Do you ever feel like someone is watching you? If so, rest assured that you are neither delusional nor paranoid. You are in fact being watched – much more closely than you might even suspect. And, no – It’s not just the National Security Agency doing the watching. A new actor has emerged in the surveillance arena, namely the data broker.
Last month, the Federal Trade Commission (FTC) issued a report titled Data Brokers; A Call for Transparency and Accountability (link title to http://www.ftc.gov/reports/data-brokers-call-transparency-accountability-report-federal-trade-commission-may-2014). In this report, the FTC discusses the results of an in-depth study of nine data brokers – companies that collect consumers’ personal information and resell and share that information with others. Because data brokers generally never interact with consumers, most people are often unaware of their existence, much less the variety of practices in which they engage. Accordingly, the report seeks to shed light on this mostly unregulated and opaque industry.
Here are some of the FTC’s findings:
- Data brokers collect vast amounts of data about consumers, largely without consumers’ knowledge, to form a detailed composite of the individual consumer’s life and to predict the consumer’s likely behavior.
- Data brokers collect and store “billions of data elements covering nearly every U.S. consumer.”
- One of the nine data brokers studied has a database containing 3000 data points for nearly every U.S. consumer.
- Another data broker is adding three billion new records to its databases each month.
- Data brokers combine and analyze data about consumers to make inferences about them, including potentially sensitive inferences about consumers’ ethnicity, income levels, and health related conditions.[1]
- Data brokers use this information to target consumers online.
- Although the products offered by data brokers offer benefits to consumers, they also pose certain identifiable risks.
- Long term storage of data by data brokers may create security risks for consumers and further enable identify thieves and other unscrupulous individuals.
- To the extent consumers have a choice about how their data is utilized, such choices are largely invisible and incomplete.
The report concludes with the following observations and recommendations:
Many of the above findings point to a fundamental lack of transparency about data broker industry practices. Data brokers acquire a vast array of detailed and specific information about consumers; analyze it to make inferences about consumers, some of which may be considered quite sensitive; and share information with clients in a range of industries. Much of this activity takes place without consumers’ knowledge. In light of these findings, the Commission unanimously recommends that Congress should 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.
Currently, consumers generally have no federal right of access, correction, or control with respect to the information being compiled and sold by data brokers. Whether the FTC’s report and recommendations will spark action by Congress to empower and protect consumers in this new industry is to be seen.
[1] A 2013 report prepared by the U.S. Senate Committee on Commerce, Science, and Transportation, Office of Oversight and Investigations titled A Review of the Data Broker Industry: Collection, Use, and Sale of Consumer Data for Marketing Purposes (link title to http://www.commerce.senate.gov/public/?a=Files.Serve&File_id=0d2b3642-6221-4888-a631-08f2f255b577) found that data brokers create products specifically designed to identify, categorize and target financially vulnerable populations. Examples of some of these categories created by data brokers include:
- Burdened by Debt: Singles
- Ethnic Second-City Strugglers
- Rural and Barely Making It
- Very Elderly
- Fragile Families
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