While there is no statutory definition for “data brokers,” the Federal Trade Commission (FTC) has defined this term to include “companies that collect information, including personal information about consumers, from a wide variety of sources for the purpose of reselling such information to their customers for various purposes, including verifying an individual’s identity, differentiating records, marketing products, and preventing financial fraud.”1 This report relies on the FTC definition of data broker, and focuses specifically on the collection and sale of consumer information for the purpose of marketing.
Four basic questions how the data broker industry operates
- What data about consumers does the data broker industry collect?
- How specific is this data?
- How does the data broker industry obtain consumer data?
- Who buys this data and how is it used?
Our Answers
Data brokers collect a huge volume of detailed information on hundreds of millions of consumers. Information data brokers collect includes consumers’ personal characteristics and preferences as well as health and financial information. Beyond publicly available information such as home addresses and phone numbers, data brokers maintain data as specific as whether consumers view a high volume of YouTube videos, the type of car they drive, ailments they may have such as depression or diabetes, whether they are a hunter, what types of pets they have; or whether they have purchased a particular shampoo product in the last six months;
Data brokers sell products that identify financially vulnerable consumers.
Some of the respondent companies compile and sell consumer profiles that define consumers in categories or “score” them, without consumer permission or knowledge of the underlying data. A number of these products focus on consumers’ financial vulnerability, carrying titles such as “Rural and Barely Making It,” “Ethnic Second-City Strugglers,” “Retiring on Empty: Singles,” “Tough Start: Young Single Parents,” and “Credit Crunched: City Families.” One company reviewed sells a marketing tool that helps to “identify and more effectively market to under-banked consumers” that the company describes as individuals including “widows” and “consumers with transitory lifestyles, such as military personnel” who annually spend millions on payday loans and other “non-traditional” financial products. The names, descriptions and characterizations in such products likely appeal to companies that sell high-cost loans and other financially risky products to iii populations more likely to need quick cash, and the sale and use of these consumer profiles merits close review;
Data brokers sell products that identify financially vulnerable consumers.
Some of the respondent companies compile and sell consumer profiles that define consumers in categories or “score” them, without consumer permission or knowledge of the underlying data. A number of these products focus on consumers’ financial vulnerability, carrying titles such as “Rural and Barely Making It,” “Ethnic Second-City Strugglers,” “Retiring on Empty: Singles,” “Tough Start: Young Single Parents,” and “Credit Crunched: City Families.” One company reviewed sells a marketing tool that helps to “identify and more effectively market to under-banked consumers” that the company describes as individuals including “widows” and “consumers with transitory lifestyles, such as military personnel” who annually spend millions on payday loans and other “non-traditional” financial products. The names, descriptions and characterizations in such products likely appeal to companies that sell high-cost loans and other financially risky products to iii populations more likely to need quick cash, and the sale and use of these consumer profiles merits close review;
Data brokers operate behind a veil of secrecy.
Data brokers typically amass data without direct interaction with consumers, and a number of the queried brokers perpetuate this secrecy by contractually limiting customers from disclosing their data sources. Three of the largest companies – Acxiom, Experian, and Epsilon – to date have been similarly secretive with the Committee concerning their practices, refusing to identify the specific sources of their data or the customers who purchase it. Further, the respondent companies’ voluntary policies vary widely regarding consumer access and correction rights regarding their own data – from virtually no rights to the more fulsome policy reflected in the new access and correction database developed by Acxiom.
What Data are Collected from Data Brokers?
Much of the information data brokers collect is demographic, such as consumers’ names, addresses, telephone numbers, e-mail addresses, gender, age, marital status, presence of and ages of children in household, education level, profession, income level, political affiliation, and information about their homes and other property. In addition, data brokers collect many other categories of information about individuals. Some examples include:
- Consumer purchase and transaction information, including whether a purchase was made through a catalogue, online, or in-store, as well as the frequency of such purchases;
- Consumers’ available methods of payment, including type of credit card and bankcard issuance date;
- Purchase of automobiles, including makes and models of cars purchased or whether a consumer prefers new or used cars;
- Health conditions. One company collects data on whether consumers suffer from particular ailments, including Attention Deficit Hyperactivity Disorder, anxiety, depression, diabetes, high blood pressure, insomnia, and osteoporosis, among others; another keeps data on the weights of individuals in a household.63 An additional company offers for sale lists of consumers under 44 different categories of health conditions, including obesity, Parkinson’s disease, Multiple Sclerosis, Alzheimer’s disease, and cancer, among others;64
- Social media activity, including the number of a consumer’s friends and followers, and whether they view YouTube videos.
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