FTC Urges Congress to Act on Data Broker Transparency

    Jun 10, 2014

    The Federal Trade Commission (FTC) on May 27 issued a report that found “a fundamental lack of transparency about data broker industry practices” and urged Congress to enact legislation “to address the lack of visibility into data broker practices and to give consumers much-needed control over their information.”

    The report, entitled “Data Brokers: A Call for Transparency and Accountability,” is the result of a study of nine brokers, representing a cross-section of the industry, undertaken by the FTC to shed light on that industry.

    FTC Chairman Edith Ramirez said in a press conference announcing the report that there are “serious privacy concerns with the data broker practices,” highlighting that fact that the brokers collect information from various online and offline sources, without consumers' knowledge, and create consumer profiles and sell them. 

    Once a data broker has obtained the consumer information, “it can be sold to other data brokers, who, in turn, will sell it to ever more data brokers and so on down the line,” Ramirez said. “The result is that, if a consumer wanted to trace the original source of a data broker's information about her, she would have to sift through a complex maze of companies.” According to the report, data brokers collect consumer data from extensive online and offline sources, largely without consumers’ knowledge.

    Among its recommendations to Congress, the FTC’s report suggests the creation of a centralized portal to require data brokers to identify themselves, describe their information collection and use practices, and provide links to access tools and opt-outs. Such legislation should also require the brokers to give consumers access to their data, including any sensitive data, at a reasonable level of detail; the ability to “opt-out” of data collection programs; and information about how they derive certain inferences from raw data. 

    For brokers that provide “risk mitigation” products, the FTC wants to require the consumer-facing company to tell consumers which data broker’s information the company relied on, and to give consumers the ability to correct inappropriate information.


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