On Tuesday, the Federal Trade Commission (FTC) released a report which advises Congress to require the data broker industry to be more transparent about how they accumulate and market consumer information. The FTC advocates for regulation which would help consumers control the significant amount of personal information collected by data brokers.
The FTC’s 110-page report, which was launched in late 2012, is the result of a study of nine data brokers like Axicom and Corelogic and how they collect and distribute user data.
According to the FTC, “these data brokers collect personal information about consumers from a wide range of sources and provide it for a variety of purposes, including verifying an individual’s identity, marketing products, and detecting fraud. 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.”
The report found that data brokers often share information with each other, creating a multifaceted network, which makes it difficult for consumer information to be tracked and attributed to a specific source. Seven of the nine companies investigated said that they share information with other brokers.
“This information comes from widespread sources – sources as varied as social media posts, Census data, retailers, and DMV and real property records. Once a data broker has obtained the information, it can be sold to other data brokers, who in turn may sell it to several more brokers and so on down the line,” according to FTC Chairwoman Edith Ramirez. “The result is that if a consumer wanted to trace the original source of a data broker’s information about her, she would have to sift through a complex maze of companies. And data brokers are helping to blur the line between online and offline behavior.”
The FTC’s report recommends that Congress should consider legislation which would rectify the lack of transparency about data broker industry practices. Included in these recommendations is the creation of a single portal, likely an internet site, where data brokers would reveal the sources from which they collect data about consumers, and give individuals the ability to opt-out of data collection.
“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 Chairwoman Ramirez. She hopes to “bring transparency and accountability to bear on this industry on behalf of consumers.”
However, the FTC’s recommendations are far from becoming law, as previous attempts to regulate the data broker industry have failed. Notable unsuccessful efforts include the 2011 Data Accountability and Trust Act. The act contained a number of requirements for data brokers which would allow for identified consumers to review and correct data related to them and would require “reasonable security policies and procedures to protect data containing personal information, and to provide for nationwide notice in the event of a security breach.” Although the bill passed the House of Representatives, it failed to get past Congress. Ramirez said that in the future, the FTC will work with U.S. Senators and others to pass legislation on brokers’ transparency.