FTC takes aim at data brokers

FTC takes aim at data brokers

Summary: Shadowy data brokers have turned online and offline data collection into a huge unregulated business. Now the U.S. Federal Trade Commission is demanding details about how these companies work.

TOPICS: Privacy

The United States Federal Trade Commission yesterday issued orders requiring nine data brokerage companies to provide the agency with information about how they collect and use data about consumers.  In a press release, the agency said it plans to "use the information to study privacy practices in the data broker industry."

Data brokers are companies that collect personal information about consumers from a variety of public and non-public sources and resell the information to other companies.  In many ways, these data flows benefit consumers and the economy; for example, having this information about consumers enables companies to prevent fraud.  Data brokers also provide data to enable their customers to better market their products and services.

The nine data brokers receiving orders from the FTC are:  1) Acxiom, 2) Corelogic, 3) Datalogix, 4) eBureau, 5) ID Analytics, 6) Intelius, 7) Peekyou, 8) Rapleaf, and 9) Recorded Future.

The 15-page orders, approved by a 5-0 vote of the commission and sent individually to each company, demand detailed, sworn reports from all nine companies about "the nature and sources of the consumer information the data brokers collect; how they use, maintain, and disseminate the information; and the extent to which the data brokers allow consumers to access and correct their information or to opt out of having their personal information sold."

The reports are due by February 1, 2013.

If those companies' names aren't familiar, it's because all of them work hard to fly under the consumer radar. But they represent very big business.

The New York Times reported last week on the size of the industry:

By now many Americans are learning that they are living in a surveillance economy. “Information resellers,” also known as “data brokers,” have collected hundreds to thousands of details — what we buy, our race or ethnicity, our finances and health concerns, our Web activities and social networks — on almost every American adult.


The consumer data trade is large and largely unregulated.

Companies and organizations in the United States spend more than $2 billion a year on third-party data about individuals, according to a report last year on personal identity management from Forrester Research, a market research firm. They spend billions more on credit data, market research and customer data analytics, the report said.

The FTC notes that data brokers "collect, maintain, and sell a wealth of information about consumers" with little accountability for the information, which they typically collect from public records and from other companies. As a result, the commission said:

[C]onsumers are often unaware of the existence of data brokers as well as the purposes for which they collect and use consumers’ data.  This lack of transparency also means that even when data brokers offer consumers the ability to access their data, or provide other tools, many consumers do not know how to exercise this right.  There are no current laws requiring data brokers to maintain the privacy of consumer data unless they use that data for credit, employment, insurance, housing, or other similar purposes. 

The FTC says it plans to use the responses it receives to "make recommendations on whether, and how, the data broker industry could improve its privacy practices."

The investigation comes in the wake of the apparent collapse of the Do Not Track standard, a self-regulation scheme which was scheduled to be completed by the end of 2012 but has been delayed into 2013 by squabbling at the W3C committee charged with developing the standard.

Topic: Privacy

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  • Shutdown -9

    "In many ways, these data flows benefit consumers and the economy; for example, having this information about consumers enables companies to prevent fraud."

    Manifestly false: the only companies who have defrauded me are:
    - the banks (money laundering, LIBOR fixing, ...)
    - the media (privacy violations, communications tapping, ...)
    - the Government (fiddling expenses (UK), ...)
    - IT and media corporations (overcharging to protect traditional revenues instead of passing on technology benefits)

    I haven't had a virus on my PC or a penetration my online banking account ... the rest has been going on for years.

    I say we take the efficient route, ask these companies to try to justify their existence ... and then shut them down after a brief review.
    • With respect...

      "the only companies who have defrauded me are..."

      Yes, but there are several billion other people on the planet, and their experiences may well vary.

      Though, personally, while I don't mind the FTC asking hard questions of the data brokers, I would like some of those questions to be about how they intend to protect the data they gather on us. Data aggregators are prime targets for computer criminals.
      P.F. Bruns
  • My preference

    I'd like to pay for all these 'free' services. Then I could abandon Hotmail et al, Instagram et al ... and become an 'ad-free zone'.
  • Hotmail offers paid, ad-free version

    If you want to drop all ads from Hotmail/Outlook.com, you can pay (I think) $20 a year for Hotmail Plus. The option is in Mail Settings.
    Ed Bott
    • yes, and it gives more options too.

      Ram U
    • Ed, that's a good option.

      Is my content on the paid version of Hotmail free from scanning for marketing or other financial purposes?

      I don't mind the adds as much as the data mining. It creeps me out that email content is scanned and that it can be used for commercial or political ends. I understand that Yahoo and Google do that. Am I correct?

      One thing that would make a difference to me is if anyone pays for information about me, I'd like to be notified of the basic details like "Who? What? When? Why? and How?"
      • Hotmail/Outlook messages are not scanned

        The ads you see on Hotmail and Outlook are generic. They are not contextual to the content of the message.
        Ed Bott
        • My ads on Yahoo and Gmail relate to my searches.

          Do you know if email content is data mined if I use Yahoo and Gmail?
          • Gmail yes, Yahoo I don't know

            Ed Bott
          • Microsoft considers that a differentiator

            Microsoft considers the fact that Gmail scans your mail and they don't a big sales point (particularly when selling to business - see Microsoft's "Gmail Man" video on YouTube).

            The ads on Hotmail or Outlook.com are there to pay the rent (which is why you can buy your way out of them), not to increase the span of information they know about you (which is the way Gmail looks at the world).
          • Gmail asked me...

            If I meant to include an attachment with an email I sent because I didn't include one but used the word attachment in the email.
  • turning a blind eye to the world?

    this is no different than the 'hot sheets' cold callers used to keep for the saps that were easy targets for phone calls asking for money for 'Policemen benevolent Fund' BS and such. the sheets would be sold among the boiler room managers as they moved around the country.

    its just been scaled up, into the million dollar zone. now they just sell your 'sappability' to the vendors.

    try this, can you ignore internet advertisements? if not, then get off the internet and walk to the store.
    Nancy Smith
    • Wow

      That is the most cynical and wrong-headed thing I've heard all year. Congratulations.
      Ed Bott
      • Cynical or not...

        Several years ago, somebody at a legitimate not-for-profit known to me made a typo in my last name and the solicitation got to my house. For years, until I moved to a different town,I received "charitable" solicitations from multiple sources (at least some definitely legitimate) to that same last name.

        My father died eleven years ago and no contributions have been made in his name since, as my mother made them in her own name. I've relocated twice since his death and have had my own mail forwarded, of course. In the last week, he received three solicitations in his name from organizations I doubt he would have contributed to--to my address. Impressively, phone solicitors from organizations I've never heard of have managed to follow my phone changes and I've had to tell two callers his status this fall.

        My mother died just over three years ago. Her "charitable" mail is keeping up with me, too.

        Yes, we have always been a generous family and I am continuing the tradition, so I guess I'll continue receiving mail.

        Merry Christmas, Ed. Please keep going for a long time.
    • Good time as any to post this ZDNet link

      "Summary: A study of iOS developers suggests data harvesting may be more serious than anticipated. Zuckerberg's number, anyone?

      This article dealt solely with Apple's iOS. And it wasn't just Path. Even if Apple has fixed this problem, it's clear that user data was collected without their express consent. The iOS app devs that used this design flaw to harvest user data know that said data are valuable.

      With regard to Android, how many users pay close attention to the the app permissions listed prior to installing an app from Google Play? And refuse to install apps because the requested permissions are too broad?

      This goes well beyond advertisements.
      Rabid Howler Monkey
    • Can I ignore Internet advertisements?

      You bet that I can. I can ignore all advertisements, whether they are on TV or on the Internet and or anyplace else. Because there will always be advertisements, I would rather have them be for things I am interested in, rather than generic advertisements for stuff I would never buy. Therefore I do not consider companies that get my search data an invasion of privacy, but a means of at least getting advertisements for things I might even buy.
  • Very intresting

    Good article. Very few can imagine just how much information we are talking about and how it is collected. Public records provide enormous sums of private data like your SS number and the whole gig is not really to clear from outside.
  • Shadowy Industry

    I don't really know much about this shadowy industry. I'd be curious to know how they go about collecting this data, exactly. I clicked on the NY Times link, and while the article focused on Acxiom, it didn't really give many details on how the data is collected.

    The Forrester link defines Consumer Intelligence and Personal Identity Management. I wonder if we'll see tools or companies formed that help us consumers manage our own identities? This link also shows a report I can buy for $499. Did you read this report, Ed?

    Regardless, I wonder if the FTC will create a report that summarizes their findings? I would be very interested in seenig what they come up with. I've been using Hotmail since before Microsoft purchased the company. I can honestly say I don't think I've ever paid attention to a single advertisement.
  • No defenders?

    The FTC(ie. Big Government) appears to be on the verge of making life more difficult for data brokers. Will nobody object?

    Adornoe? Baggins? Anyone?
    John L. Ries
    • @ No Defenders

      Okay, I'll jump in. While few outside the SQL world appreciate it's myriad ( $$$ ) benefits, the undeniable fact is that data collection, storage and sales has been around as a means for targeting advertising and product development since Stone age man first put his ear to the ground and heralded an oncoming earthquake. Whether the product of clothesline gossip, grocery store survey or information taken from public records, database information as an audience targeting aid is a critically valuable business tool when the price of a rented, accurate database ( think demographically targeted and area restricted mailing list ) weighs VERY favorably against the extremely high cost of any "shotgun" approach to customized media advertising.

      The sad reality here is that this is just another abject lesson in the never ending saga of why over funded, over staffed, incompetent, asleep-at-the-switch Federal agencies like the F.T.C. should be abolished. Why foist yet another multimillion Dollar "fact finding" parade on the American taxpayer when all the database collection information they could possibly want, and then some, is housed within the government's own intelligence community ? ? ?