The FTC study may not be ready until January, agency officials said. D.C.'s muddled take on data brokers

Privacy advocates and trade groups are clashing over how to build consumer protections into the fast-growing data broker industry as they await the results of two long-running investigations that could shape Washington’s approach to the sector.

Both the Federal Trade Commission and Senate Commerce, Science and Transportation Committee launched studies of data brokers last year, seeking information about how the firms operate and do business. The reviews, which are ongoing, have targeted companies including Acxiom, Experian and Datalogix, which collect information about people from sources online and offline and sell it to other businesses.


Washington’s interest in data brokers reflects the role of consumer data as an increasingly valuable tool for sectors from advertising to e-commerce to politics. The companies often gather troves of data on consumers without their knowledge, and privacy advocates say the industry requires greater regulatory or legislative oversight.

“Most consumers have no idea what information is collected about them or how it is used,” said David Jacobs, consumer protection counsel at the Electronic Privacy Information Center. That lack of transparency, Jacobs said, can expand companies’ ability to engage in “intrusive and invasive marketing practices.”

Both Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) and the FTC have supported legislation to help pull back the curtain on data brokers. At the same time, privacy advocates, such as Federal Trade Commissioner Julie Brill, are making the case for industry self-regulation.

Brill has promoted a one-stop shop for consumers to access their information collected by data brokers, an effort she calls Reclaim Your Name. But a leading trade group representing the marketing industry is pushing back on that concept.

“We don’t believe that a one-stop, one-size-fits-all Web portal with every data broker in the world is going to be something that actually increases consumer understanding in the way that is necessary,” said Rachel Thomas, vice president for government affairs at the Direct Marketing Association.

DMA commissioned a study in October that found about 650 firms might qualify as data brokers, a number Thomas said would make a single portal too unwieldy. “You can’t put an entire economy on a website,” she said.

Brill, though, said she still sees a path forward for the effort.

“Without a doubt, putting my Reclaim Your Name initiative into practice presents some complexities and will require some sustained effort,” she said in a statement. “But data brokers who have been willing to look forward are finding ways to start to provide more transparency and control to consumers, which are areas of real concern for consumers and me.”

Washington’s overall take on the industry remains somewhat muddled given that the two major investigations intended to shed light on the sector aren’t yet finished.

The FTC study may not be ready until January, agency officials said. And there’s no word from Rockefeller on when his review may wrap up. The senator expanded his investigation in September and has said companies have been less than responsive to his queries. A Commerce Committee spokesman declined to give a timeline but said the effort could go beyond a fact-finding mission.

“This does not rule out the chairman taking further action to protect consumers and their personal information,” the spokesman said. “The chairman thinks legislation is appropriate.”

The FTC eventually could float a legislative recommendation to give itself broader authority over data brokers or make calls for more aggressive self-regulatory efforts, said Chris Olsen, assistant director in the agency’s division of privacy and identity protection. Media attention or a class-action lawsuit involving data brokers could also create momentum on the issue, Olsen said.

House members had their own look at data brokers last year when former Rep. Ed Markey (D-Mass.), now in the Senate, and Rep. Joe Barton (R-Texas) made inquiries into the industry. But this Congress, the chamber’s key consumer privacy subcommittee, chaired by Rep. Lee Terry (R-Neb.), is unlikely to do much on privacy until a task force convened by Terry makes its recommendations.

There’s still no good definition of data brokers and which kinds of companies fall under that definition, said Software & Information Industry Association Senior Director of Public Policy David LeDuc.

“I honestly believe that the whole notion of talking about data brokers is a very difficult one,” LeDuc said, adding that the industry is already governed by the Fair Credit Reporting Act, which regulates some collection and uses of consumer data.

Earlier this month, a Government Accountability Office report recommended that Congress consider updating the nation’s consumer privacy framework to reflect the changing data landscape. And as more information comes to light about the data broker industry, some privacy advocates say more lawmakers will take notice.

“When more consumers learn how they’re being unfairly treated by data brokers, there’s going to be a huge backlash, and even Congress will act,” said Center for Digital Democracy Executive Director Jeff Chester. “The data broker industry is the central issue. It’s the foundation of the online privacy problem.”