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U.S. Senate Says Data Brokers “Operate Under a Veil of Secrecy”

Senate commerce committee hearing last week revealed that data brokers are selling increasingly sensitive information, including lists of rape victims sold for 7.9 cents per name, and genetic disease sufferers. Companies can use those details to change what offers they make to consumers and change the prices they charge for products.

Companies that create data dossiers on consumers are tapping new technologies to unearth ever more intimate information despite intensifying regulatory scrutiny of the multibillion-dollar data broker industry.  In the past 18 months, US lawmakers and federal regulators have launched a series of investigations to uncover how data brokers collect, track, trade and use information about people. Yet no new regulations have emerged to govern the fast-growing business of profiling individuals.

JDRockefeller Head Shot_ContextChairman John D. (Jay) Rockefeller IV , U.S. Senate Committee on Commerce, Science, and Transportation in his opening statements said:  “… several of the largest data brokers – Acxiom, Epsilon, and Experian – are continuing to resist my oversight.  To date, they have not given me complete answers about where they get their consumer data, and to whom they sell it.  I am putting these three companies on notice today that I am not satisfied with their responses and am considering further steps I can take to get this information. And I want to assure them that the oversight efforts this Committee has started will continue.”

The report examined practices of nine companies, including Acxiom, Datalogix, and Epsilon.  Facebook entered into a partnership with those three companies in April to build a new advertising tool which combined “what Facebook already knows about people’s friends and ‘likes’ with vast troves of information from third-party data marketers.” In September, Acxiom rolled out a new product that knew who you were on the web even if you used a different name. Another data broker examined as part of the report was Rapleaf, a reviled company that’s still in business.

The report also stated that data brokers “operate under a veil of secrecy.”  According the report, the tight-lippedness from Acxiom and several other firms questioned only contributes to the aura of mystery surrounding the online data trade.  The Senate commerce committee, chaired by Sen. Jay Rockefeller, finds the industry’s secretive nature troublesome not only because it’s invasive and well, generally sketchy, but also because there’s no check on whether people’s marketing profiles are being used legitimately.  In other words, consumers are at risk of being exploited.  Rockefeller wants to make sure our data isn’t being used for things like employment screening and discriminatory pricing, or being sold to fraudsters and predators.

The report also includes a slide that shows what data brokers see when they look at people who are struggling financially:

2013-12-28 Vulnerable Populations

Sources:  Financial Times – Valleywag.gawker.com – Senate commerce committee hearing

BIIA recommends to read the responses from industry members.

Tony Hadley, Senior Vice President of Government Affairs and Public Policy, Experian (click on the link to read the full testimony) spoke about sharing data responsibly by carefully safeguarding compliance with all privacy and consumer protection laws and industry self-regulatory standards, advancing and observing industry best practices, and establishing and monitoring adherence to Experian’s corporate policies and practices.

Jerry Cerasale, Senior Vice President of Government Affairs, Direct Marketing Association (dma)  (click on the link to read the full testimony) provided an industry point of view concerning the value of marketing data for the US economy, the responsible collection and use of consumer data, consumer, the DMA Guidelines for Ethical Business Practice and consumer education.

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