Federal Trade Commission Chairwoman Edith Ramirez offered a chilling message this week: “The extent of consumer profiling today means that data brokers often know as much – or even more – about us than our family and friends."
Ramirez made that comment in reference to a new FTC report that slams the data broker industry for its “fundamental lack of transparency.”
Those brokers gather vast amounts of "data elements" on consumers that they then sell to advertisers, marketers, fraud-protection companies, and other kinds of businesses looking for an edge with consumers. The FTC report calls out nine companies in particular, and makes specific recommendations to Congress about how to make the industry more transparent and accountable to a public that unknowingly supplies the brokers with the information they sell.
According to the FTC, the companies namechecked represent a cross section of the data-broker industry. Most of the names are appropriately obtuse and give little indication as to what the companies actually do. The nine names include Acxiom, CoreLogic, Datalogix, eBureau, ID Analytics, and Intelius. Two of them, PeekYou and Rapleaf, are fun and playful in a Silicon Valley startup kind of way, though equally vague. Recorded Future, the ninth broker named in the report, is the most sinister sounding name of the bunch, if still nondescript.
Having a fuzzy, vague corporate moniker is likely a helpful way for these data brokers to fly under the consumer radar, and to continue collecting enormous amounts of data. Per the report, data brokers "collect and store billions of data elements covering nearly every U.S. consumer." The report noted that a single broker studied "holds information on more than 1.4 billion consumer transactions and 700 billion data elements."
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The data brokers examined have three products to sell. "Marketing products" are what you would expect. For instance, the companies may sell email addresses to companies looking to send out solicitations. Five of the nine companies studied do this.
Four of the nine sell what are called "risk-mitigation products." These allow businesses to detect fraud or verify customer identities. Finally, three sell "people search products," which offer consumers the ability to search for information on other people via "publically available" information.
That last point gets to the crux of this report. All of the information that data brokers gather and deal in is publically available, and what they're doing with it is legal. Consumers, though, are largely unaware that data on them is being collected and traded on such a scale. The FTC said Congress should pass legislation to change that.
“It’s time to bring transparency and accountability to bear on this industry on behalf of consumers," says Ramirez, "many of whom are unaware that data brokers even exist.”
Surprisingly, while much of the information data brokers collect and analyze comes from online sources, offline sources also provide a great deal of useful consumer data. Sources include stated religious and political affiliations, warranty registrations, and magazine subscriptions. Brokers use everything they can get their hands on to create user-group profiles that help businesses market their products.
The report lays out a series of specific recommendations for reforming the data-broker industry, such as requiring brokers to grant consumers access to the data collected about them and requiring opt-out tools for consumers. Until those changes happen, if you really want to sow confusion and throw the data broker industry off your trail, consider taking out simultaneous subscriptions to Mother Jones and Guns & Ammo.
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