Data Brokers: “Off the Radar” – FTC Calls for Greater Oversight

by Cozen O'Connor
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A report recently released by the Federal Trade Commission (FTC) concludes that data brokers currently operate so far below the radar screen that most consumers are unable to exercise any real control over the collection and use of their personal information. In addition to shedding light on the data broker marketplace and its practices, the report also provides recommendations to Congress about legislation that could better protect consumers and begin to regulate this poorly understood industry.

Data Brokers: A Call for Transparency and Accountability is based on an in-depth study of nine leading data brokers, companies that collect consumers’ personal information and resell or share that information with others in the form of marketing, risk management, or people search products. Combined, data brokers currently collect and store billions of bits of data about nearly every consumer in the United States. According to the FTC, “Because few consumers know about the existence of data brokers, meaningful notice from the data source provides an important opportunity for consumers to learn that their data is shared with data brokers and how to exercise control over the use of their data.”

In order to promote transparency, the Commission recommended that Congress consider legislation:

- Enabling consumers to easily identify which data brokers may have data about them and where they should go to access such information and exercise opt-out rights.

- Requiring data brokers to clearly disclose to consumers that they not only use raw data (such as a person’s name, address, age, and income range), but that they also use data they derive with that information.

- Requiring data brokers to disclose the names and/or categories of their sources of data, so that consumers are better able to determine if they need to correct their data with an original public record source; require data brokers to allow consumers to correct erroneous information in their private databases.

- Mandating that consumer-facing entities to provide a prominent notice to consumers that they share consumer data with data brokers and provide consumers with choices about the use of their data, such as the ability to opt-out of sharing their information with data brokers.

More generally, the Commission called on the data broker industry to adopt several best practices:

- Implement privacy-by-design, considering privacy issues at every stage of product development.

- Refrain from collecting information from children and teens, particularly in marketing products.

- Take reasonable precautions to ensure that downstream users of their data do not use it for eligibility determinations or for unlawful discriminatory purposes.

Cozen O’Connor’s Health Law Informer will continue to monitor Congress and the data broker industry’s response to the FTC report.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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