Data Broker Industry Operates Behind 'Veil of Secrecy,' Rockefeller Report Says

By Alexei Alexis  

Dec. 18 --The data broker industry operates behind a "veil of secrecy," collecting and selling vast amounts of sensitive consumer information with limited regulatory controls or public awareness, according to a report released Dec. 18 by the staff of Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.).

The report, which is the product of a committee probe launched last year, calls for continued "vigorous" oversight of the industry.

"While there are laws on the books that protect the privacy of Americans' health and financial information, they do not cover data brokers' marketing activities--and I want to assure these data brokers that the oversight efforts this Committee has started will continue," Rockefeller said in a Dec. 18 statement.

The report was unveiled in advance of a committee hearing on the issue the same day. Witnesses included Jessica Rich, director of the Federal Trade Commission's Bureau of Consumer Protection.

The FTC expects to release its own report on the data broker industry in "coming months," Rich said.

Data brokers collect financial, health, and other data on hundreds of millions of consumers, and their practices are largely unregulated and "invisible" to the general public, Rockefeller's staff said. Information gathered by the industry is used to create marketing products that group consumers in categories, some of which focus on a person's financial vulnerability, according to the committee report.

Report 'Disappointing.'

Direct Marketing Association President and Chief Executive Officer Linda A. Woolley said in statement to Bloomberg BNA that it is "disappointing" that the report fails to recognize "the tremendous value provided to consumers and the U.S. economy by the data-driven marketing industry."

Rockefeller initiated a committee investigation in October 2012 . Targets of the probe--Equifax Inc., Epsilon, Acxiom Corp., Experian Plc, TransUnion LLC, Reed Elsevier NV, Spokeo, Datalogix and Rapleaf--were asked to respond to questions about the kind of consumer information they collect, how it is obtained and the type of entities that purchase and use it.

The investigation was expanded in September to obtain details from operators of popular websites such as About.com, Health.com, Bankrate.com, Finance.youngmoney.com and Investopedia.com . The move was triggered by concerns that such sites might be feeding data brokers with consumer information gathered through surveys, sweepstakes and questionnaires.

At the committee hearing, Rockefeller said that some companies in the data broker industry have responded positively to his oversight efforts. However, he said, several of the largest data brokers have been resistant.

"To date, they have not given me complete answers about where they get their consumer data, and to whom they sell it," he said, adding that he was considering further steps.

By Alexei Alexis  

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com


Full text of the staff report, "A Review of the Data Broker Industry: Collection, Use, and Sale of Consumer Data for Marketing Purposes," is available at http://op.bna.com/der.nsf/r?Open=sbay-9ehtxt.  

Further information on the hearing, "What Information Do Data Brokers Have on Consumers, and How Do They Use It?," including an archived webcast and links to the prepared testimony of witnesses, is available at http://www.commerce.senate.gov/public/index.cfm?p=Hearings.