The Federal Trade Commission Tuesday released a report on consumer data brokers that recommends Congress consider enacting legislation to make data broker practices more visible to consumers and to give consumers greater control over their personal information. The study conducted by the FTC that led to the report included input from skip tracers.
The report, “Data Brokers: A Call for Transparency and Accountability” is the result of a study of nine data brokers, representing a cross-section of the industry, undertaken by the FTC to shed light on the data broker industry. Data brokers obtain and share vast amounts of consumer information, typically behind the scenes, without consumer knowledge. Data brokers sell this information for marketing campaigns and fraud prevention, among other purposes, including skip tracing in the ARM industry.
The FTC sent orders to the nine brokers in December 2012, and the list included skip trace information providers in the debt collection space.
The FTC said that although consumers benefit from data broker practices which, for example, help enable consumers to find and enjoy the products and services they prefer, data broker practices also raise privacy concerns.
“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,” said FTC Chairwoman Edith Ramirez. “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.”
The report finds that data brokers collect and store billions of data elements covering nearly every U.S. consumer. Just one of the data brokers studied holds information on more than 1.4 billion consumer transactions and 700 billion data elements and another adds more than 3 billion new data points to its database each month.
To help rectify a lack of transparency about data broker industry practices, the FTC encourages Congress to consider enacting legislation that would enable consumers to learn of the existence and activities of data brokers and provide consumers with reasonable access to information about them held by these entities.
For brokers that provide “risk mitigation” products, legislation should:
- When a company uses a data broker’s risk mitigation product to limit a consumers’ ability to complete a transaction, require the consumer-facing company to tell consumers which data broker’s information the company relied on;
- Require the data broker to allow consumer access to the information used and the ability to correct it, as appropriate.
For brokers that provide “people search” products, legislation should:
- Require data brokers to allow consumers to access their own information, opt-out of having the information included in a people search product, disclose the original sources of the information so consumers can correct it, and disclose any limitations of an opt-out feature.
For data brokers that provide marketing products, Congress should consider legislation to:
- Centralized Portal. Require the creation of a centralized mechanism, such as an Internet portal, where data brokers can identify themselves, describe their information collection and use practices, and provide links to access tools and opt- outs;
- Access. Require data brokers to give consumers access to their data, including any sensitive data, at a reasonable level of detail;
- Opt-Outs. Require opt-out tools, that is, a way for consumers to suppress the use of their data;
- Inferences. Require data brokers to tell consumers that they derive certain inferences from from raw data;
- Data Sources. Require data brokers to disclose the names and/or categories of their data sources, to enable consumers to correct wrong information with an original source;
- Notice and Choice. Require consumer-facing entities – such as retailers – to provide prominent notice to consumers when they share information with data brokers, along with the ability to opt-out of such sharing; and
- Sensitive Data. Further protect sensitive information, including health information, by requiring retailers and other consumer-facing entities to obtain affirmative express consent from consumers before such information is collected and shared with data brokers.