Antitrust Law Daily Wrap Up, PRIVACY NEWS: FTC recommends legislation to promote data broker transparency and consumer choice, (May 27, 2014)

By Greg Hammond, J.D.

The FTC has released a report titled “Data Brokers: A Call for Transparency and Accountability,” recommending that Congress consider establishing legislation to require more transparency among data brokers and to allow consumers to have greater control over the copious amounts of personal information collected and shared by these companies. According to the report, data brokers collect and store personal data that covers almost every consumer in the U.S., and sell the information for marketing campaigns, fraud prevention, and other purposes. Although the collection of such data could be beneficial to consumers, by more easily allowing consumers to discover and enjoy products or services they might prefer, it also raises concerns for consumer privacy.

Findings. According to the report’s findings:

• Consumers are mostly unaware of data brokers collecting data from a large variety of online and offline sources regarding their purchase data, political and religious beliefs, social media activities, warranty registrations, magazine subscriptions, as well as other details of their everyday lives;

• Data brokers frequently share data with one another, and seven out of nine data brokers in the FTC’s study shared information with another broker within the study;

• Online and offline consumer data is collected by data brokers and used to market to consumers online;

• Potentially sensitive inferences and categories of consumers are being made regarding consumer ethnicity, religion, income, age, political affiliation, and health conditions;

• Risks to consumers include unanticipated uses of data by other companies, such as insurance companies that analyze consumers’ risky behaviors. In addition, some data brokers store consumers’ data indefinitely, causing unnecessary security risks; and

• Consumers largely do not have any meaningful choices regarding their data.

“The extent of consumer profiling today means that data brokers often know as much—or even more—about us than our family and friends, including our online and in-store purchases, our political and religious affiliations, our income and socioeconomic status, and more,” stated Edith Ramirez, Chairwoman of the FTC. “It’s time to bring transparency and accountability to bear on this industry on behalf of consumers, many of whom are unaware that data brokers even exist.”

Legislation. The FTC made a number of recommendations to Congress in order to increase data broker transparency and to allow consumers reasonable access and control of their information. Specifically, for data brokers that offer marketing products, the agency suggested that Congress consider legislation that would: (1) establish a centralized portal or mechanism for data brokers to identify themselves, provide information regarding their data collection and use practices, and provide links for access and opt-out controls; (2) require that data brokers provide consumers with reasonable access to their data; (3) allow consumers to opt-out and suppress their data; (4) force data brokers to inform consumers that they make inferences from the raw data they collect; (5) require brokers to identify data sources so consumers have the ability to correct incorrect information with the original source; (6) direct retailers and other consumer-facing entities to give consumers notice that they share information with data brokers and the choice to opt-out of sharing; and (7) require that consumer-facing entities receive consumers’ express consent, prior to sharing sensitive data, such as health information, with data brokers.

With regard to data brokers that offer “risk mitigation” products, the FTC recommended that Congress enact legislation that would require a consumer-facing company to disclose which data broker’s information the company relied on to restrict a consumers’ ability to finish a transaction, and mandate that data brokers provide consumers with access to their information and a way to correct it. For brokers that offer “people search” products, the FTC suggested that Congress enact legislation that would force data brokers to provide consumers with access to their information, an opt out option and disclosure of such an option, and disclosure of the original sources of information.

The nine data brokers involved with the FTC’s study included Acxiom, CoreLogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf, and Recorded Future. The Commission voted 4-0 in approval of the issuance of the report.

Companies: Acxiom Corporation; CoreLogic, Inc.; Datalogix Holdings, Inc.; eBureau LLC; ID Analytics, Inc.; Inome, Inc., d/b/a Intelius; PeekYou LLC; Rapleaf, Inc.; and Recorded Future Inc.

News: ConsumerProtection Privacy FederalTradeCommissionNews