FTC Lifts the Veil on Companies That Sell Your Data

A new FTC report says the data-broker industry collects troves of personal information about nearly all Americans.

A man surfs the internet in Beijing on June 15, 2009. The designers of controversial Internet filtering software that China has ordered shipped with all new computers said they were trying to fix security glitches in the programme in the latest blow to the plan to include the filtering software with all PCs sold in China from July 1, which has been criticised overseas and even in China as a bid at mass censorship and a threat to personal privacy. Researchers at the University of Michigan who examined the software last week said it contained serious security vulnerabilities that could allow outside parties to take control of computers running it via remote access. Chinese authorities have a history of blocking sites that feature porn or politically unacceptable subjects such as the brutal crackdown on Tiananmen pro-democracy protests in 1989 and the banned spiritual group Falungong.
National Journal
Laura Ryan
See more stories about...
Laura Ryan
May 27, 2014, 9:15 a.m.

Do data brokers know more about you than your own moth­er?

The Fed­er­al Trade Com­mis­sion thinks they might, and the agency re­leased a re­port Tues­day ur­ging Con­gress to push for more trans­par­ency and ac­count­ab­il­ity for the com­pan­ies that har­vest and sell con­sumer in­form­a­tion.

“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 Chair­wo­man Edith Ramirez in a state­ment Tues­day.

Data brokers are com­pan­ies that ag­greg­ate in­form­a­tion from a vast range of on­line and off-line sources, such as so­cial me­dia and re­tail­ers, to com­pile and sell con­sumer pro­files to mar­keters and oth­ers for vari­ous pur­poses, from per­son­ally tailored ad­vert­ise­ments to fraud pre­ven­tion.

The FTC re­search found that data brokers are col­lect­ing troves of per­son­al in­form­a­tion about “nearly every U.S. con­sumer,” largely with a “fun­da­ment­al lack of trans­par­ency,” and that the in­form­a­tion could be used in ways that are dam­aging to con­sumers.

Among the fed­er­al agency’s re­com­mend­a­tions is the cre­ation of a “cent­ral­ized portal,” a one-stop shop for con­sumers to ac­cess in­form­a­tion about data brokers’ data-col­lec­tion prac­tices, as well as tools to ac­cess their data pro­files.

The FTC’s in­vest­ig­a­tion in­to nine of the ma­jor data-broker com­pan­ies, launched in 2012, found that these com­pan­ies are ana­lyz­ing bil­lions of data points to make in­fer­ences about cus­tom­ers, from the be­nign, like “Dog Own­er,” to the po­ten­tially dam­aging cat­egor­ies that high­light sens­it­ive health, age, or so­cioeco­nom­ic in­form­a­tion, ac­cord­ing to the re­port.

The risk is that com­pan­ies could use this data to tar­get vul­ner­able cus­tom­ers or of­fer vary­ing prices. For ex­ample, someone iden­ti­fied as a “Dia­betes In­terest” could re­ceive ads for sug­ar-free products, but an in­sur­ance com­pany could use that same data to clas­si­fy such a per­son as high-risk, ac­cord­ing to Ramirez. 

“Does it mean many among us will be cut off from be­ing offered the same goods and ser­vices, at the same prices, as our neigh­bors?” Ramirez asked in a state­ment Tues­day. “Will these clas­si­fic­a­tions mean that some con­sumers will only be shown ad­vert­ise­ments for subprime loans while oth­ers will see ads for cred­it cards?”

The data-broker­age in­dustry dates back to mail-or­der cata­logs in the 1950s, but the in­dustry has trans­formed in the di­git­al age. As con­sumers’ con­duct more and more of their lives on­line, data brokers have an un­pre­ced­en­ted amount of in­form­a­tion at their fin­ger­tips, along with the power­ful tech­no­logy to ana­lyze this in­form­a­tion and piece it to­geth­er like nev­er be­fore.

With the ex­cep­tion of a few in­dustry-spe­cif­ic rules to safe­guard sens­it­ive fin­an­cial data, health data, and data about chil­dren, the in­dustry is un­reg­u­lated. That is why the FTC is call­ing on Con­gress to en­act le­gis­la­tion that would in­crease trans­par­ency in the in­dustry and give con­sumers more con­trol over the data col­lec­ted about them.

The FTC’s re­port fol­lows an­oth­er on the data-broker in­dustry re­leased earli­er this year by Sen. Jay Rock­e­feller, which raised sim­il­ar con­cerns about the secrecy of the in­dustry and the risks it poses to con­sumers. Rock­e­feller also in­tro­duced le­gis­la­tion, with Sen. Ed­ward Mar­key, that would en­act trans­par­ency re­quire­ments on data brokers and al­low con­sumers to cor­rect their in­form­a­tion.

Rock­e­feller and Mar­key both praised the FTC’s re­port, say­ing that it un­der­scores the need for le­gis­la­tions. 

“With the re­lease of today’s re­port, which is sup­por­ted by Demo­crat­ic and Re­pub­lic­an FTC Com­mis­sion­ers, our con­clu­sion is stronger than ever — big data prac­tices pose risks of con­sumer harm in­clud­ing dis­crim­in­a­tion based on fin­an­cial, health, and oth­er per­son­al in­form­a­tion,” Rock­e­feller said in a state­ment. “Con­gress can no longer put off ac­tion on this im­port­ant is­sue.”

What We're Following See More »
CHARM OFFENSIVE
Pence Is Trump’s Man on Capitol Hill
44 minutes ago
THE LATEST

"Spurred by VP pick Mike Pence, a former congressman with close ties to many lawmakers, the Trump campaign in recent weeks has stepped up its courtship of wary Capitol Hill Republicans. And the efforts appear to be bearing fruit." Central to the charm offensive: invitations to more than a dozen "Senate and House members into his family’s private box for some power-schmoozing with him and his kids" during the Republican National Convention.

Source:
PAUL RYAN: STOP IT
Trump Encourages More Spying by Russia
48 minutes ago
THE LATEST

Donald Trump essentially encouraged more Russian espionage against Democrats in a press conference this morning. "Russia, if you’re listening, I hope you’re able to find the 30,000 emails that are missing,” he said. “I think you will probably be rewarded mightily by our press.” That prompted Brendan Buck, spokesman for House Speaker Paul Ryan to say: “Russia is a global menace led by a devious thug. Putin should stay out of this election.”

Source:
ONE MORE INVESTIGATION
IRS Investigating Clinton Foundation
2 hours ago
WHY WE CARE

Investigations are never far from the Clintons, and here's another: At the behest of "dozens" of Republican lawmakers, the IRS is opening a fraud investigation into the Clinton Foundation."The move signals a shift from the IRS's announcement last year that it would not look into allegations of financial irregularities at the well-connected charity."

Source:
INFIGHTING AMONG COMMISSIONERS TO BLAME
Report Details Terrible Morale at FEC
2 hours ago
THE DETAILS

"Bickering commissioners, ineffective managers and lousy internal communication rank among the top reasons why the Federal Election Commission" has some of the worst morale in the federal government. That's the conclusion of an inspector general's report, which put "the most blame on the FEC’s six commissioners: three Democratic appointees and three Republican appointees who have regularly criticized one another and frequently (but not exclusively) deadlocked on high-profile political issues before them."

Source:
TRADE DEALS BACK IN THE NEWS
UAW President: Clinton Promised to Renegotiate NAFTA
3 hours ago
THE DETAILS

On Tuesday, Dennis Williams, the president of the United Auto Workers, said that Hillary Clinton has told him that she will renegotiate the North American Free Trade Agreement if elected president. Trade deals, especially NAFTA, have played a prominent role in the campaign, with Clinton receiving heat both from her Democratic rival Bernie Sanders and GOP nominee Donald Trump. The Clinton campaign did not comment on Williams's comments, though that didn't stop the Trump campaign from weighing in. Hillary Clinton "will never renegotiate Bill Clinton's NAFTA," said Stephen Miller, senior policy adviser to Trump.

Source:
×