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FTC Seeking Law to Regulate List and Data Brokers

4 Jun, 2014 By: Doug McPherson

WASHINGTON – A Federal Trade Commission (FTC) report asks Congress to enact new legislation to regulate marketers’ use of customer data through:

  • Creating a centralized mechanism for data brokers to identify themselves and describe how they collect and use data
  • Giving consumers access to their data and providing them with the ability to suppress it
  • Disclosing to consumers that inferences might be drawn about them based on their raw data
  • Providing “prominent notice” to consumers that they share their data and whom they share it with, giving consumers the ability to opt out

The report, “Data Brokers: A Call for Transparency and Accountability,” is scathing and says data brokers regularly and secretly collect sensitive data from consumers, share that information without restrictions and discriminate by assigning Latinos and African Americans to “sensitive categories.”

The report is based on the operations of nine companies that were required to share with the FTC details of how they operate: Acxiom, Corelogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf and Recorded Future.

“In the nearly two decades since the Commission first began to examine data brokers, little progress has been made to improve transparency and choice,” the report reads.

The report also puts data brokers and list brokers in the same classification. Tiffany George, a senior attorney in the FTC’s division of privacy and identity protection, said, “If your primary business is collecting data from various sources, you’re a data broker. We consider list brokers to be data brokers.”

FTC Commissioner Julie Brillcriticized marketers that treat people differently based on race, income and sexual orientation. “The profiles have the ability to not only rob us of our good name, but also to lead to lost economic opportunities, higher costs and other significant harm,” Brill wrote.

The Direct Marketing Association (DMA) responded to the report by stating that it supports “transparency and choice,” but added the proof of harm is lacking.

“This is the fourth study on data brokers they’ve done and, again, no harm has been shown,” says Peggy Hudson, senior vice president of government affairs for the DMA. “Now nine companies and hundreds of thousands of pages of information have been reviewed, and the misuses that are alleged to be out there are not occurring.”

In addition to legislation, the FTC recommends that data brokers voluntarily adopt practices such as collecting only the data they need, disposing of unused data, and refraining from collecting information from children and teens – all of which are already being done, Hudson says.

“Abuses are dealt with immediately and, if they’re not resolved, they are turned over to the FTC,” Hudson says.

Earlier this year, Senators Jay Rockefeller (D-WV) and Ed Markey (D-MA) introduced a bill that would allow people to opt out of having data brokers collect and sell information about them. Rockefeller has criticized the data broker industry for offering to sell lists of potentially vulnerable groups like “payday loan responders” and “genetic disease sufferers.”

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