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Data Brokers Gathering Dossiers on Millions of Americans by Income, Disease, and More

Senate hears that the industry "will sell any information about any person regardless of sensitivity for 7.9 cents a name."

by
Rodrigo Sermeño

Bio

December 26, 2013 - 11:13 pm

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.

Pam Dixon, executive director of the World Privacy Forum, said that data brokers have compiled dossiers on millions of people, categorizing them by type of disease, including cancer, Alzheimer’s and even bed wetting.

Dixon warned that at least one data broker sells lists of rape victims and victims of domestic violence.

“The data broker industry as it is today does not have constraints and does not have shame. It will sell any information about any person regardless of sensitivity for 7.9 cents a name, which is the price of a list of rape sufferers which was recently sold,” she said.

Rockefeller criticized data brokers on several fronts, but he seemed particularly troubled by the idea that some of these companies classify consumers in a way that might open the doors for predatory lending. In addition, the senator seemed equally concerned that some data brokers classify consumers based on their medical or financial weaknesses.

Such classifications “seem tailor-made to businesses that seek to take advantage of consumers,” he said, adding that he was “revolted” by the practice.

The report notes that one data broker sells a tool to identify consumers, including widows and military personnel, who might not have access to financial services and, as a result, might accept high-interest rate payday loans.

The panel found out that data brokers use “pseudo-scores” based on non-financial factors in lieu of actual credit scores to circumvent the Fair Credit Reporting Act.

The practice of grouping consumers into categories for marketing purposes is not new. The industry can be traced back to the 1970s when some firms began collecting data from public records to help marketers target consumers based on their consumption preferences.

Today, however, there are various ways to obtain consumer data thanks to the Internet and advances in computing and data analysis.

“Tons of consumers are now using computers, smart phones, and tablets to make purchases, plan trips, and research personal financial and health questions, among other activities,” the report notes. “These digitally recorded decisions provide insights into the consumer’s habits, preferences, and financial and health status.”

The data broker industry generated $156 billion in revenue in 2012.

Data brokers have consistently asserted Congress should not impose any consumer privacy legislation on the industry and, instead, allow firms to regulate themselves.

Jerry Cerasale, the chief lobbyist for Direct Marketing Association (DMA), tried to convince the panel that new laws are not needed and could actually freeze the industry.

The DMA launched the Data-Driven Marketing Institute and recently released a study to quantify the data broker industry’s contribution to the economy.

He said strong privacy laws already exist in the United States, which are complemented by the industry’s self-regulation.

At the request of Rockefeller, the Government Accountability Office released a report last month that found that under federal law consumers do not have a right to know what information data brokers have compiled about them for marketing purposes. The GAO report concluded that Congress should consider legislation to provide consumers with appropriate privacy protections.

Rodrigo is a freelance writer living in Washington, D.C.

Comments are closed.

Top Rated Comments   
As a software guy who's seen the mechanical internals of how the Internet works, it's hard to believe that all this data selling and data stealing is regarded as if it's an inevitability of the computing ecosystem. It's not, there are inexpensive ways to lock down personal information. But ya never hear about it on TV or see it in the newspapers. Instead, we're treated to regular blasts from blowhards like Rockerfeller who don't know. Well, maybe his staff should check into the facts so to help him know. Maybe a Rockerfeller staffperson should call the NSA, they know a whole lot about networks. Or, maybe he should just shut the hell up.
47 weeks ago
47 weeks ago Link To Comment
Most people have no idea. If you have a twitter or Facebook account, there is something called "active listening" software that can track your conversations...if you "chat" about wanting a pizza or a new place to workout...not only can your conversation be tracked, your GPS tracked location can be isolated and targeted for "recommendations".

Now, the free market...trying to find consumers can be innocent enough. The Democarats...those real "gems" of Big Brother leftism...will ALWAYS try to make the free market the "real danger".

They aren't. The real danger is always when Big Brother tries to "save" you from the free market...and then uses all those tools against you...to prove it.
47 weeks ago
47 weeks ago Link To Comment
All Comments   (15)
All Comments   (15)
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Is anyone going to tell the United States Senate that the independent Federal Social Security Agency partners with Experian to ask very specific questions while a human is forced to create an online sign-on in order to change address, only to finally be instructed to call a toll-free number in order to change address???????

Ok, I confess I just had to do that, and, at the end of my phone call to change my address, the SSA voice told me I could change my address online. My reply soon included "data mining!", and she hung up.

In other words, the Federal branch is doing exactly what Senator Rockefeller is so concerned about in the private sector.

Does the U.S. Census Bureau sell the invasive data mined from the long form survey that was totally about data mining for use by what appears to be a mutating bureaucracy?
47 weeks ago
47 weeks ago Link To Comment
This fine "reminder of reality" article will be ignored by the "privacy" shriekers and howlers [and those simultaneously posting pictures of their genitals on the Internet] who're only concerned about their oxymoronic "privacy".

The shriekers and howlers don't have the responsibility for anyone's physical safety, much less that of this Nation as a whole. Maybe they could be excluded from those of us seeking to be protected?.......they haven't the wit to see that they can't have things "all" ways.

The A.C.L.U. and their ilk should have some more hot chocolate while in their jammies.....without staining those jammies.
47 weeks ago
47 weeks ago Link To Comment
As a software guy who's seen the mechanical internals of how the Internet works, it's hard to believe that all this data selling and data stealing is regarded as if it's an inevitability of the computing ecosystem. It's not, there are inexpensive ways to lock down personal information. But ya never hear about it on TV or see it in the newspapers. Instead, we're treated to regular blasts from blowhards like Rockerfeller who don't know. Well, maybe his staff should check into the facts so to help him know. Maybe a Rockerfeller staffperson should call the NSA, they know a whole lot about networks. Or, maybe he should just shut the hell up.
47 weeks ago
47 weeks ago Link To Comment
My state, Oregon, sells data collected through the ballot process. Who you voted for, which party, etc. are available for sale by the State. Big brother is here. Now I get junk mail soliciting funds for various concerns.
47 weeks ago
47 weeks ago Link To Comment
Dont give these A-holes enough to work with, and they'll go after someone else with a more interesting folder to sort through.

Let them build dossiers’ on all the OTHER idiots who Hansel and Gretel their way across the electronic world every 10 seconds.

Keep it low profile and they’ll skip right over your narrow ass on their way to someone they know has lots of stuff they can STEAL:

1) Direct deposit your payroll to a bank closest to your home. All banks are the same...they suck…. better to suck within short walking distance, than suck all the way across town.

2) Withdraw CASH from THAT PARTICULAR ATM whenever you go shopping. Strictly minimize the NUMBER of branches/ATMs you’ll ever withdraw cash from. (hint: if its too easy to get cash, you’ll go broke faster) Carry a HANDGUN to protect said cash. Pay cash for EVERYTHING, even TOLLS (don’t like the lines at the toll booth? Then don’t GO). Shop/vacation only at places that permit CCW holders. If you live where CCW is not allowed, then MOVE.

3) At all points retail sale, use CASH. If they ask for a zip code, use '90210". If you DO happen to be from Beverly Hills, say “Yer, I’m from from Fuggen Hoboken New Jersey, an I DUNNOW the Fuggin zip code, ah-ite?"…. If the store balks at these, then take your business elsewhere.

4) Pay all regular monthly bills (mortgage, utilities, gym, daycare) with CASH or checks made out in person or by snail mail... you really notice what you can "afford" and what you cant that way. And I havent had a mortgage/utility/insurance payment get “lost” in the mail in 30 years.

5) If you DO need to buy online, set up a second (small balance) bank account for Ebay Purchases and buy ONLY from other individual sellers...F*ck Amazon and all the other retail outlets, plenty of new/lightly used stuff on Ebay from other individuals ...let some “Data Broker” try to figure out what a Ducati Clutch Plate from Florida, a Lego Set from Nebraska, and a pair of boots from Connecticut MEANS…. and they'll look for easier pickin’s among the heavier electronic trail-leavers of the web.

6) Cell Phones are for Emergencies, not daily usage. Land line it from your desk phone to the home phone (or her desk phone at her job?) to tell the wife you'll get pizza on the way in tonight. Have a routine in the day when you'll "check-in"….leave a message if needed and SHUT UP. I don’t NEED you to call me BACK unless the School said our kid is in an ambulance, got it? If you need a smart phone with Web Access and GPS to tell you EXACTLY how many steps it is to the nearest Organic Soufflé Shop 12 times a week, you’re an a**hole who DESERVES to have your data stolen.

7) Credit Cards are for Emergencies, not daily usage. RESERVE rooms and rental cars as needed with plastic, but PAY for them with paper. Lots of places "keep no record" of cash sales. Encourage them to continue by PAYING in cash whenever possible, especially when out of town.

8) Keep social media to an absolute minimum, or not at all . Screw Facebook. MAYBE follow a sports team or a hobby activity page if you must, but keep Zucherf*uck and his gang of Narcissistic Yuppies out of the loop concerning YOUR personal daily activities. Dozens of electronic "friends" updating their latest Arugula Salad and Panini Selection pared with their favorite Craft Brew, is senseless and annoying. Don’t BE one of them. Yeah, High school was fun, but then I grew up…if I didn’t stay in touch all these years, it MIGHT be because you didn’t mean that much to me, mmkay?….so, I’m not spending the next 20 years re-living the first 15, you weird and pathetic losers.

9) Cancel Cable TV. Better yet, never subscribe in the first place. Nothing they produce is worth watching. Absolutely. Nothing. All news channels ARE. THE. SAME. Period. Fox and Pajamas can be had on your Workplace Server in like 5 minute increments a couple times a day….plenty enough to absorb the basics of world events (it aint rocket science) and splatter out a quick response (without spell check because some of us have other pressing responsibilities?) and move on . If you MUST be entertained at home, use YouTube for Science/History documentaries or something fun and useful, like how to fieldstrip that FN-’49 in 8mm Mauser, or blow-up cool stuff in the yard with your kids. Nothing available at Sears, Target or Khols to be gleaned from those nuggets of information. In other words….

10) Do "real" things instead of Online things...ride bicycles, reload ammo, race motor cycles, read books, go to Museums and Libraries (use THEIR computers for on-line activity!) and maybe even go to Church once in a while.

Shut-off The Box(es) and get elbow deep into the muck of live, real-time living. Washington will always become more corrupt, and Liberals will be always be even evil-er than they were yesterday, whether you follow along in real time or not.

Don’t FILL Their Folder with your electronic life events, and
47 weeks ago
47 weeks ago Link To Comment
“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.”

No, it's not. A "feeling" Senator? I think that in our criminal justice system the presumption of innocence is our tradition and that it is up to you, the State, to prove guilt of a crime. Kings and dictators rule off of their feelings.

Our founders gave us a Bill of Rights that expressly forbids the State from forcing one to be a witness against himself. But what would Congress know about that in these times we live in today? If the the Senator has evidence of wrongdoing let him present it. Otherwise, he should keep his feelings to himself.
47 weeks ago
47 weeks ago Link To Comment
" ........ under federal law consumers do not have a right to know what information data brokers have compiled about them for marketing purposes. "

Why does such law exist? Apparently I produce a product (information) for certain businesses to profit from. Why should I not know in complete detail the how, when, and where regarding the commercialization of that which I produce, and is taken from me most often without my knowledge or consent, for the profit of others?

What are the details regarding the passage of such legislation? Who were the players involved? What is the popular support for it?

I will offer a guess as to why the law exists. Certain entities use the power and authority of government to create a profitable commercial enterprise. If each time that you divulged personal information it was explained to you that such information could or would be harvested for commerce then the enterprise would likely collapse.

How to correct this? Simple. No lengthy document explaining privacy rights in microscopic print is sufficient. All that should be required is the simple bold statement by any entity engaging in such activity that "we are going to take the personal information that you provide us, either directly or indirectly, and distribute it to others so that they may use it for whatever suits their purposes". Then let the chips fall where they may. Otherwise my personal property has been stolen in order to be fenced.

Seems to be much grist for the mill here at PJM. Hopefully, this subject will be expanded upon.
47 weeks ago
47 weeks ago Link To Comment
"Why does such law exist? "

You misunderstood the GAO's statement. They are not saying that a federal law exists which says you have no right to know who is gathering what information.

They are saying that there is no law which says you DO have the right to know.

Since there is no such law, it is (incorrectly) assumed that you don't have that right.



47 weeks ago
47 weeks ago Link To Comment
Your interpretation may be correct. But it is not made clear by the author's statement " ........ under federal law consumers do not have a right .....".

What I am stating is that there should be a law that recognizes and states clearly that an individual has just such a right. My personal information is my property and should be treated as such until such time that I, and I alone, deem that it may be made public and utilized for commercial purposes.
47 weeks ago
47 weeks ago Link To Comment
It's all well and good that politicians would be interested in privacy issues on behalf of those they supposedly represent. Given the track record of Jay Rockefeller, there are no guarantees that he has anyone's interest at heart outside of his own.
47 weeks ago
47 weeks ago Link To Comment
It may be true that these data collectors are butting in where they shouldn't, but the Senate Committee is a ludicrous and stupid bullying crew that failed - at least as this article goes - to establish what the abuse is.

The only concrete objection the panel had was that is opened some people up to shaky sales pitches. OK, but all sales pitches are shady. That is what sales is.
47 weeks ago
47 weeks ago Link To Comment
Most people have no idea. If you have a twitter or Facebook account, there is something called "active listening" software that can track your conversations...if you "chat" about wanting a pizza or a new place to workout...not only can your conversation be tracked, your GPS tracked location can be isolated and targeted for "recommendations".

Now, the free market...trying to find consumers can be innocent enough. The Democarats...those real "gems" of Big Brother leftism...will ALWAYS try to make the free market the "real danger".

They aren't. The real danger is always when Big Brother tries to "save" you from the free market...and then uses all those tools against you...to prove it.
47 weeks ago
47 weeks ago Link To Comment
Why smartphones aren't that smart. But this was all known and planned as part of the utility computing or cloud computing value proposition. The democrats don't want competition. They would prefer to dictate what's right for you without your knowledge of the eavesdrop.
47 weeks ago
47 weeks ago Link To Comment
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