The Federal Trade Commission (FTC) has ordered nine data brokerage companies to tell the government what it currently doesn’t tell consumers—how it collects and sells the personal information of Americans. Two of the companies, CoreLogic of Irvine and ID Analytics of San Diego, are headquartered in California.

The nine companies are ID Analytics, CoreLogic, Acxiom, Datalogix, eBureau, Intelius, Peekyou, Rapleaf and Recorded Future.

Tracking consumer behavior is growing and largely unregulated, but coming under increased scrutiny as corporations become more sophisticated at manipulating consumers. Data is collected from consumer shopping, communications, financial transactions and myriad other sources and utilized by an equally vast array of marketers and other interested parties. Every electronically traceable movement, from web surfing to a doctor’s visit, is knowable and technically available for storage and access.  

Yet, for the most part, individuals have no idea what actually inspires the coupons they receive from Target or the ad alongside their Google search response.

The FTC wants the nine data brokers to give them details on the nature and sources of the consumer information and how they use, maintain and disseminate the information. The agency also wants to know to what extent consumers can access and correct their personal information and opt out of having it sold everywhere.

Clients of ID Analytics, a subsidiary of Arizona-based LifeLock (since March) that specializes in credit analysis, include the top five credit card issuers, top four wireless carriers, auto lenders and other big companies. ID Analytics looked at 1 billion applications for bank cards, store credit cards and wireless service over a nearly four-year period.

CoreLogic advertises itself as the leading provider of residential property valuations for the mortgage industry. It uses property and mortgage information, motor vehicle records, criminal background records, tax records and more to service 40,000 customers in the public and private sector.

Although the industry is omnipresent, as the FTC pointed out in its press release announcing its investigation, “Consumers are often unaware of the existence of data brokers as well as the purposes for which they collect and use consumers’ data.  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.  There are no current laws requiring data brokers to maintain the privacy of consumer data unless they use that data for credit, employment, insurance, housing, or other similar purposes.” 

As data collection, storage and analysis technology becomes more sophisticated, the looming explosion of sensitive medical and financial digital information is drawing congressional inquiries and regulatory questions. The House of Representatives opened an investigation in July and the Senate began an inquiry in October.

The FTC issued a preliminary report in March that reiterated a request it had made in another preliminary report in December 2010 which asked the data companies to voluntarily become more transparent in their actions, voluntarily increase privacy, voluntarily give consumers opportunities to fix their data and let those ensnared in the database have an opportunity to opt out.

The March report, meant to help provide a framework for future legislation and regulations, concluded: “The Commission agrees that consumers should have more control over the practices of information brokers and believes that appropriate legislation could help address this goal.”

So far, that’s not happening voluntarily.

-Ken Broder 

To Learn More:  

FTC to Study Data Broker Industry’s Collection and Use of Consumer Data (Federal Trade Commission)

Federal Trade Commission to Data Brokers: Show Us Your Data (by Jessica Guynn, Los Angeles Times)

Facebook’s New Partnership Gives It One More Way to Track Your Buying Habits (by Mary Beth Quirk, The Consumerist)

Protecting Consumer Privacy in an Era of Rapid Change (Federal Trade Commission) (pdf)

How Companies Learn Your Secrets (by Charles Duhigg, New York Times)

Marketing Company Follows 3 of 4 U.S. Households as They Shop (by Noel Brinkerhoff and David Wallechinsky, AllGov)