Data brokers know if you’re a single mom with two kids who earns less than $50,000 a year. They can figure out when you are diagnosed with a disease, are trying to lose weight, or are expecting a child.
Take, for example, the instance of a man who angrily approached his local Target store after his daughter, a high-school student, received flyers for maternity clothing, nursery furniture, and baby clothes. He learned that his daughter was, in fact, pregnant—but not before Target did, through analysis of her shopping habits and information it had acquired from data brokers.
Data brokers trade personal information about consumers with a wide range of sources for purposes that include verifying an individual’s identity, marketing relevant products to them, and detecting fraud, according to a Federal Trade Commission report. Because they generally don’t interact with consumers, most people are unaware of how their practices might affect them.
Understanding how data brokers work—and how their actions can affect you—can help you retain (or regain) control of your private information.
“The average person doesn’t really understand that when you make purchases with your credit card, perform searches online, and put things on social-media sites,” says Pam Dixon, executive director of the World Privacy Forum, “these companies take that information and might sell it to a data brokers, who resell it to advertisers, retailers, marketers, or other data brokers who want to give you personalized offers.”
Data brokers crawl the Web, manually enter data in printed documents, and batch-process consumers’ publicly viewable interactions with online feeds and applications, according to the FTC report, to collect information from government agencies, private companies, and publicly available data.
From federal agencies, data brokers such as Acxiom, CoreLogic, and Datalogix, which did not respond to requests for comment, might seek demographics of particular city blocks, including ethnicities, ages, education levels, income levels, and occupations, according to the FTC report.
From state and local government agencies, they might seek data about individuals’ professional or recreational licenses, such as those for practicing medicine or law or owning a firearm; and property and assessor records, which might include liens, mortgages, and pre-foreclosures.
From commercial data—including detailed, transaction-specific information from online and offline retailers, as well as credit card issuers—data brokers gather details of consumers’ purchase history, appended with labels such as luxury, organic, or related to a disability, the FTC report says.
And from publicly available data, which includes information that you post on blogs, or interact with on social-media sites such as Facebook, LinkedIn, and Pinterest, data brokers compile details about your relationship status, interests, or sexual orientation, says Gautam Hans, policy council at the Center for Democracy and Policy.
It is unclear what data brokers seek from or supply to consumer data giants such as Facebook and Google, says Douglas Laney, vice president and analyst at Gartner. Within an unregulated industry, it is easy for these companies, which did not respond to requests for comment, to keep specifics quiet. It is also easy for them to do nearly anything with the data they obtain.
“Information still is not considered a balance sheet asset,” Laney says. “This means that bartering and trading information in return for goods and services can be entirely off-book and away from prying regulatory eyes.”
Data brokers use the information they collect—and inferences they derive from the data—to create lists of consumers who have similar characteristics and to develop models to predict behaviors, the FTC report says.
If you’re between the ages of 21 and 45, have children, and have purchased sporting goods within two years, for example, a data broker might add you to a list called Soccer Moms. It might also analyze data to predict whether you are likely to buy brand-name sports apparel, order sports equipment by catalog, research kids’ sports activities online, or respond to sports-related online ads.
If you’ve had money problems, you might find yourself on a list called Financially Challenged—a potentially attractive one for companies offering subprime loans. The FTC report also cited lists called Urban Scramble and Mobile Mixers, which include high concentrations of Latino and African-American consumers living in low-income areas. Rural Everlasting included single men and women over the age of 66 with “low education attainment and low net worths.”
Data brokers’ broad group characterizations gives many privacy experts pause, Hans says. “There’s certainly some gender- and racially coded information that they imply in naming these lists,” he says. “The pervasiveness of it is very important, and should be discussed more publicly. Because few people are aware of it, though, there’s little debate about whether it’s right or wrong.”
Marketers such as health care companies, retailers, and insurance providers purchase these lists to improve direct-mail, telemarketing, and email campaigns, Dixon says. “They have your inferred income, how many kids you have, race, ethnicity, health conditions—all sorts of juicy stuff,” she says. “That’s the sort of thing people don’t expect would come out without their consent or knowledge.”
Data brokers “get data from hundreds of data points,” Dixon says. “You might not be eligible for a certain car insurance because you fell into a certain category on a data broker’s list,” she says. “And you might be paying higher health insurance premiums because they deduced that you’re at high risk for a disease” based on online support groups related to the disease you might have joined.
“It’s not really possible to say a consumer did just one thing,” Dixon says. “If you release that information outside of the health care context, it’s no longer regulated under HIPAA [the Health Insurance Portability and Accountability Act]. Most people don’t realize that.”
Data brokers can also influence everything from whether applicants are admitted to specific schools to the interest rates lenders offers them.
“At the college admissions level, we see your kids’ social-media data having a real impact,” she says. “Combine this information with your inferred income, career, and other data points, and it could affect whether or not your child is admitted.”
Despite growing concerns about how the quantity and quality of information that data brokers obtain and sell can ultimately affect consumers, Hans and Dixon don’t expect industry regulation any time soon. For now, Dixon says, consumers should be cognizant of their activities, both on- and offline.
“You really just have to watch out for what you put on the record,” she says. “Today, everyone is a bit of a data broker.”