FTC urges legislation to shed more light on data brokers

Data brokers that collect, analyze and sell massive amounts of information on the activities of consumers for marketing purposes operate with “a fundamental lack of transparency,” the Federal Trade Commission said in a report Tuesday.

The report is the result of a lengthy investigation of the data broker industry and it recommends that Congress enact legislation that requires the companies to disclose more information about themselves and the data they collect.

The legislation, the FTC says, should give consumers access to the information collected about them by data brokers, allow consumers to suppress information and inform consumers what inferences are being made about them.

Data brokers analyze data collected about consumers to make automated assumptions about them, the report said. While the conclusions may determine the products and services offered to a person, the report said, the conclusions can be mistaken.

Consumers are placed in data-driven social and demographic groups for marketing purposes with labels like “financially challenged,” “diabetes interest” and “smoker in household,” the report said.

“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,” FTC chairwoman Edith 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.”

Since the FTC investigation began in December 2012, companies in the industry have taken some steps to disclose more information about their activities and the information they collect on individuals. Acxiom, the largest data broker, set up a website that allows a consumer to see some of the information it has on people as well as some of the data-generated assumptions it makes about them, like what household goods he or she is most likely to buy.

The nine data brokers examined in the FTC report were Acxiom, CoreLogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf and Recorded Future.