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FTC orders data brokers to share details of collection processes

Posted by admin on December 23, 2012

The FTC has opened an investigation into the practices of nine data brokers.Big data has become an overarching trend of businesses in 2012, however, some suppliers of that data have warranted the attention of federal eyes because of allegedly conspicuous practices. Once again, the government has opened an inquiry into how data brokers operate, only with more force this time.

Consumer data consists of various files on personal and financial information, details that are often a private matter. However, data brokers could use that sensitive information for their own gains by possibly reselling it to some outside firms, potentially including marketers or debt collectors.

FTC wants information
The newest case against data brokers has been made by the Federal Trade Commission (FTC), which said it has opened an investigation into the data collection policies of nine companies that resell consumer and employee data.

In a 15-page administrative subpoena issued to the nine companies, the FTC required they provide information into how they source consumer information; how they use, maintain and disseminate that data; and to what degree brokers allow consumers to correct information or opt out entirely.

The agency will then issue a report based on its analysis of the information to lawmakers that will advise on whether more regulation of the practice is needed. Data brokers are currently unchecked by federal regulations.

The inquiry further underscores the increasingly suspect manners in which data brokers operate. The New York Times said the FTC request seeks "far more" information with greater depth than previous investigations.

Congressmen blaze path
The FTC's announcements come not too long after Senator John D. Rockefeller (D-WV) pursued other data brokers through the Senate Commerce Committee after he and others had heard concerns from constituents about data broker practices and the impact on consumer privacy.

"Collecting, storing and selling information about Americans raises all types of questions that require careful scrutiny," Rockefeller said in a statement about his investigation in early October. "While these practices may offer some benefits to consumers, they deserve to know what's being collected about them and how companies profit from their information. We are sending letters to nine different companies today to learn how this industry works."

Rockefeller's study was only the most recent Congressional investigation into the matter. In July, Rep. Ed Markey (D-Mass.) opened his own inquiry into the practices of consumer reporting agencies like Equifax and Experian - both were also included in the Rockefeller probe - and is currently still in the process of his investigation.

Employers risk damaging consequences if they consult with data brokers to provide HR services and conduct background checks. Enabling brokers to use employees' own information against them could spark major employee backlash. Businesses can take comfort in knowing our comprehensive HR and screenings services are guaranteed to secure privacy while also offering comprehensive services.

Topics: HR Compliance, Background Checks

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