Cost-benefit analysis is supposed to be at the heart of the FTC’s unfairness powers. But the FTC doesn’t really bother with CBA in privacy cases, as FTC Commissioner Josh Wright lamented in an interview last summer with Chris Wolf for IAPP about the FTC’s report on data brokers:
Serious cost-benefit analysis concerning consumers and privacy requires rigorous study of consumer preferences. By that, I mean what is required to understand how and to what extent consumers value information is much more than survey evidence that purports to elicit consumer preferences by merely asking consumers whether “they are concerned about privacy.” I would also like to see evidence of the incidence and scope of consumer harms rather than just speculative hypotheticals about how consumers might be harmed before regulation aimed at reducing those harms is implemented. Accordingly, we also would need to quantify more definitively the incidence or value of data broker practices to consumers before taking or endorsing regulatory action. The report acknowledges that these practices have some benefits to consumers. But I would like this component of the equation to be more thoroughly examined.
We have a lot of work to do on the cost side of the ledger as well. We have no idea what the costs for businesses would be to implement consumer control over any and all data shared by data brokers and to what extent these costs would ultimately be passed on to consumers. This could be especially problematic in areas where the costs to businesses are high but where the ultimate benefit to consumers is minimal. For example, the costs to effectuate opt-out mechanisms might be high in certain circumstances and may not offer consumers any real benefit. If consumers have minimal concerns about the sharing of certain types of information—perhaps information that is already publicly available—I think we should know that before requiring data brokers to alter their practices and expend resources.