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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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January 29, 2018


Big Data, Big Dilemma

Five years ago, I authored a post discussing the advantages and pitfalls of "big data." Since then, data analytics has come to the forefront of computer science, with data analyst being among the most sought-after talents across many industries. One of my nephews, a month out of college (graduating with honors with a dual degree in computer science and statistics) was hired by a rail transportation carrier to work on freight movement efficiency using data analytics—with a starting salary of more than $100,000.

Big data, machine learning, deep learning, artificial intelligence—these are terms we constantly see and hear in technology articles, webinars, and conferences. Some of this usage is marketing hype, but clearly the significant increases in computing power at lower costs have empowered a continued expansion in data analytical capability across a wide range of businesses including consumer products and marketing, financial services, and health care. But along with this expansion of technical capability, has there been a corresponding heightened awareness of the ethical issues of big data? Have we fully considered issues such as privacy, confidentiality, transparency, and ownership?

In 2014, the Executive Office of the President issued a report on big data privacy issues. The report was prefaced with a letter that included this caution:

Big data analytics have the potential to eclipse longstanding civil rights protections in how personal information is used in housing, credit, employment, health, education, and the marketplace. Americans' relationship with data should expand, not diminish, their opportunities and potential.

(The report was updated in May 2016.)

In the European Union, the 2016 General Data Protection Regulation was adopted (enforceable after 2018); it provides for citizens of the European Union (EU) to have significant control over their personal data as well as to control the exportation of that data outside of the EU. Although numerous bills have been proposed in the U.S. Congress for cybersecurity, including around data collection and protection (see Doug King’s 2015 post), nothing has been passed to date despite the continuing announcements of data breaches. We have to go all the way back to the Privacy Act of 1974 for federal privacy legislation (other than constitutional rights) and that act only dealt with the collection and usage of data on individuals by federal agencies.

In a future blog post, I will give my perspective on what I believe to be the critical elements in developing a data collection and usage policy that addresses ethical issues in both overt and covert programs. In the interim, I would like to hear from you as to your perspective on this topic.

Photo of David Lott By David Lott, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed

January 29, 2018 in consumer protection , innovation , regulations | Permalink

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