It's long been time to establish some rules for data brokers and the issue now seems to have gotten the attention of the Federal Trade Commission (FTC). The agency recently released a report describing some of the abuses of this business. All of this was summarized in a recent article (see: FTC report examines data brokers).
In today’s economy, Big Data is big business. And data brokers — companies that collect consumers’ personal information and resell or share that information with others — play a key role....[T]he Federal Trade Commission [has] released a study of nine data brokers. These data brokers collect personal information about consumers from a wide range of sources — including public records, loyalty cards, websites and social media — and provide information for a wide range of purposes — including verifying someone’s identity, marketing products and detecting fraud.
What did the FTC learn about the data broker industry?
- Data brokers collect consumer data from numerous sources, largely without consumers’ knowledge. Some of the information data brokers collect, like bankruptcy information, voting history, consumer purchase data, web browsing activities and warranty registrations are not obtained directly from consumers, and as a result, consumers are largely unaware that data brokers are collecting and using this information.
- Data brokers collect and store billions of data elements, including some on nearly every U.S. consumer. Data brokers hold a vast array of information on individual consumers. For example, one of the nine data brokers has 3,000 data segments for nearly every U.S. consumer.
- Data brokers combine and analyze data about consumers to make potentially sensitive inferences. Data brokers infer consumer interests from the data they collect. Then, they use those interests to make inferences about consumers and place them in categories....
Here's an important point from the executive summary of the FTC report that needs emphasis (see: Data Brokers: A Call for Transparency and Accountability).:
Because these companies generally never interact with consumers, consumers are often unaware of their existence, much less the variety of practices in which they engage. By reporting on the data collection and use practices of these nine data brokers, which represent a cross-section of the industry, this report attempts to shed light on the data broker industry and its practices.
I can't make the point stronger than the title of this FTC report. We need more transparency and accountability on the part of the data brokers. Most consumers are unaware of the intrusive aspect of this industry so there won't be much pressure from them. Stay tuned to see if we get any action from Congress. There's a lot of money and power involved here and it's uncertain if our elected officials view this as a priority, particularly with most of the population unaware of the abuses.