Discover which U.S. regulator oversees data management practices for small businesses like Carol’s gift shop. Learn about the FTC’s role in enforcing privacy laws and best practices.
Table of Contents
Question
Carol was a U.S.-based glassmaker who sold her work at art festivals. She kept things simple by only accepting cash and personal checks.
As business grew, Carol couldn’t keep up with demand, and traveling to festivals became burdensome. Carol opened a small boutique and hired Sam to run it while she worked in the studio. Sam was a natural salesperson, and business doubled. Carol told Sam, `I don’t know what you are doing, but keep doing it!”
But months later, the gift shop was in chaos. Carol realized that Sam needed help so she hired Jane, who had business expertise and could handle the back- office tasks. Sam would continue to focus on sales. Carol gave Jane a few weeks to get acquainted with the artisan craft business, and then scheduled a meeting for the three of them to discuss Jane’s first impressions.
At the meeting, Carol could not wait to hear Jane’s thoughts, but she was unprepared for what Jane had to say. `Carol, I know that he doesn’t realize it, but some of Sam’s efforts to increase sales have put you in a vulnerable position. You are not protecting customers’ personal information like you should.`
Sam said, `I am protecting our information. I keep it in the safe with our bank deposit. It’s only a list of customers’ names, addresses and phone numbers that I get from their checks before I deposit them. I contact them when you finish a piece that I think they would like. That’s the only information I have! The only other thing I do is post photos and information about your work on the photo sharing site that I use with family and friends. I provide my email address and people send me their information if they want to see more of your work. Posting online really helps sales, Carol. In fact, the only complaint I hear is about having to come into the shop to make a purchase.`
Carol replied, `Jane, that doesn’t sound so bad. Could you just fix things and help us to post even more online?”
`˜I can,” said Jane. `But it’s not quite that simple. I need to set up a new program to make sure that we follow the best practices in data management. And I am concerned for our customers. They should be able to manage how we use their personal information. We also should develop a social media strategy.`
Sam and Jane worked hard during the following year. One of the decisions they made was to contract with an outside vendor to manage online sales. At the end of the year, Carol shared some exciting news. `Sam and Jane, you have done such a great job that one of the biggest names in the glass business wants to buy us out! And Jane, they want to talk to you about merging all of our customer and vendor information with theirs beforehand.”
Which regulator has jurisdiction over the shop’s data management practices?
A. The Federal Trade Commission.
B. The Department of Commerce.
C. The Data Protection Authority.
D. The Federal Communications Commission.
Answer
A. The Federal Trade Commission.
Explanation
The Federal Trade Commission (FTC) has jurisdiction over the shop’s data management practices. The FTC is the primary federal regulator responsible for enforcing privacy laws and overseeing data protection practices for most businesses in the United States, including small businesses like Carol’s gift shop.
The FTC’s authority stems from Section 5 of the FTC Act, which prohibits unfair or deceptive practices in or affecting commerce. This broad authority allows the FTC to take action against companies that fail to adequately protect consumer data or engage in deceptive privacy practices.
In this scenario, Carol’s gift shop is collecting and using customer personal information, such as names, addresses, and phone numbers. The FTC would expect the business to implement reasonable data security measures, provide clear privacy disclosures, and obtain customer consent for data collection and use where necessary.
The other regulators mentioned – the Department of Commerce, Data Protection Authority, and Federal Communications Commission – do not have primary jurisdiction over the shop’s data management practices in this context.
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