Brokers use ‘billions’ of data points to profile Americans

Brokers use ‘billions’ of data points to profile Americans

By Craig Timberg, Tuesday, May 27, 8:59 AM

Data brokers that quietly gather billions of pieces of data on Americans should be required to operate more openly, so that those categorized as “financially challenged” or possibly suffering from serious medical conditions have the ability to check and challenge those characterizations, a federal report said Tuesday.

The data broker industry, which is lightly regulated, develops profiles of hundreds of millions of people using online and offline sources, such as magazine subscriptions, visits to Web sites, posting on social networking services and purchase histories, the Federal Trade Commission reported. The information sold to marketers can list race, income and homeownership.

Categories used to label consumers include “Bible Lifestyle,” “Smoker in Household” and “New Age/Organic Lifestyle,” the report said. One category, called “Rural Everlasting,” describes people of retirement age who have “low educational attainment and low net worths.”

FTC officials, who based their report on documents gathered by issuing subpoenas to nine data brokers in December 2012, expressed concern about how the data is collected, how it’s used and the potential for making errors that are kept secret from the consumers themselves.

“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, and more,” said FTC Chairwoman Edith Ramirez. “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.”

No evidence of illegal activity was described in the report, though the FTC cited the potential for abuse when data brokers gather information about health-related issues. Among the health data collected, the report said, was whether a household contained an allergy sufferer or a person concerned about weight loss or cholesterol. One category was “Diabetes Interest.”

Stuart P. Ingis, general counsel for the Direct Marketing Association, which represents nearly 2,000 companies that collect and distribute consumer data, said that the FTC investigation failed to reveal actual cases of abuse of personal information. “You’d think if there was a real problem, they’d be able to talk about something other than potential.”

The report included several legislative proposals intended to help Americans learn what information has been gathered about them and to correct errors. Consumers, under the FTC proposals, also would have the right to opt-out of data gathering about themselves. Such information is widely used by digital advertisers to improve the targeting of their marketing messages. Officials from that industry have long said that such advertising pays for the free services — such as e-mail, videos and social networking — that consumers have come to expect.

Ingis said that the FTC’s proposals, such as a requirement for a centralized portal for consumers who want to know what information data brokers collect, are unnecessary and cumbersome. “I’m not sure that there’s a problem that requires a law here,” Ingis said.

But FTC Commissioner Julie Brill urged Congress to act, and for Americans to learn more about how their data is collected and used. “We want to provide more tools and more options for how their information is used in the data broker ecosystem,” she said. “Consumers can’t manage this process by themselves. It’s too big. It’s too complex. There are too many moving parts.”

The issue of data collection has generated increasing attention in recent years — and especially since former National Security Agency contractor Edward Snowden revealed how information collected by the private sector gets vacuumed up by intelligence agencies. The White House issued a report on the collection and use of Big Data on May 1.

Yet privacy advocates see little hope of legislative action on Capitol Hill. “There’s no political pressure on Congress, really, to act. The data broker lobby is in­cred­ibly powerful,” said Jeffrey Chester, executive director of the Center for Digital Democracy.

He noted that political campaigns routinely use information collected by data brokers to tailor their election and fund-raising messages to targeted groups. “They’re not going to vote against their political self-interest.”


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