Consumer Privacy Defended In FTC's Caution To Congress On Data Brokers

FTC Chairman Jon Leibowitz

The Federal Trade Commission on Monday called on Congress to shed light on the opaque world of data brokers who collect and sell consumer data but remain largely invisible to the public.

In a report released Monday, the FTC called for legislation to give consumers access to personal data held by brokers and allow them to correct any inaccurate information. The commission also suggested a website where brokers could identify themselves to consumers and describe how they collect and disclose information.

Though largely unknown to the general public, data brokers gather information from a variety of public and private sources, including home purchase histories, change of address forms, credit card activity and even address information from local pizza delivery shops, according to Ashkan Soltani, a noted privacy researcher. Then they sell that data to buyers who use it for a variety of purposes, often for online marketing.

In a conference call with reporters, FTC Chairman Jon Leibowitz said Monday that data brokers are "invisible to consumers."

Privacy advocates praised the commission's call for greater transparency.

"Today, consumers face an ever growing and largely invisible data apparatus that collects and pools their information 24/7," Jeff Chester, executive director of Center for Digital Democracy, said in a statement. "The harvesting and sale -- often in real-time -- of our valuable data, including about our financial and health interests, poses a major threat to consumers."

The FTC report was based on more than 450 public comments and numerous discussions between privacy advocates and the online advertising industry.

The report sought to address ways to protect Internet users who often unknowingly reveal vast amounts of personal data as they surf the Web. Information about the websites they visit, their activities on social networks and their online purchases can all be tracked, shared and sold between businesses and within advertising networks, experts say.

The FTC report, among other things, called for Congress to create a national standard for notifying customers if their data is lost in a data breach, suggested mobile application companies -- and websites more generally -- create "short, meaningful" privacy disclosures and urged the software industry to create a "Do Not Track" mechanism on browsers to let consumers choose how much of their information is collected online and how it is used.

Last year, at least two bills were introduced in support of a "Do Not Track" mechanism but did not pass. Leibowitz said he was confident that consumers will find such a setting on their web browsers by the end of the year.

The FTC regulates the use of consumers' data online but can only take legal action against companies whose privacy practices are deemed "deceptive" or "unfair." Companies that voluntarily agree to adhere to the FTC's suggested "best practices," as outlined in the report, make themselves subject to FTC enforcement for any lapses in those standards.

Last year, the FTC took action against Google and Facebook for deceptive privacy practices. But data brokers have been a "blind spot" for the FTC because they typically don't make privacy promises to consumers, Soltani said.

Ken Wasch, president of the Software and Information Industry Association (SIIA), the principal trade association for the software and digital content industry, said his group supports a "public-private" approach to ensuring consumer privacy but does not support the report's call for new legislation.

"In light of the FTC's substantial authority in this area, we do not believe there is a need for new privacy legislation," Wasch said in a statement.

But Sen. John D. Rockefeller IV (D-W.Va.), chairman of the Senate Commerce Committee, said the committee "needs to seriously consider" the FTC's recommendations, such as requiring online companies to honor consumer requests not to have their browsing activities tracked.

"Those companies said they’d do that, and they need to make good," Rockefeller said in a statement.

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Comments

[SueZbell]

11:23 PM on 03/27/2012

I suspect the gov't is a big customer of these companies -- even read it's tracking posts on sites such as this.

BIG BROTHER and its legal illegitimate siblings.

[jsgaetano]

11:00 PM on 03/27/2012

Conservatives don't believe US Citizens have any rights to privacy. That's the linchpin in their entire opposition to Roe v Wade, after all.

[mbi11]

01:09 PM on 03/27/2012

Who knew a threat to privacy would be waged by profit making businesses. George Orwell would have been surprised. It Don't diminish the threat only the motives, the end result is the same.

[Virtual Deux]

06:00 AM on 03/28/2012

You see diversity where there is none. Most of the companies using this information ARE the government, albeit through the back door.

[mbi11]

08:11 AM on 03/28/2012

Possibly, but this smacks of a conspiracy which is far more unlikely in reality than in novels. I suspect it is data mining for marketing companies that the government may be piggybacking on.

[Marty Concussion]

07:54 PM on 03/26/2012

I think that this is a great idea.

My question is, how are the FTC going to monitor, police, and enforce this?

[Bill Rohde]

07:39 PM on 03/26/2012

The results are.......useless! Who is the better credit risk" the guy who stays home looking at Internet porn(legal), or the frustrated looser go goes out flashing little girls...or worse....but has a subscription to the Christian Science Monitor? Would you expect the fantasy life of a Fortune 500 CEO to be more or less varied than a little old lady from Dubuque's day dreams. Our CEO has stock options worth millions, while our old lady is still clipping coupons by hand from a public issue of Sears her hubby purchased in 1947. Sounds to me like Big Blue Blows Bad. as far as predicting social clout and responsibility.

[jdoeremi]

05:57 PM on 03/26/2012

This is a scandal waiting to happen. Citibank just hired Watson - the computer that beat the best human players of the Jeopardy game show to perform data analysis on their client database and perhaps against their employees to keep them honest. I can already see salivating data brokers who can't wait to sell our personal data about us as individuals that we don't even know they possess for Watson to analyze and perform potentially evil data mining that we would neither agree to nor authorize. When that happens, prepare for FREAKONOMICS Watson-style. The advantage is banks will easily uncover more patterns of money laundering, creative and often illegal accounting practices that are deployed even by members of congress that have corporations and many other criminal corporate activities.The sinister disadvantages are we will have more frequent termination of employees, more denials of employment, more unexplained cancellations or drastic reductions of credit limit, more denials of promotion, and more denials of insurance coverage. Worse, there will be no explanation for the action taken against you lest a lawsuit might ensue against them or the opportunistic data brokers who will enforce NDA on the banks and many of them will be eager to jump on this like jackals on a fallen prey.

[SDindependent]

07:00 PM on 03/26/2012

citi must have one of the worst databases in existence. On a daily basis in retail stores people apply for a citi card and when the ss goes in, someone elses name pops up from any random place around the country. As they say garbage in garbage out, that is about what these bank databases are becoming. I am suprised there is not an investigative reporter making a career out of the shoddy data collection practices.

[jdoeremi]

09:00 PM on 03/26/2012

There will be predictive technologies derived from data collected by these data brokers that are so inaccurate, it will likely do more harm than good to many of us. Some of these data brokers may even have data derived from Facebook when they were charged and fined multiple times in the past by the government for violating customer privacy. Imagine your employer's insurance excluding diabetes treatment upon your hiring because the personal data about you sold to the bank erroneously indicated every member in your family has diabetes except you. So when you contract diabetes later in life, you will be paying for medical expenses out of pocket for the rest of your life. Thanks to the data brokers who erroneously collected that you have family members that have diabetes. I can add more examples that insurance companies and banks will data mine or exploit in their quest to cut cost and increase shareholder value.