FTC Recommends Congress Regulate Data Broker Industry
The Federal Trade Commission made a formal recommendation to Congress that the data broker industry face tougher regulations to stop current practices that abuse and violate Americans’ privacy. The FTC claimed data brokers “operate with a fundamental lack of transparency” and that Congress should enact legislation that makes the data broker industry’s practices more open and allows consumers to have more control over their data.
The report titled “Data Brokers: A Call for Transparency and Accountability” comes from the results of an investigation of nine data brokers which were issued subpoenas by the FTC – though the FTC is unable to state how many data brokers there are in totality.
According to the report “Data brokers obtain and share vast amounts of consumer information, typically behind the scenes, without consumer knowledge.” This includes information such as health records which raises concerns though the data brokers studied all operated within the law.
Some of the 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 often passes through multiple layers of data brokers sharing data with each other. In fact, seven of the nine data brokers in the Commission study had shared information with another data broker in the study.
- Data brokers combine online and offline data to market to consumers online.
- 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. Potentially sensitive categories from the study are “Urban Scramble” and “Mobile Mixers,” both of which include a high concentration of Latinos and African-Americans with low incomes. The category “Rural Everlasting” includes single men and women over age 66 with “low educational attainment and low net worths.” Other potentially sensitive categories include health-related topics or conditions, such as pregnancy, diabetes, and high cholesterol.
- Many of the purposes for which data brokers collect and use data pose risks to consumers, such as unanticipated uses of the data. For example, a category like “Biker Enthusiasts” could be used to offer discounts on motorcycles to a consumer, but could also be used by an insurance provider as a sign of risky behavior.
- Some data brokers unnecessarily store data about consumers indefinitely, which may create security risks.
- To the extent data brokers currently offer consumers choices about their data, the choices are largely invisible and incomplete.
While Americans are rightly concerned about government surveillance and government partnerships with private companies to spy on Americans it would also seem appropriate to factor in what is going on in the corporate world regarding privacy and how it is being violated.
People should be able to expect some basic privacy whether it be from state or private interests.