The Federal Trade Commission called on Congress to pass legislation
that would enable consumers to learn more easily how data brokers
collect, use and sell their data, to correct it or to opt out of the
process, especially when it comes to sensitive information such as
about their health status.
The commission's report relied on information shared by nine data
broker companies, which do not interact directly with consumers but
collect data to inform other companies' marketing efforts, to verify
consumers' identity or to detect fraud.
The companies were Acxiom Crop, Corelogic Inc, Datalogix, eBureau,
ID Analytics, Intelius, PeekYou, Rapleaf, and Recorded Future.
"You may not know them, but data brokers know you. They know where
you live, what you buy, your income, your ethnicity, how old your
kids are, your health conditions, and your interests and hobbies,"
said FTC Chairwoman Edith Ramirez.
"This is an industry that operates in the dark... The sheer
magnitude of what's taking place I think is quite astonishing."
The review did not find illegal activity from the brokers but raised
concerns about the scope of collection, the way brokers segment
consumers into broad racial, socio-economic and even political
categories, and how those "troubling classifications" could harm
The FTC found that data brokers collect and sell - to advertisers
and each other - billions of data points about nearly every U.S.
consumer, gathered through retailers, social media, Census figures,
magazine subscriptions and other sources.
Through this vast trove, consumers are classified by race, income,
age, health conditions and other categories like "financially
challenged," which include single parents; "rural everlasting,"
which are single people over the age of 66 with "low education
attainment and low net worth"; or "urban scramblers," which include
a high concentration of low-income Latinos and African Americans.
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While such data can help advertisers better target potential buyers,
it could also prompt discrimination by directing some consumers to
inferior customer service or offering different prices for the same
goods, the FTC said.
For instance, such categories could lead to some consumers seeing
ads for subprime loans while others see ads for credit cards, or
insurance companies could use marketing categories like "bike
enthusiast" or "diabetes interest" to screen consumers.
Democratic U.S. Senators Jay Rockefeller of West Virginia and Edward
Markey of Massachusetts in February introduced a bill that seeks to
give consumers more control over data collection.
Ramirez said the FTC would work with Rockefeller and others to pass
legislation on brokers' transparency, long urged by consumer
advocates but resisted by data-driven industries that oppose new
regulations and legal requirements.
(Editing by Ros Krasny and Eric Walsh)
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