Do you know what a data broker is? A recent survey found 80 percent of people have no idea. But data brokers actually know a lot about you. They collect, calculate and sell highly personal information about millions of people. And now, they're the ones being watched.
After financial planner Rod Laurenz opened a new office, he used a credit card to buy baby wipes to clean the place. He says after picking up just one canister, he was shocked to be bombarded with targeted online ads for other baby wipes and more children's products. Something this single guy says he's definitely not interested in at the moment.
“It does lead to some concerns. How much do they know? And how much can then be determined about a person,” Laurenz asked.
The Federal Trade Commission also wants to know those answers. The agency has launched an investigation into the Data Brokerage industry, demanding detailed data from nine major companies currently collecting consumer information both online and off.
“We really wanted to look under the hood of these companies and see exactly who they're buying this information from, how much information they have, what they use it for, and who they share it with,” said Maneesha Mithal, the Associate Director of the FTC’s Division of Privacy and Identity Protection.
The FTC already knows that data includes what you buy, where you shop and where you drive. It might also include your health problems, who your social network friends are, if you pay your bills on time or if you spent time in jail. The FTC has three big concerns.
“First is that data brokers are selling information that companies could use to deny people employment or credit or insurance,” said Mithal.
Second, according to the agency, is that people consider it "creepy" to be followed online. And finally, they're worried about identity theft. Why? Because a government report reveals hackers have also accessed information companies collected about you.
But, the Direct Marketing Association, or DMA, stresses most data brokers work hard to keep your private info secure, and thinks the largely self-regulated industry should stay that way.
“If you do something incorrectly its known, it’s out there in the blogs, your reputation is, is harmed and companies will make immediate changes,” said Jerry Cerasale, Senior Vice President of Government Affairs for the Direct Marketing Association.
Both the FTC and DMA do agree the multi-billion dollar Data Brokerage business is critical. Targeted marketing drives consumer spending, which is a driving force in the economy.
"It’s going to get us out of this recession. It’s going to get us out of it faster and its going to keep America in the lead,” said Cerasale.
Rod Laurenz actually likes targeted ads, when they target him correctly. He was happy when marketers figured out he wasn't interested in baby products, and the ads have changed to vacation destinations and luxury cars.
“Certainly there's a benefit if you're going to see ads, have those ads be pertinent things you actually may be interested in or want to buy or learn about,” he said.
After the FTC analyzes the information it gets, the agency will make recommendations about industry practices, and possibly ask congress to regulate it more.
The FTC will also look at ways consumers could have even more privacy and opportunities to "opt out" of being tracked and correct inaccurate information collected about them.