FTC Seeking Information From 9 Data Brokers in Industry Probe

By: Ifrah Law

On December 18, 2012, the Federal Trade Commission issued orders requiring nine data brokerage companies to provide the agency with information on how they collect data from consumers and use it. The nine companies asked to provide this data to the FTC include Acxiom, Datalogix, Intellius and Peekyou.

Data brokers are companies that collect personal information about consumers from a variety of sources, both public and non-public, and then package the information and sell it to companies. As the FTC noted in its announcement, in many ways this data can benefit consumers and the economy by enabling companies to prevent fraud or allowing customers to see ads that interest them.

However, the FTC seems concerned that much of the data brokerage industry operates unregulated. No current laws require data brokers to maintain the privacy of an individual’s data unless it is used for employment, credit, insurance, housing, or another similar purpose. Some estimates indicate that these data brokers have several thousand details on the majority of adults in the United States.

The FTC is specifically seeking details about:

1. The nature and sources of the consumer information that data brokers collect.
2. How data brokers use, maintain, and disseminate the information they collect.
3. 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 FTC said that it will use the responses to prepare a study and to make recommendations on whether and how the industry could improve its privacy practices.

The FTC has already called on Congress to address data brokers’ practices through legislation. In March, the FTC advocated for legislation to “address the invisibility of, and consumers’ lack of control over, data brokers’ collection and use of consumer information.” The FTC has also urged Congress to pass a law that would require data brokers to let individuals examine the data contained in files on them, similar to the way that federal laws allow for consumers to get free credit reports every year.

In July, Rep. Edward Markey (D-MA) and Rep. Joe Barton (R-TX), co-chairs of the Bipartisan Congressional Privacy Caucus, opened an investigation into the practices of the industry. The Privacy Caucus has expressed concerns that many Americans do not know how the industry operates and that controls may be lacking for individuals over their own information.

In October, Sen. John D. Rockefeller IV (D-WV) opened his own investigation into the data broker industry. Rockefeller said he was struck by the amount of personal, medical, and financial information that could be collected and sold.

This week’s announcement provides further notice that the FTC has intensified its scrutiny of the data brokerage industry. Companies in the data compilation business should continue to monitor their practices to ensure that they are complying with all regulations and should stay abreast of any forthcoming changes in regulations and laws.