FTC wants to know what data brokers know about your online habits
4:00 PM, Feb 18, 2013
6:10 PM, Feb 18, 2013
(WXYZ) - Do you know what a data broker is?
A recent survey found 80% of people have no idea.
But data brokers actually know a lot about you!
They collect, calculate and sell highly personal information about millions of people. And we've learned they're the ones being watched.
After financial planner Rod Laurenz opened a new office, he used a credit card to buy baby wipes to clean the place. He says after picking up just one canister, he was shocked to be bombarded with targeted online ads for other baby wipes, and more children's products.
Something this single guy around town says he's definitely not interested in at the moment.
"It does lead to some concerns. How much do they know? And how much can then be determined about a person?" says Laurenz.
The Federal Trade Commission also wants to know those answers.
The agency just launched an investigation into the data brokerage industry, demanding detailed data from nine major companies currently collecting consumer information online and off.
Maneesha Mithal of the FTC says, "We really wanted to look under the hood of these companies and see exactly who they're buying this information from, how much information they have, what they use it for, and who they share it with."
The FTC already knows that data includes: what you buy, where you shop, and where you drive.
It might also include: your health problems, who your social network friends are, if you pay your bills on time, or spent time in jail.
The FTC has three big concerns.
"First is that data brokers are selling information that companies could use to deny people employment or credit or insurance," says Mithal.
Second, according to the agency, is that people consider creepy to be followed online.
And finally, they're worried about identity theft.
This government report reveals hackers have also accessed information companies collected about you.
But the Direct Marketing Association stresses most data brokers work hard to keep your private info secure and thinks the largely self-regulated industry should stay that way.
Jerry Cerasale from the Direct Marketing Association says, "If you do something incorrectly its known, it's out there in the blogs, your reputation is, is harmed and companies will make immediate changes."
Both the FTC and DMA do agree the multi-billion dollar data brokerage industry is critical.
Targeted marketing drives consumer spending, which is a driving force in the economy.
Cerasale says, "It's going to get us out of this recession. It's going to get us out of it faster and it's going to keep America in the lead."
Laurenz actually likes targeted ads, when they target him correctly. He was happy when marketers figured out he wasn't interested in baby products, and the ads changed to vacation destinations and luxury cars.
Laurenz says, "Certainly there's a benefit if you're going to see ads, have those ads be pertinent things you actually may be interested in or want to buy or learn about."
After the FTC analyzes the information it gets the agency will make recommendations about industry practices, and possibly ask congress to regulate it more.
The FTC will also look at ways consumers could have even more privacy and opportunities to opt out of being tracked, and correct inaccurate information collected about them.