Companies tracking our online footsteps should be more transparent, says FTC
You may not know of or have heard much about companies known as data brokers, but a recent government report says these companies actually know a lot about you and the information you share online, billions of pieces of data, actually.
Jeffrey Brown has the story.
JEFFREY BROWN: Are you a mobile mixer, an urban scrambler? Do you know what those mean or that you yourself might be characterized as one or the other?
According to a new study by the Federal Trade Commission, large companies called data brokers use such labels as they track our online buying habits, what we do in our free time, religious affiliations and much, much more, in an industry the FTC says suffers from a fundamental lack of transparency.
It found that one company’s database alone had information that included 1.4 billion consumer transactions and more than 700 billion aggregated pieces of data. The FTC is calling on Congress to take new steps to protect consumers.
And its chairwoman, Edith Ramirez, joins us now to talk about it.
Welcome to you.
First tell us how this works. Who are these data brokers? Who are they collecting information for, and to what end?
EDITH RAMIREZ, Chairwoman, Federal Trade Commission: Let me say, Jeff, thank you for having me here with you.
Well, these are companies that consumers simply don’t know about, but they’re companies that collect massive amounts of information about all of us. And what is astonishing is the sheer breadth of their data collection and data practices.
What’s happening here is that all of us, as we shop online, as we browse the Web, whenever we post to a social network, we will be leaving digital bread crumbs that these companies are scooping up and then aggregating also with also offline information, public information.
JEFFREY BROWN: Well, what’s the problem, because, for many of us, a lot of this data isn’t — well, it helps us, right? It sends us to the right places. We use a lot of it ourselves for our shopping habits. So, what’s the problem?
EDITH RAMIREZ: Well, let me emphasize that what is going on here is that these data brokers collect this information. They then share the information and sell it to other companies, who can use it for a variety of purposes.
I want to highlight that there are some very beneficial purposes for these products, but they also raise privacy concerns. And that’s what we’re concerned about at the FTC.
JEFFREY BROWN: So, give us an example. I mean, I mentioned some — in the introduction, some of these categories and labels. How are they used, well, to harm people?
EDITH RAMIREZ: So, again, so — just so that it’s clear, what’s happening is that these companies are aggregating billions of data points about nearly every U.S. consumer.
So, what they do is that they compile extensive profiles about consumers, and then they also use data analytics to make certain inferences about us. They then classify and categorize consumers into these various categories, among them, mobile mixer, urban scrambler.
And then this information is then being sold to other companies, who can use them for various purposes that would include marketing purposes. They also use these products for prevention of fraud, for instance, so beneficial use there.
JEFFREY BROWN: But you’re suggesting it can also go to insurers, to employers, potential employers, to government?
EDITH RAMIREZ: That’s exactly right.
The potential risks here are various. One is, you mentioned the lack of transparency. Consumers simply don’t know that these practices are taking place. So, first and foremost, we believe that it’s important for consumers to understand what data brokers are doing.
We would like there to be access to information about these companies and their data practices. We also want consumers to have more control over what’s taking place and to be able to have an opportunity to opt out of the data collection that’s taking place.
JEFFREY BROWN: All right, before I ask you about that, you used the term potential risks. When your study came out, a spokeswoman from the industry said that it was really talking about potential risks, that you hadn’t found actual harm.
Have you documented actual cases where people are harmed?
EDITH RAMIREZ: So, we have not — we didn’t identify as a result of this study actual violations of law.
But keep in mind, also, that our study was focused on nine particular data brokers that we saw as representatives of a cross-section of the industry. So we didn’t purport to document all of the data practices that the data brokers are engaged in. So, that’s one important qualification.
At the same time, what we now understand is that, again, these massive profiles are being generated. We are all being classified and categorized based on our age, our income, socioeconomic status, even our political leanings, our religious affiliations.
And the question that causes us ultimate — some deep concern is, what are the implications of being categorized in that way? There is a potential for these categories to be used in ways that could ultimately be discriminatory or could raise other sensitive concerns.
JEFFREY BROWN: All right, so you were talking about allowing people to at least know what data is being shared and potentially to opt out of that system. How might that work?
EDITH RAMIREZ: So, what we have suggested is that there be a centralized mechanism, such as an Internet portal, through which consumers could access information about the types — the names of these companies.
So, consumers right now don’t even know where to begin, how to even understand how many companies out there are engaged in these types of practices, what information has been collected about them. So we would like to see some centralized mechanism that consumers could go to and, from there, be able to access the individual Web sites of these various companies, who in turn would then provide information about their specific data collection practices and offer ways that consumers could control that.
JEFFREY BROWN: This is the kind of thing you’re calling on Congress to enact some new regulation.
Congress, at least generally, has known about this for a long time, and we haven’t seen much action. Is there reason to think there would be something now?
EDITH RAMIREZ: Well, I’m hopeful that Congress will take another look at this issue.
There are certain members of Congress that are interested. We hope to work with them to put forward legislation that would address these issues. At the same time, we’re also calling on the companies themselves to undertake certain best practices that we recommend, do this on their own, have more regulation, self-regulation.
And, in addition to that, we also, at the agency, at the Federal Trade Commission, will continue to monitor the marketplace, and to the extent that we see violations of the laws that we enforce, we certainly intend to take action.
JEFFREY BROWN: And, in the meantime, what’s a consumer to do? I mean, what — what — how much — and how much are we doing it to ourselves by not paying enough attention?
EDITH RAMIREZ: That’s a terrific point.
So, I think one thing that consumers can do is just make sure that they’re aware of the privacy controls that are available to them, but also there are also certain companies that — certain of these data brokers who have taken steps, and good first steps, in the direction of providing more transparency about their practices.
One particular company, Acxiom, has taken some steps in that regard, and so companies — consumers can access information and then learn and get a better handle on what’s going on there, and make use of available opt-out tools.
But, as you note, this is an area that we believe Congress should take action in, and then ultimately we hope to see companies themselves respond to concerns on the part of consumers when they learn more about these practices.
JEFFREY BROWN: All right, Edith Ramirez is chairwoman of the Federal Trade Commission.
Thank you so much.
EDITH RAMIREZ: Thank you.
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