FTC orders data brokers to reveal business practices

The Federal Trade Commission opened an investigation on Tuesday into the business and privacy practices of data brokers — companies that compile and sell consumers' personal information.

The FTC ordered nine data brokers to explain how they collect and use personal data. The agency also asked whether consumers are able to access or correct the information collected about them.

The FTC noted that consumers do not interact directly with data brokers. Instead, the companies compile information from public records or buy the information from other companies.

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"As a result, consumers are often unaware of the existence of data brokers as well as the purposes for which they collect and use consumers’ data," the FTC said. "This lack of transparency also means that even when data brokers offer consumers the ability to access their data, or provide other tools, many consumers do not know how to exercise this right."

The FTC will use the responses it receives to prepare a report and make recommendations on how to improve the privacy practices of data brokers.

The companies that received the orders for information were Acxiom, Corelogic, Datalogix, eBureau, ID Analytics, Intelius, Peekyou, Rapleaf and Recorded Future.

Sen. Jay Rockefeller (D-W.Va.) and Reps. Ed Markey (D-Mass.) and Joe Barton (R-Texas) have also pushed the data brokers for more information about their practices.

Jeff Chester, executive director of the Center for Digital Democracy, a privacy advocacy group, said the FTC's action will "unmask this largely stealth consumer surveillance industry."

"The dramatic growth of the data broker industry, fueled by information on consumers culled from the Internet, social media, mobile phones, and in-store shopping, has created a multitude of all seeing eyes spying on Americans every day," he said.

Jerry Cerasale, vice president of government affairs for the Direct Marketing Association, said his group welcomes the FTC's probe.

“Data-driven marketing fosters competition online by ensuring that large and small actors have the ability to reach consumers across the Internet. This, in turn, gives consumers greater opportunities to find the goods and services they desire at prices they can afford," he said. "The FTC’s inquiry will certainly bring to light these and other important benefits that responsible data-driven marketing provides to consumers — and to the American economy as a whole.”