HFT is a term used to describe a financial transaction that allows an individual or company to buy or sell a specific commodity at a higher or lower price than would otherwise be possible.
These transactions can be conducted online or at physical retail stores.
A few months ago, the Federal Trade Commission (FTC) announced it had launched a database to help consumers spot HFT scams and to help prevent consumers from losing valuable data in the process.
But now, it appears the FTC may be making some changes to the system in a bid to protect consumers.
In a recent report, the FTC noted that the HFT system may have created “significant” vulnerabilities in the data it holds about consumers.
For example, the system allows companies to track the number of times an individual has visited certain sites and the type of search term they used.
In the report, FTC Deputy Director Julie R. Naughton noted that HFT was not designed to provide any “financial incentive” for businesses to use the system.
Instead, the “incentive is to help them maximize profits by making money from the HFA transaction.”
For example, if you purchase a CD for $30 on Amazon.com, Amazon may pay you a commission for the sale of the CD.
However, if the CD is returned to Amazon.co.uk for a refund, the retailer will receive the CD back.
If the refund is made after the CD has been returned to the seller, Amazon.ca will pay a fee, which is usually between 0.1 and 0.3 percent.
If the return is made by a third party, the company will pay the buyer a commission of between 0 and 1.5 percent.
In some cases, the third party may also pay an administrative fee for processing the refund, although it is not clear how much.
According to Naughson, the commission system allows HFT to make a profit.
She said, “The problem is that this system does not reward those who are most productive, so the incentive for those who can generate the most money goes to the companies that have the best algorithms.”
The FTC also noted that this incentive system does create “significant risks for consumers.”
According to the FTC, HFTs could “inhibit the discovery of fraud or other misconduct by preventing them from learning about the use of this fraud protection scheme and potentially allowing them to circumvent the rules to commit fraud.”
In the case of a “corporate data breach,” a company could potentially be liable for up to $1 million in fines and a civil penalty of up to one percent of a company’s profits.
The FTC report did not address whether or not other states have begun to take steps to protect against HFT.
However the U.S. Consumer Product Safety Commission (CPSC) announced last year that it is launching a data breach response program.