The Federal Trade Commission called on U.S. lawmakers Tuesday to protect consumers against the mostly unmonitored collection and sharing of their data over the Internet, including their Web surfing habits and personal tastes.
The FTC is seeking tools and authority to see what so-called “data brokers” and collectors have on consumers, and suppress or modify this information if necessary.
The agency also said that little-known data brokers, companies that analyze and sell massive amounts of consumer information for marketing purposes, need to be more transparent to consumers themselves.
The FTC’s 110-page report about the industry found a profound and “fundamental lack of transparency”.
“You may not know them, but data brokers know you,” Edith Ramirez, chairwoman of the F.T.C., said in a conference call.
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, the FTC said.
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.
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,” Ramirez said in a statement.. “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.
Among the report’s findings:
- Data brokers collect consumer data from extensive online and offline sources, largely without consumers’ knowledge, ranging from consumer purchase data, social media activity, warranty registrations, magazine subscriptions, religious and political affiliations, and other details of consumers’ everyday lives.
- Consumer data often passes through multiple layers of data brokers sharing data with each other. In fact, seven of the nine data brokers in the Commission study had shared information with another data broker in the study.
- Data brokers combine online and offline data to market to consumers online.
- Data brokers combine and analyze data about consumers to make inferences about them, including potentially sensitive inferences such as those related to ethnicity, income, religion, political leanings, age, and health conditions. Potentially sensitive categories from the study are “Urban Scramble” and “Mobile Mixers,” both of which include a high concentration of Latinos and African-Americans with low incomes. The category “Rural Everlasting” includes single men and women over age 66 with “low educational attainment and low net worths.” Other potentially sensitive categories include health-related topics or conditions, such as pregnancy, diabetes, and high cholesterol.
- Many of the purposes for which data brokers collect and use data pose risks to consumers, such as unanticipated uses of the data. For example, a category like “Biker Enthusiasts” could be used to offer discounts on motorcycles to a consumer, but could also be used by an insurance provider as a sign of risky behavior.
- Some data brokers unnecessarily store data about consumers indefinitely, which may create security risks.
- To the extent data brokers currently offer consumers choices about their data, the choices are largely invisible and incomplete.