the bill has stalled in the state’s legislature, but she believes it will have a much better chance of passing when she introduces it again in 2019. I am optimistic that this is a trend, and that many states will start passing bills forcing data brokers to be increasingly more transparent in their activities. And while their laws will be tailored to residents of those states, all of us will benefit from the information.
A 2018 California ballot initiative could help. Among its provisions, it gives consumers the right to demand exactly what information a data broker has about them. If it passes in November, once it takes effect, lots of Californians will take the list of data brokers from Vermont’s registration law and demand this information based on their own law. And again, all of us—regardless of the state we live in—will benefit from the information.
We will also benefit from another, much more comprehensive, data privacy and security law from the European Union. The General Data Protection Regulation (GDPR) was passed in 2016 and took effect on 25 May. The details of the law are far too complex to explain here, but among other things, it mandates that personal data can only be collected and saved for specific purposes and only with the explicit consent of the user. We’ll learn who is collecting what and why, because companies that collect data are going to have to ask European users and customers for permission. And while this law only applies to EU citizens and people living in EU countries, the disclosure requirements will show all of us how these companies profit off our personal data.
It has already reaped benefits. Over the past couple of weeks, you’ve received many e-mails from companies that have you on their mailing lists. In the coming weeks and months, you’re going to see other companies disclose what they’re doing with your data. One early example is PayPal: in preparation for GDPR, it published a list of the over 600 companies it shares your personal data with. Expect a lot more like this.
Surveillance is the business model of the Internet. It’s not just the big companies like Facebook and Google watching everything we do online and selling advertising based on our behaviors; there’s also a large and largely unregulated industry of data brokers that collect, correlate and then sell intimate personal data about our behaviors. If we make the reasonable assumption that Congress is not going to regulate these companies, then we’re left with the market and consumer choice. The first step in that process is transparency. These new laws, and the ones that will follow, are slowly shining a light on this secretive industry.
This essay originally appeared in the Guardian.
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Bavo De Ridder • June 8, 2018 8:10 AM
I would like to add some clarifications on the GDPR.
The GDPR does not mandate that for all processing the consent of the user is required. Only for processing for which no other legal ground can be found (e.g. contractual obligations, legal obligations …) is consent required. A considerable amount of processing of personal information happens because of contractual obligations or other legal grounds and does not require consent.
The GDPR also does not only apply to EU Citizens. It applies to all processing of personal information done inside the EU or by EU companies:
-) services offered in the EU, regardless if the company is from the EU or not, falls under the GDPR. E.g. Facebook or Amazon offering services to people in the EU. This regardless if those people are EU citizens or not.
-) services offered by an EU company to anyone, even outside of the EU, fall under the GDPR. E.g. a EU company offering services to US Citizens who consume the service while in the USA (they never have .
A more important aspect of the GDPR is the requirement for transparency. That is one of the cornerstones of the GDPR.
If you gather personal information, you have to inform the persons involved. Irregardless if you gather the information directly or indirectly. There are some provisions that make it easier for data brokers to be exempt from that (they can claim that it would have an unreasonable cost to do so). But in the latter it would still be required to inform the persons that their information has been passed on and to whom.
I am not a lawyer or legal expert so some of the above may require a more nuanced view but I still wanted to share this small clarification.