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FTC hits up 9 data brokers for info on how they collect and use private data

Michael Cooney | Dec. 19, 2012
The Federal Trade Commission today said it orders to nine data brokerage companies to report how they collect and use data about consumers.

The Federal Trade Commission today said it orders to nine data brokerage companies to report how they collect and use data about consumers.

The agency said it will use the information from 1) Acxiom, 2) Corelogic, 3) Datalogix, 4) eBureau, 5) ID Analytics, 6) Intelius, 7) Peekyou, 8) Rapleaf and 9) Recorded Future to study data broker privacy practices.

Data brokers typically collect personal information about consumers from a variety of public and non-public sources and resell the information to other companies but consumers are confused about or in most case not even aware of what happens with their own information.

Specifically the FTC said it was looking for information such as:

  • the nature and sources of the consumer information the data brokers collect
  • how they use, maintain, and disseminate the information
  • the extent to which the data brokers allow consumers to access and correct their information or to opt out of having their personal information sold.

In many ways, these data flows can benefit consumers and the economy, the FTC said. For example, having this information about consumers helps companies prevent fraud. Data brokers also provide data to let customers better market their products and services, the FTC stated.

But all has not been well in data broker-land this year. In June, the FTC had data broker Spokeo pay $800,000 to settle FTC charges it sold personal information it gathered from social media and other Internet-based sites to employers and job recruiters without taking steps to protect consumers required under the Fair Credit Reporting Act.

According to the FTC, Spokeo collected personal information about consumers from hundreds of online and offline data sources, including social networks. It merges the data to create detailed personal profiles of consumers. The profiles contain such information as name, address, age range and email address. They also might include hobbies, ethnicity, religion, participation on social networking sites, and photos.

The FTC alleged that Spokeo operated as a consumer reporting agency and violated the FCRA by failing to make sure that the information it sold would be used only for legally allowable reasons; failing to ensure the information was accurate; and failing to tell users of its consumer reports about their obligation under the FCRA, including the requirement to notify consumers if the user took an adverse action against the consumer based on information contained in the consumer report. The FTC also alleged that Spokeo deceptively posted endorsements of its service on news and technology websites and blogs, portraying the endorsements as independent when in reality they were created by Spokeo's own employees.

The FTC said that from 2008 until 2010, Spokeo marketed the profiles on a subscription basis to human resources professionals, job recruiters and others as an employment screening tool. The company encouraged recruiters to "Explore Beyond the Resume." It ran online advertisements with tag lines to attract employers, and created a special portion of the Spokeo website for recruiters. It created and posted endorsements of its services, representing those endorsements as those of consumers or other businesses.


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