Today, the Federal Trade Commission (FTC) released a long-awaited report on the data-broker industry. In the report, the FTC characterized data brokers as operating with a “fundamental lack of transparency.” The report, which is the culmination of an investigation begun in December 2012, does not call for any FTC enforcement action, but does recommend that Congress act to give consumers more control over how their data is collected and used.
The report specifically recommends the creation of an online portal where consumers can view what data is being collected, and “opt out” of data collection or correct mistakes in their data profiles. The legislative recommendations would require data brokers to disclose what raw data they use to draw inferences about a consumer, and would require consumer-facing sources to disclose the names of brokers to which they supply their customers’ data.
While criticizing data brokers for collecting personal information from a number of sources, both online and offline, and largely without consumers’ knowledge, the report does acknowledge that consumers do benefit from many of the purposes for which brokers collect such data. In the same report, however, the FTC states that the collection and use of the data also pose several risks to consumers (the FTC provides an example wherein data on a consumer’s interests (motorcycling) may cause his or her insurance company to increase his or her automotive insurance premiums or deny them coverage, without the consumer knowing the reason for such increase/denial).
In a statement following the release of the report, FTC Chairwoman Edith Ramirez said that “[t]he 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… 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.”
In addition to making legislative recommendations, the report calls on data brokers to adopt the best-practice principles contained in the FTC’s previous Privacy Report issued two years ago.