Think you get to surf the internet for free these days? Think again. There’s a good chance you’re paying for the privilege with a little piece of your privacy, according to a Federal Trade Commission report released Tuesday. The ads you see on web pages are often automatically chosen to reflect your interests, based on collected bits and pieces of information you have made public as you go about your life online, and off.
And who’s doing the collecting? Data brokers, the largely unregulated middlemen in the privacy-for-personalization transaction at the heart of the digital economy. The FTC’s report, based on the responses of nine major data brokers to orders issued to them by the commission in 2012, shows just how far those companies have gone in amassing a huge information mosaic of Americans’ lives.
Of the nine data brokers, one data broker’s database has information on 1.4 billion consumer transactions and over 700 billion aggregated data elements; another data broker’s database covers one trillion dollars in consumer transactions; and yet another data broker adds three billion new records each month to its databases. Most importantly, data brokers hold a vast array of information on individual consumers. For example, one of the nine data brokers has 3000 data segments for nearly every U.S. consumer.
Among those thousands of “data segments” are seemingly private details, the report finds, like:
- What kind of clothes you buy
- Which charities you give to
- What kind of pets you own
- What movies you like to see
- How big your house is
- What kind of car you drive
- Whether you’re liberal or conservative
- Where you’re thinking of going on vacation
- What kind of stocks you invest in
- Whether you smoke
- What kind of over-the-counter drugs you buy
The FTC found that consumers benefit from many of the purposes for which data brokers collect and use data. “Data broker products help to prevent fraud, improve product offerings, and deliver tailored advertisements to consumers. Risk mitigation products provide significant benefits to consumers by, for example, helping prevent fraudsters from impersonating unsuspecting consumers. Marketing products benefit consumers by allowing them to more easily find and enjoy the goods and services they need and prefer. In addition, consumers benefit from increased and innovative product offerings fueled by increased competition from small businesses that are able to connect with consumers they may not have otherwise been able to reach. Similarly, people search products allow individuals to connect with old classmates, neighbors, and friends.”
But the dangers are real, too. Consumers could be “denied the ability to conclude a transaction based on an error in a risk mitigation product,” without having any recourse to correct the mistake. Lower marketing scores could result in “different levels of service from companies.” The FTC also concluded that stored data on consumers could be vulnerable to “unscrupoulous actors” who could use the private data “to predict passwords, challenge questions, or other authentication credentials.”
The FTC found “a fundamental lack of transparency about data broker industry practices.” The brokers collect thousands of pieces of information about individual Americans’ lives, creating detailed mosaics of who they are and what they do, analyzing and sharing it with clients in multiple industries. But “all of this activity takes place behind the scenes, without consumers’ knowledge.”
The FTC says there is little it can do to mitigate the danger other than report on it. The Fourth Amendment and multiple federal laws constrain what the National Security Agency can do with the masses of data Edward Snowden revealed the government collects on Americans and others. But the law governing the use of personal data by commercial entities doesn’t cover marketing. So while Snowden imagines a dystopian future in which the government uses its collected information to endanger Americans, it seems that future already exists in the commercial realm.