WASHINGTON (5/29/14)--The Federal Trade Commission (FTC) has found that data brokers operate with a "fundamental lack of transparency." The agency recommends that Congress look into legislation that would increase transparency when it comes to the practice and give consumers more control over personal data that is collected and shared among data brokers.
Data brokers obtain and share vast amounts of consumer information, typically without consumer knowledge. They then sell this information for marketing campaigns, fraud prevention and more.
"The extent of consumer profiling today means that data brokers often know as much -- or even more -- about us than our family and friends, including our online and in-store purchases, our political and religious affiliations, our income and socioeconomic status, and more," said FTC Chair Edith Ramirez, releasing the FTC's findings and recommendations Tuesday. "It's time to bring transparency and accountability to bear on this industry on behalf of consumers, many of whom are unaware that data brokers even exist."
The report studied nine data brokers (Acxiom, CoreLogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf and Recorded Future ) and found that just one of them studied holds information on more than 1.4 billion consumer transactions and 700 billion data elements, and another adds more than three billion new data points to its database each month.
Other findings in the report include:
Data brokers collect consumer data from online and offline sources, ranging from consumer purchase data, social media activity, warranty registrations, magazine subscriptions, religious and political affiliations and other details of consumers' everyday lives.
Consumer data often passes through multiple layers as data brokers sharing data with each other. Seven of the nine data brokers in the study had shared information with another data broker in the study.
Data brokers combine and analyze data about consumers to make inferences, including potentially sensitive inferences such as those related to ethnicity, income, religion, political leanings, age and health conditions.
Many of the purposes for which data brokers collect and use data pose risks to consumers, such as unanticipated uses of the data. For example, a category like "Biker Enthusiasts" could be used to offer discounts on motorcycles to a consumer, but could also be used by an insurance provider as a sign of risky behavior.
Some data brokers unnecessarily store data about consumers indefinitely, which may create security risks.
To the extent data brokers currently offer consumers choices about their data, the choices are largely invisible and incomplete.
The FTC encouraged Congress to consider enacting legislation that would enable consumers to learn of the existence and activities of data brokers and provide consumers with reasonable access to information about them held by these entities.
Such legislation should include, according to the FTC, requirements that data brokers create a centralized mechanism, allow consumers to have access to their data, allow consumers to opt out and protect sensitive information.
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