Ed's Blog

Privacy Hawks Demand Info From Data Brokers

By Ed Mierzwinski
Consumer Program Director

Data brokers are companies that buy and sell your public and non-public information, collected from a variety of online and offline sources, to government agencies and private firms, for a variety of uses. Most people know nothing about data brokers and the data brokers like it that way. Further, most people have no idea what the data brokers do with their information. Their activities are non-transparent. The firms buy and sell information gleaned from public record databases, social network sites and other sources; but unlike the Big Three credit bureaus, no one really knows what they are up to. While credit bureaus are required by law to keep your records accurate, limit access to them and give you certain rights to review and correct them, data brokers generally insist that no laws apply to them and insist further that their activities are not covered by the Fair Credit Reporting Act (FCRA).

Now comes a bi-partisan group of Representatives, led by the longtime co-chairs of the Bi-Partisan Congressional Privacy Caucus,  the political odd couple of Reps. Ed Markey (D-MA) and Joe Barton (R-TX), who have sent detailed information demands (their news release and the letters here) to a number of these virtually unregulated data brokers.

Natasha Singer of the New York Times has a story today on the demands. Excerpt:

In 2010, the Federal Trade Commission began its own investigation into the practices of more than a dozen data compilers. One of those companies, Spokeo, recently agreed to settle charges with the government that it had violated federal law by selling consumers’ personal data for employment screening. Enforcement actions against several other data brokers are pending, the agency said.

On Sunday, Natasha had her latest story in a series on the data brokers. Consumer Data, but Not for Consumers focuses on the secretive Arkansas firm Axciom (don't be fooled by the bright and cheery "y'all come on in" front page), one of the targets of the Congressional inquiry. She quotes FTC Commissioner Julie Brill, a longtime privacy expert who sought credit bureau and other privacy reforms for many years as a state assistant attorney general before she was appointed to the FTC by President Obama:

EXCERPT "In 1996, Congress updated the Fair Credit Reporting Act of 1970, giving people greater access to the files that those agencies held about them. Today, consumers can easily gain access to their credit reports online. “What the credit reporting industry did was change their point of view from client-oriented to consumer-oriented, and develop the tools and technology to allow consumers to see what’s in their reports and ensure it is accurate,” Ms. Brill said. “The data broker industry could do the exact same thing.”

The letters from Congress to the data brokers, indeed, echo some of the same concerns U.S. PIRG has raised for years about data brokers evading the FCRA. Excerpt in screen shot from the Congressional letter to Axciom (all letters appear identical).

Also today, the NY Times has an editorial "Faulty Criminal Background Checks" supporting reform of the employment background check industry. These firms are a subset of the data brokers and a report cited in the editorial, from the authoritative National Consumer Law Center, finds that many of the firms violate the Fair Credit Reporting Act.

Comments

This is all good, and I don’t want to suggest otherwise. I very much applaud Julie Brill’s doggedness on this issue. I have a few observations.

First, everyone in the privacy community has known about data brokers forever. Julie has flogged the issue. It took a story in the NYT to get anyone on the Hill to show much interest. I’m tired of seeing letters from Ed Markey, who’s just running after a headline. He does give a great speech, even though he still thinks privacy is notice and choice. Markey’s stuck in the 1980s. He still thinks the FCRA is relevant. If he’s thought about it at all, that is.

Second, we’re right on the cusp of the FCRA model falling apart, legally and practically. It’s been an open question for years whether the FCRA is constitutional. To put the problem in a nutshell, everyone is the world is free to sell information about your eleven year old bankruptcy EXCEPT credit bureaus. That’s hard to justify, although I don’t think that the argument for the law is an impossible one. Even if it is constitutional, the restriction is increasingly irrelevant.

As a practical matter, the credit bureau model is on the wane. The FCRA doesn’t control the granting of credit. It regulates the information that creditor grantors use (credit reports), and we give consumers rights over that information. That’s worked okay (more or less) since the FCRA passed in 1970. But it doesn’t really work any more. There are plenty of sources of consumer data that aren’t credit reports.

A credit grantor (or employer or insurer) can get information (PII and non-PII) from the Net and use the information effectively without any consumer rights. We’ve all seen the stories that if you friends are deadbeats, you are probably a deadbeat. That will go on ad infinitum in the future. We probably need to move away from the regulate-the-intermediary model we have now and toward some more direct rules for credit granting, hiring, and insurance underwriting. Otherwise, we will see more and more use of Net resources that are not (and could not be) subject to the FCRA for credit, employment, and insurance purposes.

This is why data brokers (and social networks, for that matter) are important today. We’ve seen some state laws stopping employers and schools from demanding passwords to social network accounts. That’s evidence of the need for fairer regulation of the use of PII outside the context of credit records. That’s what Ed Markey and the others should be worried about. The FCRA model is broken.

Giving consumers access to data broker records is okay, I suppose. Some of the records are factual. Some are not. What are you going to do if a data broker thinks you are interested in sports cars but that isn’t right? Correct the record? Tell the industry that you’re interested in baseball cards, not sports cars? Most consumers wouldn’t ask for their records even if they could. The question is whether we want to do something about how the information that data brokers supply is used by data broker clients. If it’s for marketing, consumers may not care. If it’s for credit, employment, or insurance, then we have to find a way to give consumers better rights. Trying to impose the FCRA on data brokers won’t work. Looking at data brokers is okay for a start, but it’s not close to where the problem is.

In England for some years, your credit rating was based on your address. If the guy who lived there before you was a deadbeat, so were you. That’s laughable, but we’re returning to that model. If all the scattered information about you, your friends, your neighbors, and your relatives obtained from a myriad of sources suggests that all of you are deadbeats, then you will be a deadbeat too. And the FCRA won’t help. There’s no data that’s about you to see or to correct. That’s why we need a different approach.

None of this will be easy, conceptually or politically. But it’s not too soon to consider the world if and when the FCRA disappears.

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