Lawmakers Set Their Sights on Restricting Targeted Advertising

By: Laura Ames

Anyone who spends time online has encountered “surveillance advertising.” You enter something into your search engine, and immediately encounter ads for related products on other sites. Targeted advertising shows individual consumers certain ads based on inferences drawn from their interests, demographics, or other characteristics. This notion itself might not seem particularly harmful, but these data are accrued by tracking users’ activities online. Ad tech companies identify the internet-connected devices that consumers use to search, make purchases, use social media, watch videos, and otherwise interact with the digital world. Such companies then compile these data into user profiles, match the profiles with ads, and then place the ads where consumers will view them. In addition to basic privacy concerns, the Consumer Federation of America (CFA) points to the potential for companies to hide personalized pricing from consumers or to promote unhealthy products and perpetuate fraud. Perhaps the largest concern is that the large stores of personal data that these companies maintain put consumers at risk of having their privacy invaded, identity theft, and malicious tracking.   

In response to these concerns, Democratic lawmakers unveiled the Banning Surveillance Advertising Act (BSSA) in an attempt to restrict the practice and under a general consensus that surveillance advertising is a threat to individual users as well as society at large. This move prompted opponents to argue that the BSSA is overly broad and will harm users, small businesses, and large tech companies alike.

What Does the BSSA Do? 

The BSSA is sponsored by Senator Cory Booker and Representatives Jan Schakowsky and Anna Eshoo. The bill bars digital advertisers from targeting their ads to users and also prohibits advertisers from targeting ads based on protected information like race, gender, religion, or other personal data purchased from data brokers. According to Senator Booker, surveillance advertising is “a predatory and invasive practice,” and the resulting hoarding of data not only “abuses privacy, but also drives the spread of misinformation, domestic extremism, racial division, and violence.”

The BSSA is broad, but it does provide several exceptions. Notably, it allows location-based targeting and context advertising, which occurs when companies match ads to the content of a particular site. The bill suggests delegating power to the FCC and state attorneys general to enforce violations. It also allows private citizens to bring civil actions against companies that violate the ban with monetary penalties up to $1,000 for negligent violations and up to $5,000 for “reckless, knowing, willful, or intentional” violations. The BSSA has support from many public organizations and a number of professors and academicians. Among several tech companies supporting the BSSA is the privacy-focused search engine DuckDuckGo. Its CEO, Gabriel Weinberg, opined that targeted ads are “dangerous to society” and pointed to DuckDuckGo as evidence that “you can run a successful and profitable ad-based business without building profiles on people.” 

The BSSA as Part of a Larger Legislative Agenda 

The BSSA is just one bill among a number of pieces of legislation aiming to restrict the power of large tech companies. Lawmakers have grown increasingly focused on bills regulating social media companies since Facebook whistleblower Frances Haugen testified before Congress in 2021. These bills target a wide variety of topics including antitrust, privacy, child protection, misinformation, and cryptocurrency regulation. Most of these bills appear to be rather long shots, however, because although the Biden administration supports tech industry reform, so many other issues are high priorities for it. Despite this hurdle, lawmakers are currently making a concerted push with these tech bills because the legislature’s attention will soon turn to the 2022 midterms. Additionally, Democrats, who have broader support for tech regulations, worry they could lose control of Congress. Senator Amy Klobuchar argued that once fall comes, “it will be very difficult to get things done because everything is about the election.” 

Tech and Marketing Companies Push Back

In general, tech companies tend to argue that targeted advertising benefits consumers and businesses alike. First, companies argue that this method allows users to see ads that are directly relevant to their needs or interests. Experts rebut this theory with the fact that in order to provide these relevant ads, tech companies must collect and store a great deal of data on users, which can put that data at risk of interference by third parties. Companies also argue that this legislation would drastically change their business models. Marketing and global media platform The Drum predicted that the BSSA “could have a massive impact on the ad industry as well as harm small businesses.” The Interactive Advertising Bureau (IAB), which includes over 700 brands, agencies, media firms, and tech companies, issued a statement strongly condemning the BSSA.  IAB CEO David Cohen argued that the BSSA would “effectively eliminate internet advertising… jeopardizing an estimated 17 million jobs primarily at small- and medium-sized businesses.” The IAB and others argue that targeted advertising is a cost-effective way to precisely advertise to particular users. However, the CFA points to evidence that contextual advertising, which is allowed under the BSSA, is more cost-effective for advertisers and provides greater revenue for publishers. 

Likelihood of the BSSA’s Success

In the past several years, there has been growing bipartisan support for bills addressing the increasing power of tech companies. This support would seem to suggest that these pieces of tech legislation have a better chance of advancing than other more controversial legislation. However, even with this broader support, dozens of bills addressing tech industry power have failed recently, leaving America behind a number of other countries in this area. One of the major problems impeding bipartisan progress is that while both parties tend to agree that Congress needs to address the tremendous power that tech companies have, they do not align on the methods the government should use to address the problem. For example, Democrats have called for measures that would compel companies to remove misinformation and other harmful content while Republicans are largely concerned with laws barring companies from censoring or removing content. According to Rebecca Allensworth, a professor at Vanderbilt Law School, the larger issue is that ultimately, “regulation is regulation, so you will have a hard time bringing a lot of Republicans on board for a bill viewed as a heavy-handed aggressive takedown of Big Tech.” Given Congress’ recent track record in moving major pieces of legislation, and powerful opposition from the ad tech industry, the BSSA might be abandoned along with other recent technology legislation.  

The FTC Takes on Health and Fitness Apps’ Rampant Privacy Problems

By: Laura Ames

More and more Americans are turning to mobile health and fitness applications, but many worry about the lack of regulations would ensure that developers of these products keep user information secure and private. The Federal Trade Commission (“FTC”) recently addressed this concern with a policy statement (“Statement”) including app developers among the entities who must follow certain notification procedures after security breaches. However, many question the Statement’s practical effects and whether the FTC had the authority to issue it.  

Health App Trends

Mobile health and fitness apps have gained popularity in recent years, and the COVID-19 pandemic only accelerated this growth. In fact, the United States led the world in health and fitness app downloads as of October 2020 with 238,330,727 downloads that year alone. Even with this increased usage, a recent poll showed that over 60% of U.S. adults felt at least somewhat concerned regarding the privacy of their health information on mobile apps. These worries appear to be well-founded. Flo Health Inc., the developer of a menstrual cycle and fertility-tracking app, currently faces a consolidated class action alleging the company disclosed users’ health information to third parties without users’ knowledge. This is not an isolated concern. A recent study of over 20,000 health and fitness apps found that a third of these apps could collect user email addresses and more than a third transmitted user data to third parties such as advertisers.

The Original Health Breach Notification Rule

Congress enacted the Health Information Technology for Economic and Clinical Health (“HITECH”) Act as an investment in American health care technology. Subtitle D of this Act delegated authority to the FTC to promulgate breach notification requirements for breaches of unsecured protected health information. In 2009, the FTC issued its Health Breach Notification Rule (“HBNR”) covering vendors of personal health records (“PHR”) and PHR-related entities who experienced a security breach. The HBNR requires these entities to notify affected individuals and the FTC. Crucially, the HITECH Act defines a PHR as an electronic record that can be drawn from multiple sources.

The FTC has never enforced the HBNR, but the possibility for changes to the rule has been on the horizon for some time. In 2020, the FTC requested public comments on the HBNR, which functions as a part of their rulemaking process, saying that it was merely a periodic review of the rule. However, before that comment period ended, the Commission issued a policy statement that turned heads.

The FTC Makes a Bold Move

On September 15, the FTC issued a statement with two of the five Commissioners dissenting. The FTC’s stated goal was to clarify the HBNR and put entities on notice of their security breach obligations. The FTC explained that the HBNR is triggered when “vendors of personal health records that contain individually identifiable health information created or received by health care providers” experience a security breach. The first major revelation was that the FTC considers developers of health apps or connected devices as health care providers because they provide health care services or supplies.

Additionally, the FTC stated that it interprets the rule as covering apps that are capable of drawing information from multiple sources, like through a combination of consumer inputs and application programming interfaces (“APIs”). The statement gave two examples of apps that are covered under this understanding. First, an app that collects information directly from users and has the capacity to draw information through an API that enables syncing with a user’s fitness tracker. Second, an app is implicated if it draws information from multiple sources even if the health information only comes from one source. For example, if a consumer uses a blood sugar monitoring app that draws health data only from that consumer’s inputs but also draws non-health data from the phone’s calendar, that app is covered by the HBNR.

Additionally, the FTC sought to remind entities that a breach is not limited to cybersecurity intrusions but also includes unauthorized access to information. Under this interpretation, companies that share information without a user’s authorization would also be subject to the Rule. Although the FTC had not previously enforced the Rule, this Statement also served as signaling the FTC’s willingness to do so. It mentions that businesses could face potential civil penalties of $43,792 per violation per day.

Obviously, these clarifications could subject many app developers and other companies to the FTC’s rule. However, in the eyes of some, including the two dissenting Commissioners, this statement is not a mere clarification but a fundamental policy change. It could not only lead to potential confusion but could also be a breach of the FTC’s statutory authority and rulemaking process.

Critiques and Larger Questions

Some legal experts argue that this statement represents an expansion of the HBNR that could lead to further confusion for app companies and others. The two dissenting FTC Commissioners go further than potential confusion in their statements.

Commissioner Christine S. Wilson argued that this Statement both short-circuits the FTC’s rulemaking process and also improperly increases its statutory authority by expanding the definitions of terms without legislative approval. Commissioner Noah Joshua Phillips agreed that this statement’s first problem is its issuance in the middle of a request for public comment. Wilson pointed out that the FTC’s own business guidance for dealing with the HBNR directly contradicted the statement by saying that “if consumers can simply input their own” health data on a business’ site, for example, a weekly weight input, then the business is not covered by this rule. Wilson also expressed concerns that this interpretation of “health care provider” was a potentially slippery slope. For instance, does Amazon qualify as a health care provider given that users can purchase Band-Aids and other medical supplies through its phone app?

In the coming months, we might see the FTC forcing app developers to notify customers of data disclosures, but the debate around this statement also reveals larger questions concerning health care at the moment. Fundamental questions that once might have seemed easy to answer, such as who qualifies as a health care provider, are growing murkier. In the wake of COVID-19’s effects on telehealth and health technology in general, it seems unlikely that health care will phase out of this continued intermingling with technology. If that is the case, then legislation and regulations surrounding health care will continue to have to scramble to catch up with this rapid technological evolution.