Quietly Changing Your Terms of Service Could Be Unfair or Deceptive

Quietly Changing Your Terms of Service Could Be Unfair or Deceptive

Earlier this month, the FTC issued guidance warning companies that adopting more permissive data practices, such as sharing consumer data with third-parties or using AI training, may be unfair or deceptive. The company’s privacy policy may not provide sufficient notice to consumers, depending on the nature of the changes.

The FTC emphasized that companies using consumer data to power AI systems are material changes to their data practices, necessitating a balance between new business goals and existing privacy commitments. The FTC also emphasized that companies cannot simply change their privacy policies retroactively but must inform consumers before adopting permissive data practices like using personal data for AI training. Companies should update their privacy policies and notify consumers before sharing or processing data in-house, such as AI.

The FTC guidance aligns with state privacy laws that mandate consumer notification of any policy changes. For instance, under the Colorado Privacy Act, certain changes require notice beyond simply updating the policy, even if they are effective immediately. If the change is a secondary use, affirmative consent may be required.

The technological landscape has evolved with the rise of consumer-facing AI products, but businesses cannot unilaterally renege on privacy commitments after collecting user data. Digital markets can make it difficult for users to switch between services, leaving them without recourse once a firm uses attractive privacy commitments to lure them.  Companies should carefully assess the type and timing of notice required before processing data collected, as artificial consent is not intelligent, as stated by the FTC.

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This article is for information purposes only. It is not intended to be and should not be relied on as legal advice for any particular matter.