Data brokers outpace regulators as they mine new technologies

December 22, 2013 5:01 pm

Data brokers outpace regulators as they mine new technologies

By Emily Steel in New York

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.

“This is like a train that is just going and going and going and nobody is at the controls except for the people who want it to run, run, run without knowing what the implications are,” said Joseph Turow, a professor at the University of Pennsylvania’s Annenberg School for Communication.

A 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.

“One of the key characteristics of modern data brokers is a lack of restraint,” said Pam Dixon, executive director of the World Privacy Forum. “The degree to which no piece of data are sacred is evident in the reams of sensitive consumer data compiled, scored, circulated, and sold.”

Acxiom recently launched a new product that offers marketers the chance to exploitthe most detailed consumer profiles ever. The system pulls in data from a wide range of sources then makes that one profile available for targeting and personalising ads on the web, mobile and eventually television. Previously, companies created separate profiles about individuals based on each of the devices and internet browsers a person used.

For years, data brokers have operated in the shadows. The vast and largely unregulated industry includes hundreds of companies with names that most consumers have never heard of, such as Acxiom, Experian and Epsilon.

These companies search through government records, purchase histories, social media profiles and hundreds of other sources to construct profiles that include thousands of data points. Those details range from a person’s income, political affiliation and marital status to their type of credit card and health conditions. These companies know whether a person suffers from depression or smokes cigarettes, what he or she reads, weighs and how many whiskey drinks they have consumed in the past 30 days.

In the US, no overarching federal privacy laws regulate the tracking and sale of personal information. Specific regulations govern the use of information collected about children or information that could be used to make decisions regarding credit, employment, insurance or housing. Consumers, meanwhile, do not have the right to know what information is collected about them. They often cannot opt out of the tracking or use of those details.

While no new regulations have emerged, legislators continue to call for more scrutiny of the business. Senator Jay Rockefeller, chairman of the Senate commerce committee, last week lambasted the collection and use of data about financially vulnerable individuals. He also said that he was putting Acxiom, Experian and Epsilon “on watch” for failing to answer questions about their business practices.

A report from the US Government Accountability Office found that current laws do not address new technologies, such as mobile devices, and the robust marketplace for this information. The GAO recommended that congress should “consider strengthening the consumer privacy framework”.

Industry executives argue that self-regulation is the answer.

Whether new regulations will pass remains to be seen. Past attempts to introduce more robust digital privacy regulations have failed to gain traction.