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What Is a Data Broker? The FTC's Muddled Message

August 3, 2012 By Gwenn Freeman
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You might wonder why I'm asking this question or wonder why you should care, but you should care. If you are a marketer, you are either a data broker or you do business with one. And, data brokers have become an area of interest in Washington.

In March of this year, the FTC released its report on privacy that included a new statement about data brokers: "To further increase transparency, the Commission calls on data brokers that compile data for marketing purposes to explore creating a centralized website where data brokers could (1) identify themselves to consumers and describe how they collect and use consumer data and (2) detail the access rights and other choices they provide with respect to the consumer data they maintain."

Then, in July, eight congressmen, led by Representatives Edward Markey and Joe Barton, sent letters to nine "data brokers" requesting information on what data they collect, where data is sourced, their products and services, their security measures and consumer rights to access and correction.

One of the most interesting things about this request for information was the list of "data brokers" who received a letter. Of the nine, we probably all agree that Acxiom, Epsilon, Equifax, Experian and Merkle could be classified as data brokers. Though perhaps less well known and with a different customer base, Intelius, according to its website, provides people search and background checks. This leaves potential outliers Harte-Hanks, FICO and Meredith, who have pushed back on their classification as data brokers.

The diversity of the nine companies led me to research the definition of a data broker. At Wikia, I found an interesting definition for our times: "Data brokers collect personal information from public and private records and sell this information to public and private sector entities for many purposes, from marketing to law enforcement and homeland security purposes."

The article went on to say, "Two types of businesses exist in this industry: 1) 'individual reference services providers' (IRSPs), which sell 'profiles' and other reports containing confidential personal information about individuals; and 2) 'marketing list brokers,' which sell lists of names, mailing addresses or electronic mail addresses of individuals, grouped by characteristics, conditions, circumstances, traits, preferences or mode of living."

This is a problem. A single term that covers two types of business with radically different approaches to the way data is aggregated, presented and used is inherently misleading.

 

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