Federal watchdog urges
curbs on data brokers
This IBM graphic depicts how the planet seems to be growing a central nervous system based on big data.
George Orwell could scarcely have imagined that his sci-fi novel, set in 1984, would come true a mere 30 years later.
But according to a Federal Trade Commission report on “big data” released this week, it apparently has.
In Data Brokers: A call for transparency and accountability, the government watchdog lays out in frightening detail how much is being collected about all of us and the uses to which it is being and could be put.
The FTC unanimously calls for legislation to give consumers the right to learn about the existence and activities of data brokers and give them access to their data.
“The need for consumer protections in this area has never been greater,” the report concludes.
The exhaustive 110-page report, the result of a two-year study, lays bare the inner workings of an industry that does not seek the limelight. In fact, it has little interaction with consumers at all.
“Data brokers acquire a vast array of detailed and specific information about consumers; analyze it to make inferences about consumers, some of which may be considered quite sensitive; and share the information with clients in a range of industries. Much of this activity takes place without consumers’ knowledge,” the commission says.
Well, now you do.
This graphic from the FTC report shows how data is collected from multiple sources. Click image to enlarge.
“This report attempts to provide a window into data brokers’ collection and use of consumer information and makes recommendations to enhance transparency and consumer control,” the report concludes.
“It also raises concerns about the collection of sensitive data about consumers and the development of labels and categories that could be used to target and potentially discriminate against consumers.”
What makes the revelations more urgent is the sheer amount of data from so many different sources – online and elsewhere – that can now be combined and stored forever.
In its findings section, the report details the characteristics of the modern industry:
“Data brokers collect and store a vast amount of data on almost every U.S. household and commercial transaction. For example, one of the nine data brokers [in the study] has 3000 data segments for nearly every U.S. consumer.”
Data brokers infer consumer interests from the data they collect and place individuals into finely targeted categories. Some may seem innocent enough – like “single dog owners” – but others may be more sensitive – like “Expectant Parent,” “Diabetes Interest,” and “Cholesterol Focus.”
The FTC explains the sources of big data in this graphic in its report. Click image to enlarge.
The report notes the potential risks to consumers:
“If a consumer is denied the ability to conclude a transaction based on an error in a risk mitigation product, the consumer can be harmed without knowing why. In such cases, the consumer is not only denied the immediate benefit, but also cannot take steps to prevent the problem from recurring.”
The lack of transparency about the industry gives the commission most cause for alarm. After noting that many consumers don’t even know about data brokers, it notes:
“Even those consumers who know who the data brokers are, find their websites, and take the time to find the opt out and use it may still not know its limitations.”
Opt outs are not offered for all products, and the extent of consumer control is confusing, the commission says.
The urgency of the commission report is emphasized in its recommendations for a legislative solution.
“Since [the 1990s], data broker practices have grown dramatically in breadth and depth, as data brokers have the ability to collect information from more sources, including consumers’ online activities; analyze it through new and emerging algorithms and business models; and store the information indefinitely due to dwindling storage costs,” the FTC says.
“Lack of transparency and choice remain significant issues in this industry.”
This is a frightening conclusion about a nearly invisible but enormously influential industry. Most of us are blissfully unaware that so much data is now being collected and combined about our tastes, habits, even illnesses and medicines we use.
Each item may seem innocuous in isolation, but when they are all combined they draw a detailed picture of our lives about which even we may not be fully aware.
The potential for abuse is far too enormous, and the risk of serious harm is great. This report, should be required reading for each and every person, and its recommendations should be enacted into law by Congress without delay.
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