FTC Raises Concerns About Data Brokers and Consumer Privacy

The Federal Trade Commission yesterday issued a report on the “fundamental lack of transparency” in the data broker industry. The FTC’s press release provides a good summary:

The report, “Data Brokers: A Call for Transparency and Accountability” is the result of a study of nine data brokers, representing a cross-section of the industry, undertaken by the FTC to shed light on the data broker industry. Data brokers obtain and share vast amounts of consumer information, typically behind the scenes, without consumer knowledge. Data brokers sell this information for marketing campaigns and fraud prevention, among other purposes. Although consumers benefit from data broker practices which, for example, help enable consumers to find and enjoy the products and services they prefer, data broker practices also raise privacy concerns.

“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. “It’s time to bring transparency and accountability to bear on this industry on behalf of consumers, many of whom are unaware that data brokers even exist.”

The report finds that data brokers collect and store billions of pieces of data covering nearly every U.S. consumer. One data broker studied by the FTC holds information on more than 1.4 billion consumer transactions. Another adds more than 3 billion new data points to its database each month.

Among the report’s findings:

Data brokers collect consumer data from extensive online and offline sources, largely without consumers’ knowledge, ranging from consumer purchase data, social media activity, warranty registrations, magazine subscriptions, religious and political affiliations, and other details of consumers’ everyday lives.

Consumer data is often shared among many data brokers.

Data brokers combine and analyze data about consumers to make inferences about them, including potentially sensitive inferences such as those related to ethnicity, income, religion, political leanings, age, and health conditions.

Many of the purposes for which data brokers collect and use data pose risks to consumers, such as unanticipated uses of the data.

To address its concerns, the FTC recommends that Congress enact legislation to make data broker practices more transparent to consumers and to give consumers greater control over the immense amounts of personal information collected and shared by data brokers.


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