Data Security & Privacy

Federal Trade Commission Demands ‘Data Brokers’ Be More Transparent

Several news outlets reported yesterday that the Federal Trade Commission (“FTC”) is urging Congress to demand that data brokers tell consumers more about their trade practices in how they collect and use consumer information. Data brokers are companies that assemble digital profiles on nearly every U.S. consumer by gathering information from credit- and debit-card transactions, public records, online tracking cookies, and smartphones, among other sources.

The FTC, in its report, concluded that there is a “fundamental lack of transparency[,]” in how data brokers go about collecting consumer information. FTC Chairwoman, Ms. Edith Ramirez, states that data brokers often “know as much – or even more – about us than our family and friends, including our online and in-store purchases, our political and religious affiliations, our income and socioeconomic status, and more.” The report, two years in the making, finds no actual harm to consumers, and only suggests potential misuses that do not occur. It also goes into depth on how data brokers operate.

The report concludes that Congress should require the creation of an Internet website whereby data brokers must disclose the sources of data they collect about consumers, and give the consumers the opportunity to opt-out. The reality of anything become law in the near future seems highly unlikely at best. Similar legislation introduced in February has gained little traction.

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