FTC Investigates Data Brokers
By Chris May
PHILADELPHIA (CBS) -- Do you know what a data broker is? Chances are you don't. But data brokers know a lot about you. They collect, analyze, and sell personal information about you and millions of other people. Now, the government wants to know more about how your data is for sale.
When financial planner Rod Laurenz opened a new office, he used a credit card at a grocery store to buy baby wipes for cleaning. He was shocked the next day when he was online and saw new ads for the same baby wipes and other children's products -- ads targeted to him, even though Rod has no kids.
"It does lead to some concerns," Rod said. "How much do they know? And how much can then be determined about a person?"
The Federal Trade Commission also wants to know. The agency just launched an investigation into the data brokerage industry, demanding detailed data from nine major companies that collect consumer information online and off.
Maneesha Mithal of the FTC said, "We really wanted to look under the hood of these companies and see exactly who they're buying this information from, how much information they have, what they use it for, and who they share it with."
The FTC already knows that data includes what you buy, where you shop and where you drive. It might also include your health problems, who your social network friends are, if you pay your bills on time, or if you spent time in jail.
The FTC has three big concerns, Mithal said:
"First, is that data brokers are selling information that companies could use to deny people employment or credit or insurance," he explained.
Second, according to the agency, people consider it "creepy" to be followed online.
And finally, the agency is worried about identity theft, especially because a government report reveals data brokers have been targeted by hackers.
But the Direct Marketing Association says data brokers provide a valuable service and work hard to keep data secure.
"If you do something incorrectly, it's known," said Jerry Cerasale of the Direct Marketing Association. "It's out there in the blogs, your reputation is harmed, and companies will make immediate changes."
Rod doesn't mind ads when they target him correctly. He was glad marketers figured out he wasn't interested in baby products, and the ads changed to vacation destinations and luxury cars.
"Certainly, there's a benefit, if you're going to see ads, to have those ads be pertinent things you actually may be interested in or want to buy or learn about," Rod said.
What could emerge from the government investigation? The FTC could ask congress to regulate data brokers, giving consumers more protections and opportunities to opt out of being tracked.
For more info, visit: www.ftc.gov/opa/2012/12/databrokers.shtm
