FTC looks to control ‘serious privacy concerns’ in data-collection industry

The Federal Trade Commission has called on federal lawmakers to consider legislation aimed

at protecting consumers from the massive amounts of personal information collected on them by data brokers.

“You may not know them but data brokers know you,” said Edith Ramirez, FTC chairwoman, during a May 27 conference call. “They know where you live, what you buy, your income, you ethnicity, how old your kids are, your health conditions and you interests and hobbies.”

Due to this kind of information-collecting, the Ramirez said the FTC has concluded there are “serious privacy concerns” related to data-broker practices despite recognizing the good from these largely unknown businesses collecting, analyzing and selling consumer data. They help fight fraud and improve product offerings and tailor advertisements to consumers.

However, a study by the commission of nine data brokers—Acxiom, CoreLogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf and Recorded Future—found they operate with a “fundamental lack of transparency,” and laws should be passed to allow give consumers some control over what information is collected and make it accessible. Data brokers should have to describe their practices and the information they collect—and retailers should have to give consumers notice when they share information with data brokers.

Click here to read the FTC’s report, Data Brokers: A Call for Transparency and Accountability

“We want to lift the veil of secrecy that shrouds data broker industry practices,” said Ramirez, who added any legislation would not limit data brokers from continuing to provide products and services.

The study, a result of a late 2012 commission vote to issue orders to data brokers, found data brokers collect billion of data points covering nearly all US consumers. One broker possesses records on more than 1.4 billion consumer transactions and adds more than 3 billion data points to its database each month. Personal consumer information is collected offline and online, the FTC said.

More concerning to the FTC was the finding that data brokers put consumers in certain buckets by race, ethnicity, age, religion, and socioeconomic status.

“Does it mean many among us will be cut off from being offered the same goods and services, at the same prices, as our neighbors?” asked Ramirez. To continue a hypothetical, she said a person with diabetes might not mind if ads for sugar-free products are sent because of data brokers, but that person might think differently if an insurer uses the information to classify them as a high risk.