Federal Trade Commission Launches Investigation into Data Brokers’ Practices

by   |   December 19, 2012 7:13 pm   |   0 Comments

The Federal Trade Commission heated up the debate over the collection of personal information online on December 18 with an announcement that it had begun an investigation into nine data brokerage companies.

The FTC said it delivered 15-page administrative subpoenas to each of the data brokers requiring specifics as to how they collect and use personal information and whether each company allows consumers to access and correct their individual records.

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The nine companies that received the FTC directives were Acxiom, Corelogic, Datalogix, eBureau, ID Analytics, Intelius, Peekyou, Rapleaf and Recorded Future.

This year has seen an uptick in regulatory interest regarding the policies of companies that collect, analyze and resell consumer data. In February, the Obama administration issued an online bill of rights for consumers. In March, the FTC released a report urging data brokers to better disclose the nature and extent of their information collection practices.

In July, Reps. Edward Markey (D.-Mass.) and Joe Barton (R.-Tex.) sent letters to  data broker companies (including some that overlap with the  nine companies targeted by the FTC) requesting similar types of disclosures. In November, Markey and Barton posted online the responses they received from the companies and publicly expressed their disappointment in what they labeled as evasive answers.

Sen. Jay Rockefeller, a West Virginia Democrat and head of the Senate Commerce Committee, launched an investigation into a list of companies that gather personal data in October. “I applaud the FTC’s decision to join me in taking a hard look at the data broker industry,” Rockefeller said in a statement. “American consumers deserve to know who is collecting information about them.”

But the latest FTC inquiry is the largest and most meaningful to date. For one, it is demanding more detailed information than any previous requests. Secondly, the FTC may have better results in extracting the information from data brokers, since the FTC does not publicly release the results of its investigations.

The companies identified by the FTC in their inquiry span various industries and data sources. Intelius specializes in background checks and people-searches; Acxiom runs customer databases for financial institutions, retailers, and auto manufacturers; and Peek-You monitors social media activity to determine consumer sentiment.

Industry organization such as the Direct Marketing Association have stated that increased governmental regulation of data collection could hinder economic growth and prevent innovation.

FTC chairman Jon Leibowitz acknowledged last week at a congressional hearing that data brokers can benefit consumers but also termed them “invisible data catchers” that need to better disclose the nature and scope of their activities.

The FTC previously has pushed for data brokers to construct a centralized website where consumers can learn how their information is being used and correct any inaccuracies. The industry has characterized such a solution as impractical and insecure.

Data brokers are not currently required by law to disclose to consumers what information they are collecting, which may include data on personal finances, shopping habits, health status, race, ethnicity and social media activities.

Acxiom is one of the companies that has been the subject of inquiries from the FTC as well as members of Congress. In an interview with Data Informed in September, Jennifer Barrett Glasgow, Acxiom chief privacy officer, said that companies that collect consumer data need to explain how their practices benefit both businesses and consumers.

“Companies generally want to maximize their use of the data to make the information valuable for both parties,” Barrett Glasgow said at the time, adding such benefits cannot happen if a data-collection initiative “feels plain-old creepy.”

Alec Foege is a writer and independent research professional based in Connecticut, and author of the upcoming book The Tinkerers: The Amateurs, DIYers, and Inventors Who Make America Great. He can be reached at alec@brooksideresearch.com.


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