Lawmakers Disappointed in Results from Data Brokers Privacy Inquiry

by   |   November 19, 2012 12:24 pm   |   0 Comments

Members of Congress examining consumer privacy policies are dissatisfied with the responses they received from nine so-called data broker companies after issuing letters requesting additional information and transparency regarding their data-collecting activities.

A bipartisan group of lawmakers, led by Rep. Edward J. Markey (D.-Mass.) and Rep. Joe Barton (R.-Texas), who helm the Congressional Bi-Partisan Privacy Caucus, sent queries in July to nine companies in July asking for details regarding their policies and practices regarding privacy protection. On Nov. 8, Rep. Markey posted the company’s responses on his congressional website.

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The companies contacted include Acxiom, Epsilon (Alliance Data Systems), Equifax, Experian, Harte-Hanks, Intelius, Fair Isaac, Merkle, and Meredith Corp.

The lawmakers issued a joint statement characterizing the data brokers’ responses as offering “only a glimpse of the practices of industry that has operated in the shadows for years.”

The House members noted that only one of the nine companies contacted, Acxiom, accepted the categorization of its business as data brokering and provided details on the numbers of consumers who request access to information being gathered. They said they would “push for whatever steps are necessary to make sure Americans know how this industry operates and are granted control over their own information.”

The majority of the companies gave cordial if opaque responses. Equifax, the credit consumer reporting bureau, stated in its response that it “is not a data broker.” The company stated that it “operates almost exclusively in a heavily and closely regulated environment that is altogether inconsistent with a data broker environment.”

Harte-Hanks, a direct-marketing services company best-known for its PennySaver advertising fliers, stated in its response that it “does not own a database which describes consumers, represents consumer profiles or contains consumer dossiers which we then compile, sell or license” and therefore does not consider itself a data broker.

Within the same letter, however, Harte-Hanks acknowledged that it “sometimes receive[s] consumer information made available through the social network providers” at the request of its clients. It also provides its clients with lead generation services “primarily to cross-sell to existing customers.”

Meredith Corp., the Midwestern-based publishing giant, explained in its response that it operates a “commercial list rental and data licensing business” through a subsidiary, but that the business “accounts for significantly less than 1 percent of  Meredith’s revenue and only four employees are dedicated to this business.”

The lawmakers’ statement also noted that while the companies provided scant information about how information on consumers they collect is used or analyzed, they did reveal a wide range of sources from which the information is culled. Sources included telephone directories, financial institutions, government agencies, and information provided directly by consumers. Social media networks such as Facebook and LinkedIn were also noted as sources mined for consumer data.

However, the members of Congress argued, few consumers are aware that their personal information is being gathered and analyzed by data brokers, and even fewer make attempts to access their information to confirm whether it is accurate.

Axciom, one of the nation’s largest database marketing concerns, revealed in its response to the lawmakers’ letter that over the last two years around 77 people per year requested access to their personal information being gathered by the company, out of some 190 million consumers whose information is being collected.

Another company contacted, Merkle, explained in its response that it “does not have the legal authority to process such requests directly from consumers” since it primarily handles data owned by third parties.

Epsilon and Experian each said it uses consumer data from a number of sources from public and private sources to provide marketing services so that retailers, media companies, charities and political organizations magazines and charities can accurately target messages to interested consumers.

The disappointment expressed by Rep. Markey and his congressional colleagues reveals the difficulty legislators have encountered when trying to determine the range and impact of growing levels of personal data collection.

The congressional inquiry came on the heels of a privacy report issued by the Federal Trade Commission earlier this year that recommended legislation to provide consumers with more say about how their personal information is used and distributed.

In a typical response that downplayed the lawmakers’ concerns about privacy, Fair Isaac, known for its FICO score that many mortgage lenders and credit issuers use to determine the creditworthiness of consumers, explained in its response that it did not create the databases it uses to build its analytic models. Instead, the company explained, “We provide models and tools to assist our clients to make better business decisions.”

Intelius, an online service for consumers to search compilations of public records and other generally available data, also asserted it was not a data broker because it does not develop or market profiles.  Data included in searches include phone numbers, addresses, birthdates, household members, as well as criminal records and social media. The company stated that its TrueRep.com service allows individuals and businesses to review information about them that appears on Intelius websites.

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. Follow him on Twitter at @alecfoege.


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