Step Aside, NSA: What are Private Companies Gathering About You, Then Sharing?
WASHINGTON – Sen. Jay Rockefeller (D-W.Va.), chairman of the Senate Commerce Committee, is expanding his probe to discover the practices and scope of the multi-billion dollar industry trading personal details about consumers.
In October 2012, Rockefeller launched an investigation into the data-brokerage industry by asking nine major data brokers about their business practices. The responses from the companies showed that some websites share consumer information gathered by Web surveys, sweepstakes, and questionnaires.
He said, however, that several major brokers have refused to tell his committee about some of their consumer data sources.
Rockefeller recently announced his plan to “take a closer look” into the data-brokerage industry. He sent letters to 12 websites focused on personal finance, health, and family issues, asking them to explain their privacy policies, including whether they share consumer data with third parties. The senator requested these websites answer those questions by Oct. 11.
“While some consumers may not object to having their information categorized and used for marketing, before they share personal information it is important that they know it may be used for purposes beyond those for which they originally provided it,” wrote Rockefeller. “Transparency regarding website information practices is increasingly important as greater numbers of consumers turn to the Internet for advice and information.”
The sites – which include Condé Nast’s Self.com, Fool.com, Investopedia.com, and Time Inc.’s Health.com – could be collecting sensitive data about a consumer’s health or financial status and giving it to data brokers, he said.
Rockefeller said the probe has already found that data brokers use the information they collect to group consumers into categories such as “Rural and Barely Making It” and “Ethnic Second-City Strugglers.”
Data-brokerage firms collect, store, analyze and sell consumer data with the aim of helping their clients tailor marketing to their most valuable current customers or identify new customers. These companies provide marketers personal details so that they may know that you are a physician who is trying to lose weight, has an interest in golf, and owns a dog. They may not know what specific brand of dress pants you recently bought, but they may know you are into high-end clothing.
They collect personal information about consumers from a variety of public and non-public sources. These companies build profiles about individuals by scouring hundreds of sources, including social networks, purchase histories, and Web searches to create dossiers that include thousands of personal details that they then feed into algorithms to determine how to predict and influence consumer behavior. These files might include race, ethnicity, education, occupation, and political and religious affiliation.
The evolving, but little-known industry, is now worth $300 billion per year and employs 3 million people in the U.S. alone.
Critics of data-brokerage companies say that the average consumer has no idea that their intimate personal details are up for sale on these websites.
The industry has come under scrutiny recently as reports have surfaced that companies have been mining and selling highly sensitive and personal information.
Last year, the consumer reporting company Equifax and its clients settled charges with the Federal Trade Commission (FTC) that they had improperly sold and purchased lists of millions of consumers who were late on their mortgage payments. Other data companies sell the names and addresses of people suffering from ailments like cancer, diabetes, and clinical depression, according to data analyzed by the Financial Times.
The Acxiom Corporation, one of the largest data-brokerage firms in the world, unveiled last month a free website where U.S. consumers can view some of the information the company has collected about them. Acxiom reportedly has information on about 700 million active consumers worldwide, which helped the company record $1.1 billion in sales last year.
The data on the site, called Aboutthedata.com, includes biographical information, like marital status and education level; homeownership status, including mortgage amount and property size; vehicle details; and economic data, like the size of portfolio investments.
Many privacy advocates have attacked Acxiom’s move, saying the information Acxiom discloses through the website is only a small sample of the data the company collects and sells. Others have warned that the site provides a new avenue for Acxiom to collect even more details about consumers by allowing them to verify and correct their profiles.
Currently, there is no comprehensive data regulation for data brokers. Certain kinds of sensitive data are protected, but most of the information can be bought and sold without any input from the individual. For example, the Fair Credit Reporting Act (FCRA) requires that companies that collect information for those making credit, insurance, and housing decisions do so in a manner that ensures the information is accurate.
Last year, the FTC issued a report on protecting consumer privacy in which they recommended that Congress consider legislation overseeing online privacy and data brokers.
Julie Brill, an FTC commissioner, penned an op-ed article in the Washington Post in August, asking data-brokerage companies to make their practices more transparent.
She said personal data could be used by firms making decisions that are not regulated by the FCRA but still affect users' lives profoundly, including “determinations about whether we are too risky to do business with or aren’t right for certain clubs, dating services, schools or other programs.”
“Citizens don’t know what of our personal information is on file or how it is being used, and this frames the fundamental challenge to consumer privacy in the online marketplace: our loss of control over our most private and sensitive information,” Brill said.
In November 2012, a bipartisan group of lawmakers, led by Reps. Ed Markey (D-Mass.) and Joe Barton (R-Tex.), requested information from nine major data brokers about their policies and practices. The probe yielded only a partial glimpse into the industry.
“Many questions about how these data brokers operate have been left unanswered, particularly how they analyze personal information to categorize and rate consumers,” the lawmakers said in a joint statement.
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