By now, most lawyers have been exposed to the term ‘Big Data’ but they may not understand exactly what it refers to or how it will impact their clients.

To understand the legal implications of Big Data, it’s important to understand the meaning of the term. The term Big Data refers to collections of data that are so large and complex that it becomes difficult to process using standard database management tools or traditional processing applications. It describes large volumes of complex and variable data that require advanced techniques and technologies to capture, store, distribute, manage and analyze the information.

The following are some interesting statistics from Wikibon about Big Data:

  • Walmart handles more than 1 million customer transactions every hour, which is imported into databases estimated to contain more than 2.5 petabytes of data. (Source)
  • 94% of Hadoop users perform analytics on large volumes of data not possible before; 88% analyze data in greater detail; while 82% can now retain more of their data. (Source)
  • Facebook stores, accesses, and analyzes 30+ Petabytes of user generated data. (Source)
  • Big data is a top business priority and drives enormous opportunity for business improvement.  Wikibon projects that big data will be a $50 billion business by 2017. (Source)
  • Bad data or poor data quality costs US businesses $600 billion annually. (Source)

The potential uses and benefits of Big Data are endless, but unfortunately Big Data also poses some risks to the companies who seek to use it and to individuals whose information is now continuously being collected, combines, sorted, mined, analyzed and acted upon by businesses. This post explores the legal implications of Big Data and what it means to general counsel.

As the Holy Grail of Marketing, Big Data has Privacy Challenges

When it comes to consumer marketing potential, Big Data is considered the holy grail allowing marketers to target specific customers with precision and efficiency and delivering advertising, services, and products specifically tailored to an individual based on his or her preferences. Big data combined with the use of mobile devices can result in highly relevant offers delivered at the right time and the right place to specific individuals.

The privacy issues with all this data and its use have still to be worked out. Privacy is likely to become one of the most significant legal challenges associated with Big Data.

Who is Collecting Data is Not Transparent

Another area of privacy concern related to Big Data deals with the principle of access/participation. The Fair Credit Reporting Act (FCRA), requires credit reporting agencies to provide consumers with access to their credit reports so that inaccuracies can be fixed. In the context of Big Data, the principle of deals with the individual’s ability to access his or her data to ascertain whether it is accurate or not. The general public does not currently know what entities are collecting information about them or who is creating profiles. The situation is murkier still when it comes to data brokers, who do not have a direct relationship with the individual consumers.

Based on concerns about access and transparency, the Federal Trade Commission (FTC) has indicated a desire to consider additional scrutiny over data brokers. More recently (December 2012), the FTC launched an investigation to study the data broker industry and its collection and use of consumer information. Overall, this is an area ripe for increased regulation and potential legislation.

Consumers are Not Qualified to Give Meaningful Consent

Pursuant to the U.S. Fair Information Practice Principles, the concepts of notice/awareness and choice/consent provide some protection for the individual consumer. Specifically, they must be made aware of the uses to which their personal information will be put and to whom that information will be disclosed.

In a world of Big Data, however, some contend that the goal of notice/consent may be circumvented simply because of the inherent complexity in the bid data ecosystem and practical limitations. The problem is two-fold: first, the consumer may not understand where their information will end up (with a data broker perhaps), and second, the consumer may not understand the inferences that will be drawn from their combined data as a result of Big Data techniques and analysis, so meaningful consent is impossible.

The issues outlined here are just the start of the Big Data implications for companies and their general counsel. While the era of Big Data is upon us, and it will become increasingly common for companies to collect and analyze large data sets to further their business interests, there are many potential legal issues related to the collecting, analysis, use, and distribution of Big Data that have not yet been addressed. Before your clients rush into the Big Data space, it may be wise to contemplate the potential privacy implications to avoid becoming the poster child for a Big Data privacy lawsuit.

About the author

Matt Faustman

Matt Faustman

Matt is the co-founder and CEO at UpCounsel. Matt believes in the power of online platforms to change antiquated ways of life and founded UpCounsel to make legal services efficiently accessible. He is responsible for our overall vision and growth of the UpCounsel platform. Before founding UpCounsel, Matt practiced as a startup and business attorney.

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