Fashion must make data protection a priority – WWD
The fashion industry has made tremendous progress in harnessing technology in recent years. However, its next challenge will not only be to adopt new technologies to increase engagement and sales, but also to protect the privacy of its customers.
Consumers fear that their information will be shared and sold, and lawmakers at all levels are listening. All signs point to more oversight and regulation, not less, in the future.
For example, lawmakers and law enforcement agencies have exposed Big Tech’s privacy pitfalls for years. But now government officials are more than lamenting the loss of online privacy rights, as Sephora’s recent $1.2 million settlement with the California attorney general showed. On August 24, the California AG announced the settlement with the retailer as part of the state’s continued enforcement of the California Consumer Privacy Act. Just two days ago, the Federal Trade Commission released its advisory on developing privacy rules on trade surveillance and data security. The request for public comment is broad and covers 95 questions ranging from how companies are monitoring consumers to how the commission should consider changes to online advertising and other business models.
Additionally, as designers kicked off New York Fashion Week, policymakers in Washington hosted two data privacy events on September 8 – one at the White House on protecting Americans’ privacy and another. to the FTC to discuss the development of the commission’s open rules. The bottom line: Given fashion’s increased reliance on consumer data — for personalized shopping, augmented reality, and virtual goods in the metaverse — brands are now doing so at their peril.
Not convinced? Here’s why fashion needs to make data privacy a priority in its business operations, starting with some key points from the FTC’s Privacy Rulemaking Notice.
Data will power the future of fashion. In the world of fashion and beyond, data is a precious commodity – often influencing what humans buy, when and how they purchase goods or services, and whether they will become repeat customers. The FTC has asked for comment on how companies collect, analyze and monetize different types of data, from a shopper’s geolocation to biometric information used for online retail. This can include eye scans or physical movements of consumers’ faces – as they virtually try on makeup, glasses or even clothes. The FTC also asked for comment on the costs and benefits of collecting certain data (in the age of hyper-personalization) and how the commission should consider factors that may be difficult to quantify.
Fashion algorithms can help or hinder diversity efforts. Many brands have made pledges or pledges to improve their organizations’ diversity, equity and inclusion practices in the wake of America’s racial reckoning in 2020. Yet, if an organization’s algorithms discriminate or lead to prejudice for some consumers, their DEI statements make no sense. The FTC made it clear that “the commission’s Anti-Injustice Authority is a powerful tool to fight discrimination” and asked for comments on how the commission should analyze algorithmic discrimination based on the categories protected by the law. on civil rights. Brands have made algorithms an integral part of their business practices – for product recommendations, chatbots, search, and other features. But since humans determine datasets, AI systems can lead to discriminatory results — failing to recognize darker skin tones, limiting size options in search, or marketing products to a particular demographic without considering their actual buying behavior. As the FTC seeks comment on the discriminatory algorithms, Fashion has the opportunity to share its views on whether the commission should consider new rules.
Fashion brands need to make data transparency a priority. We often hear about fashion transparency efforts related to garment workers and the environment, but there is very little discussion of data transparency – despite the damage caused by unethical use and illegal consumer data. The FTC recognizes the potential cost to companies of investing in data transparency — which can include explaining to consumers how they collect, store, or transfer user data, or even requiring companies to publicly disclose information about ratings. self-administered or third-party audits. Many fashion designers operate like small businesses and will likely need more resources (including legal and financial) to ensure greater transparency in their data practices. Smaller brands have a chance to share their views during the current FTC privacy rules development, as the commission considers whether to exempt certain companies because of their size from potential disclosure requirements .
Fashion companies invested between 1.6 and 1.8% of their revenue in technology in 2021, and this figure is expected to increase to between 3 and 3.5% by 2030, with investments in more automation and AI analytics. Brands no longer have the luxury of prioritizing technology without also addressing consumer privacy. This includes greater transparency with consumers, compliance with new state laws, and engagement with federal policymakers as privacy reform gains momentum in Washington. As the saying goes, “If you don’t have a seat at the table, you’re probably on the menu.” It’s time for everyone in fashion – brands and consumers – to sit up and act before the government forces their hand.
The FTC will accept comments until October 21, 2022.
Kenya Wiley is a fashion policy advisor and assistant professor in the MA program in Communication, Culture and Technology at Georgetown University.