Startups, Privacy & the FTC

Derek Unprocessed Small

Derek Parham is a startup advisor and a member of the Engine steering committee. This is an opinion piece and should not be construed as legal advice. @derekparham

Too few startups understand complex compliance requirements and the government could better communicate guidelines and regulations to entrepreneurs. This was the consensus reached at a roundtable meeting with Commissioner Maureen Ohlhausen of the Federal Trade Commission and members of the San Francisco startup community Wednesday morning.

The Commissioner joined members of San Francisco startup community at Engine to speak about the agency’s outreach to entrepreneurs and small businesses. Discourse between the startup community and Washington is critical to bridging the divide between the two groups. This kind of hands-on information sharing is invaluable to making sure policymakers gain technical experience with the real-world application of new technologies that they are regulating.

The FTC is eager to get startups involved in its consumer protection process. The problem is, small startups may not have the resources -- or the wherewithal -- to focus on compliance with FTC regulations. They are directing their resources toward growth and dealing with regulations is sidelined until the company gets big enough or successful enough. Often the compliance department of a company doesn’t exist until the startup is thinking about going public. But there are simple ways for startups to meet basic requirements. FTC regulators care a lot about the statements in privacy policies. So making a concerted effort when creating it, as well as checking it monthly to make sure it is still accurate is a super easy way to make regulators happy -- not to mention your users.


We need our community to become educated on FTC regulations that impact them. Privacy policies do matter, no matter how big your company is right now. And the FTC in turn needs to continue the open discourse with our community that we saw yesterday with Commissioner Olhausen at Engine. The FTC maintains a website, and a very active twitter feed which provide an avenue for keeping up on regulatory changes that are likely to impact your company. And of course, watch this space.