The fashion industry has made huge strides in harnessing technology in recent years. However, its next challenge will be not only to embrace new technologies for increased engagement and sales, but to safeguard the privacy of its customers.
Consumers are concerned about their information being shared and sold, and lawmakers at all levels are listening. All the signs point to more oversight and regulation, not less, in the future.
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For example, lawmakers and enforcement agencies have called out Big Tech’s privacy pitfalls for years. But now, government officials are doing more than bemoaning the loss of privacy rights online, as Sephora’s recent $1.2 million settlement with California’s Attorney General has shown. On Aug. 24, California’s AG announced the settlement with the retailer as part of the state’s ongoing enforcement of the California Consumer Privacy Act. Just two days prior, the Federal Trade Commission published its notice on privacy rulemaking on commercial surveillance and data security. The public comment request is broad, spanning 95 questions from how companies surveil consumers to how the commission should account for changes to online advertising and other business models.
Also, as designers kicked off New York Fashion Week, Washington policymakers hosted two data privacy events on Sept. 8 — one at the White House on protecting Americans’ privacy, and another at the FTC to discuss the commission’s open rulemaking. The upshot: Given fashion’s increased reliance on consumer data — for personalized shopping, augmented reality and virtual goods in the metaverse — brands now do so at their own risk.
Not convinced? Here’s why fashion must make data privacy a priority in their business operations, starting with a few key points from the FTC’s privacy rulemaking notice.
Data will fuel 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 requested comments on how companies collect, analyze and monetize different types of data — from a shopper’s geolocation to the biometric information used for online retail. This may include consumers’ eye scans or physical facial movements — as they virtually try on makeup, eyewear or even clothing. The FTC has also requested comments on the costs and benefits of collecting certain data (in the era of hyper-personalization), and how the commission should consider factors that may be difficult to quantify.
Fashion algorithms can help or hurt diversity efforts. Numerous brands made pledges or commitments to improve their organizations’ diversity, equity and inclusion practices following America’s racial reckoning in 2020. Yet if an organization’s algorithms discriminate or lead to bias for certain consumers, their DEI statements are meaningless. The FTC has made it clear that the commission’s “unfairness authority is a powerful tool to combat discrimination,” and has requested comments on how the commission should analyze algorithmic discrimination based on protected categories under civil rights law. Brands have made algorithms an integral part of their business practices — for product recommendations, chatbots, search and other features. But given that humans determine the data sets, the 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 taking into account their real shopping behavior. As the FTC requests comments on discriminatory algorithms, fashion has an opportunity to share its views as to whether the commission should consider new rules.
Fashion brands must make data transparency a priority. We often hear about fashion’s transparency efforts related to garment workers and the environment, but there’s very little discussion about data transparency — despite the harms caused by unethical and illegal use of consumer data. The FTC acknowledges the potential cost to companies for investments in data transparency — which can cover explaining to consumers how they collect, retain or transfer user data, or even requiring companies to publicly disclose materials on self-administered assessments or third-party audits. Many fashion designers operate as small businesses, and will likely require more resources (including legal and financial) to provide better transparency of their data practices. Smaller brands have an opportunity to share their views during the FTC’s current privacy rulemaking as the commission considers whether to exempt certain companies due to size from potential disclosure requirements.
Fashion companies invested between 1.6 and 1.8 percent of their revenue in technology in 2021, and the figure is expected to increase to between 3 and 3.5 percent 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 better transparency with consumers, compliance with new state laws and engagement with federal policymakers as privacy reform gains momentum in Washington. As the adage goes, “If you don’t have a seat at the table, you’re probably on the menu.” It’s time for all of fashion — brands and consumers — to take their seat, and act before government forces their hand.
The FTC will accept comments through October 21, 2022.
Kenya Wiley is a fashion policy counsel and adjunct professor at Georgetown University’s Communication, Culture and Technology Master’s Program.