FTC Releases Report on Data Brokers

Data brokers are businesses that collect consumers’ personal information and resell or share that information with others.

Data brokers are important participants in the Big Data economy.  After its lengthy investigation of the data-broker industry concluded, the Federal Trade Commission (FTC) released its report titled “Data Brokers: A Call For Transparency and Accountability.” The report recommends that legislation be passed requiring companies to disclose more information about the data they collect and allowing consumers greater access to the information collected about them by data brokers. The nine data brokers examined in the F.T.C. report were Acxiom, CoreLogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf and Recorded Future.

The White House previously issued its own report which focused on how companies can gather large amounts of data, which can result in discrimination against certain racial, ethnic or socioeconomic groups. The White House report called for Congress to pass the Consumer Privacy Bill of Rights, which President Obama proposed in 2012. The FTC’s report contains similar terms to the White House report.

A data broker collects and analyzes information about consumers in order to formulate assumptions about them. This “consumer profiling” places customers in certain groups for marketing and other purposes. The information can be sold to companies to determine the types of products and services that should be offered to a person. However, the conclusions drawn from the data can be wrong. Thus, it was concluded that there was the need to allow consumers more control over the data collected about them.

The FTC report states that companies that are collecting such personal information about customers should be transparent and accountable. Privacy advocates believe the FTC should have gone even further. They claim too much responsibility is placed on consumers to monitor the data brokers. Instead, the data brokers should be required to contact the consumer when his or her information is about to be sold.

Companies in the data collection industry have been taking some steps to be more transparent, such as setting up websites that allow a consumer to see some of the information that has been collected and some of the assumptions made from it. However, there is still a long way for data brokers to go before they will be completely “transparent.”