FTC puts data brokers in spotlight

US regulators are launching an investigation into how data companies track, sell and use information about consumers, shining a bright spotlight on a multibillion-dollar industry that until recently has operated in the shadows.

The US Federal Trade Commission will focus on nine companies that track everything from religious affiliations to political leanings, and create consumer profiles based on household incomes, social media postings and shopping activity. Some even know if a person has expressed concerns about health conditions such as diabetes or arthritis.

No current laws in the US require that data brokers maintain the privacy of individual’s data unless they are used for credit, employment, insurance, housing or other similar purposes. The FTC said that it would use the information it receives in its inquiry to make recommendations on whether and how the industry could improve its privacy practices.

“Consumers are often unaware of the existence of data brokers as well as the purposes for which they collect and use consumers’ data,” the FTC said. “This lack of transparency also means that even when data brokers offer consumers the ability to access their data, or provide other tools, many consumers do not know how to exercise this right.”

The inquiry comes as the data broker industry faces increased scrutiny from regulators and lawmakers about its business practices and privacy implications.

Some lawmakers are pushing for stricter guidelines to protect people’s privacy, especially as companies increasingly exploit online data about individuals. The lawmakers have raised concerns about what information is being collected about individuals, how it is used and whether people have the chance to opt out.

“The dramatic growth of the data broker industry, fuelled by information on consumers culled from the Internet, social media, mobile phones, and in-store shopping, has created a multitude of all-seeing eyes spying on Americans everyday,” said Jeff Chester, a consumer privacy advocate with the Center for Digital Democracy.

The FTC said on Tuesday that it had subpoenaed nine data broker companies, including Acxiom, Datalogix and Rapleaf, for details about their business practices.

Eric Roza, chief executive of Datalogix, which has worked with Facebook to track whether people who see ads on the social networking site end up buying the advertised product in a store, said: “Data is playing an increasingly important role in driving economic growth and providing benefits to consumers, brands and publishers. Rapidly growing areas of technology can be complicated, and we welcome the opportunity to help demystify industry practices and to increase transparency.”

Acxiom said it had not received a request from the FTC yet but added it had a “long history of proactively engaging with regulators and the public to clarify common misunderstandings about our business practices”.

The other companies could not be reached for comment.