Many companies are sitting on a trove of customer data and are realizing this data can be valuable to train artificial intelligence models.
However, what some companies have not thought through, is whether they can actually use that data for this purpose. Sometimes this data is collected over many years, often long before a company thought to use it for training AI.
The potential problem is that the privacy policies in effect when the data was collected may not have considered or disclosed this use.
Using customer data in a manner that exceeds or otherwise is not permitted by the privacy policy in effect at the time the data was collected could be problematic. This has led to class actions and enforcement by the Federal Trade Commission.
In some cases, the FTC has imposed a penalty known as algorithmic disgorgement to companies that use data to train AI models without proper authorization. This penalty is severe as it requires deletion of the data, the models and the algorithms built with it — and can be an incredibly costly result.
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