WASHINGTON – A Senate panel released a report and held a hearing before the holiday break on the multibillion-dollar and largely unregulated data broker industry, which showed that these firms have several avenues to collect sensitive data on consumers.
To better understand how firms in the industry operate, the Senate Commerce Committee reached out last year to nine companies that sell consumer data for marketing purposes. Based on this information, the committee staff was able to draw some conclusions in a 36-page report.
Data brokers collect a huge volume of detailed data about consumers, from what illnesses they may have, to what car they own and what types of soap they buy. They use this information to create consumer profiles that categorize consumers, or “score” them, without their consent.
Data brokers also identify financially vulnerable consumers by putting them into categories like “rural and barely making it,” “ethnic second city strugglers,” and “credit-crunched: city families.”
Credit scores and medical records are not available to data brokers under federal law, but these “e-scores” are not covered by those laws.
Sen. Jay Rockefeller (D-W.Va.), the committee chairman, has been vocal on privacy issues for years and has sponsored legislation that would give consumers the ability to prevent online companies from tracking them on the Web and using that information for profit. During the hearing, he did not mention any specific legislation but reiterated his commitment to continue scrutinizing the industry.
“The [National Security Agency] is so secure in its protection of privacy as compared to this group that we’re talking to, these data brokers,” he said. “It’s not even close.”
Rockefeller expressed his dissatisfaction with three data brokers – Acxiom, Experian, and Epsilon – who had failed to turn over information to the committee for its investigation.
“To date they have not given me complete answers,” Rockefeller said. “I am putting these three companies on notice today that I am not satisfied with their responses and am considering further steps I can take to get this information.”
Epsilon said in a statement it had not participated in order “to protect our business, and cannot release proprietary competitive information.”
Tony Hadley, senior vice president of government affairs and public policy at Experian, said the company had submitted 3,000 pages of response documents for the report. He told the committee the company could not disclose specific information about its clients, saying it would put the company at a disadvantage against its competitors.
Hadley said that data brokers significantly enhance economic productivity and provide many benefits to consumers. For example, marketing data “brings lower prices and greater convenience to consumers by strengthening competition,” he said.
“This is a serious subject,” Rockefeller said. “We have the feeling people are getting scammed or screwed. …It’s up to you to talk us out of that.”
According to the report, marketers maintain databases that track and sell the names of people who have certain illnesses.