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AI (and other) companies: secretly changing terms of service may be unfair or deceptive

AI (and other) companies: secretly changing terms of service may be unfair or deceptive


You may have heard that data is the new oil. In other words, data is a critical raw material that drives technology and business innovation, and like oil, it must be collected and refined at scale to be useful. And perhaps no data purification system is as high-volume and data-intensive as AI. As we've discussed, companies developing AI products are continually seeking more and new data, and may find that the easiest source of raw data is their own user base. not. However, many of these companies have privacy and data security policies in place to protect your information. These companies currently face potential conflicts of interest. They have strong business incentives to turn rich flows of user data into fuel for their own AI products, but they also have existing commitments to protecting user privacy.

Companies may wish to resolve this conflict by simply changing the terms of their privacy policies so that they are not restricted in how they use customer data. Companies may also try to make these changes secretly to avoid backlash from users concerned about privacy. However, market participants should be aware that companies that break their promises regarding user privacy risk breaking the law.

For companies to adopt more permissive data practices could be unfair or deceptive. For example, we may share consumer data with third parties, use that data for AI training, and only notify consumers of this change by confidentially and retrospectively amending our Terms of Service. . or privacy policy.

When it comes to illegal conduct, the FTC has a long history of challenging deceptive and unfair practices related to companies' privacy policies that affect the promises they make to consumers. Nearly 20 years ago, the FTC ruled that Gateway Learning Corporation, known for its Hooked on Phonics product, changed its privacy policy to allow it to share consumer data with third parties without notifying consumers or obtaining their consent. , filed a complaint for violating the FTC Act.

Similarly, this summer, the FTC alleged that genetic testing companies violated the law when they changed their privacy policies to retroactively expand the types of third parties with which consumers' personal data could be shared. According to the FTC, the company did so without notifying or obtaining the consent of consumers with whom it had previously shared personal data.

From 2004 to today, the technological landscape has changed, especially with the advent of consumer AI products, but the fact remains the same. A company that collects user data based on a set of privacy promises cannot then unilaterally break those promises. Collection of User Data. Particularly given that certain features of digital marketplaces can make it more difficult for users to easily switch between services, when companies use attractive privacy commitments to lure them to their products. Users may then end up walking away from that commitment. .

The FTC is targeting companies that engage in unfair or deceptive practices, including those that secretly rewrite privacy policies or terms of service to allow free use of consumer data, changing the rules of the game for consumers. We plan to continue filing lawsuits against them. For product development. After all, there is nothing sensible about obtaining artificial consent.

Thank you to the staff of the Privacy and Identity Protection Division of the Bureau of Technology and Consumer Protection for their assistance with this post (in alphabetical order): Crystal Grant, Julia Horwitz, Amritha Jayanti, Stephanie Nguyen, Madeleine Varner, and Ben Wiseman .




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