Difference between revisions of "Data brokers"

Revision as of 17:50, 15 March 2018

Data brokers refers to the industry where companies collect information on consumers and package the data for sale to businesses or government agencies. Most commonly, data is gathered by Data brokers when people carry out activities online: purchases, web searches, social media pages, etc. The data is aggregated to create profiles on individuals; and, oftentimes, this information is analyzed and people are grouped into useful lists or categories that make the information desirable for purchase. There are three main types of data broking companies: ones that create marketing, risk mitigation, or people search products. There are few laws that currently govern these companies, and ethical dilemmas have risen as a result of mass collection of personal information. Critics argue that consumers are often not aware that data brokers are acquiring data about them, and believe that companies violate the privacy of these individuals and could potentially jeopardize the safety of consumers. There are further concerns regarding the categorization of individuals, and the potential mistreatment and repercussions that can stem from sensitive grouping.

Origins

In 1965, Gordon Moore noticed the fast-paced improvement of transistors on a chip, and observed that they doubled every year from 1959-1965 ^[1]. This later became known as Moore's Law, which is the expectation that transistors will continue to double every two years. The cost of computing has decreased overtime, which has allowed for the improvement of software and hardware.

The rapid advancement of more powerful computing, networking, and data storage has led to the field of Big Data. Big Data is the collection and analysis of large amounts of data by both government agencies and corporations ^[1]. The Big Data field has allowed for the formation of the Data Broking industry. Companies began to enter the market that specialized in various types of massive data collection and analysis. After data is collected data brokers use algorithms to predict an individual's health, financial status, interests, sexual orientation, religion, political beliefs, and habits. This data is then sold to government agencies and corporations who use the information for a variety of different purposes: verifying an individual's identity, marketing products, and detecting fraud.

Data Collection

Most often consumers are not aware of the existence of data broking companies, and do not know that data is being collected about them. In May 2014, the Federal Trade Commission (FTC) released a report that shed light on the Data broker industry, Data Brokers: A Call for Transparency and Accountability. Before this report, the interworking of the Data broker industry was a mystery. Within the document the FTC listed the main Data broker sources: the government, publicly available sources (social media, blogs, the internet), and commercial data sources.

Government Sources

Data brokers gather information from the federal, state, and local governments. The government agencies that are typically used are the U.S Census Bureau, Social Security Administration, U.S Postal Service, Federal Bureau of Investigation, U.S Secret Service, and the European Union. These sources provide information on individuals: ethnicity, age, education level, household makeup, income, occupations, commute times, and addresses. The U.S Secret Service and European Union give access to most wanted lists or terrorists watch lists ^[2]. State and local governments provide information, including licenses, real property and assessor records, assessed value, liens, deeds, mortgages, mortgage releases, pre-foreclosures, identifying information about the owner, voter registration information, motor vehicle and driving records, and court records.

The information collected from government sources is not always directly accumulated from state and local governments. Data brokers will hire individuals to go to these local offices to gather the data. Another means of collecting data is through relationships with these offices that give them access to the data automatically ^[2]. There are some state laws that prohibit companies from gathering personal information from government sources. For example, the Federal Driver's Privacy Protection Act ("DPPA") which does not allow the release of motor vehicle and driving recorded information unless it is used for or requested by law enforcement, insurance, and identity verification or fraud detection ^[3]. Also twenty-two states do not allow the use of voter registration record for commercial or non-election related purposes ^[2].

Publicly Available Sources

Data Brokers get information from publicly available sources such as directories, press reports, and posts on the internet ^[2]. One technique these companies use to collect information is web crawling. Web crawlers are programs that search through the web in an automated way, and it reports the data back to a specified server ^[4]. When users do not set their privacy settings to restrict access to their information on various sites, Data brokers will pull all available information from these websites. For example, data brokers will crawl individuals' social media profiles for information.

Aside from web crawling, Data brokers have other methods they use to collect information from publicly available sources. They will buy or acquire printed information, like records or directories. They also arrange for collection processing of information. For example, they acquire data from a daily news feed. The final way they gather data is through Application Programing Interface (API). They arrange for their sources to make available an API where they process the data ^[2].

Commercial Data Sources

Data brokers gather data from commercial sources: retailers, catalog companies, magazine publishers, registration websites, merchants and financial service clients. This information can include types of purchases or subscriptions sold, how much they paid, dates of purchase, and method of payment. Registration websites refers to sites where consumers receive services, such as retail, news, finances, and travel. In the FTC report, they found that data brokers get personal information from financial service companies, like data regarding health related purchases ^[2].

Data brokers get over 50 percent of their data from other data brokers ^[2]. Information gets repeatedly cycled back and forth from one data broking company to another. Oftentimes, information does not come from the original source, which makes finding a data element's origin nearly impossible.

Examples of Data Brokers

There are three main types of products that data broking companies provide: marketing products, people search and risk mitigation.

Marketing Products

Acxiom is public data broker company founded in 1969 ^[5]. In 2017, the company had a revenue of 880.2 million which is a 3.2 percent increase from 2016 ^[6]. Today, the company mainly uses the data it collects on individuals to provide marketing products for a wide range of companies; but, they do offer two more data products which are aimed at helping to reduce fraud and identity theft, as well as people search products for helping to find certain businesses or people.

Their marketing product allows companies to carry-out people-based marketing, and receive a higher return on their marketing investments ^[6]. People-based marketing refers to creating relevant advertisements, better service, improved offerings, and special promotions for consumers ^[7]. According to an Acxiom brochure, Understanding Acxiom's Marketing Products, the company groups people together and forms lists based on similar characteristics. These lists help assist marketing strategies by providing the target customers for a product or service, and ways to reach the market of interest. For example, Acxiom has a Personicx cluster, which categorizes people into one of 70 segments based on demographics. The 70 clusters are based on 21 life stages: having a baby, retirement, marriage, income, etc ^[8].

Risk Mitigation

ID Analytics

ID Analytics was founded in 2002. The company offers businesses a product that helps with identity authentication, detecting fraud, identity risk, and creditworthiness. Their goal is to help companies prevent fraud and decrease credit risk. According to ID Analytics website, they study the connections and relationships of identity elements. From this data they are able to infer risk by consumer behavioral data within their database called the ID Network ^[9].

The company rates consumers on a scale based on personal information and connections made by the software. The score that is generated is known as an ID Score ^[9]. The personal information they use when calculating an ID Score is data like social security numbers, name, address, and emails. ID Score First-Party Fraud algorithm looks for attributes that typically categorize thieves, and their is a particular score that is used to recognize them^[9].

People Search

Intelius

Intelius was founded in 2013, and it provides a product that gives consumers access to information on individuals ^[10]. The company offers detailed background checks and people search results ^[11]. According to the Intelius website, the people search tool allows individuals who are seeking to reconnect or get more information about someone to use its platform. The information that the site provides is phone numbers, address history, age, birthdate, relatives, etc ^[10].

Ethical Dilemmas

Few laws https://law.fiu.edu/legal-developments-regarding-data-brokers/

Privacy

Currently, there are no federal laws that hold data brokers accountable for maintaining the privacy of consumers unless the data broker is using the data for employment, credit, insurance, or housing ^[12] . Privacy advocates argue the ethics of collecting personal data without an individual's knowledge. They are also alarmed by the consumer's inability to track down the source of the information, due to the process data broker's use to collect information, and the lack of transparency as people often do not know the data broker's purpose for using the data. Ethicists argue that individuals have a right to control personal or private information from being analyzed and sold for monetary gain. In 2013, the former commissioner of the Federal Trade Commission, Julie Brill, posed concerns about data brokers breaching the privacy of consumers by analyzing personal data points without permission or consumer knowledge ^[13] .

On top of this argued privacy violation, marketing data brokers claim that the data analysis and predicted behaviors they sell are unidentifiable and cannot be traced backed to a particular person. The claim that data broker's data analysis and predicted behaviors are unidentifiable is false ^[13]. The data points can be linked back to individuals, which can expose highly sensitive information about a consumer that can endanger their right to privacy.

Issues with Categorizing Individuals

There is concern regarding exclusion of populations from markets and benefits ^[14]. When data brokers, like Acxiom, make lists categorizing individuals this can be considered as a form of exclusion. The populations that belong to differing lists receive advertisements and offers for entirely different products, which can lead to discrimination. A 2016 report by the Federal Trade Commision, Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues, outlines the risks that can occur when companies use Big Data for targeting market segments. The categorizations of these groups can reinforce or create disparities among those that belong to a particular list. In regards to financial products, a low socioeconomic group may never receive better offers although they may be eligible ^[14]. High socioeconomic groups will reap the benefits, while those who have a lower income may not be given the same treatment due to their categorized economic standing. More generally, depending the data factors in a personal profile, some individuals will not get the same benefits, service, and opportunities as others that meet certain criteria or qualifications. The differentiation of access has the potential to create new inequalities.

Consequences of Inaccurate Data

Data brokers do not always have accurate data about individuals. In a report issued by the Office of the Attorney General Department of Financial Regulation, a person's data profile can be corrupted or have mistakes. Errors in data are perpetuated by the the process of data collection^[15]. Errors among a person's profile are especially harmful if the data broking company is using this data for risk mitigation, like ID Analytics. The FTC reported in 2012 a on major credit reporting company generated a credit report that had data errors for 21 percent of consumers. Of these consumers 5.2 percent were able to challenge their credit assessments which would have increased their interest rates and lower their credit score^[15]. Incorrect data can impact and tarnish an individual's reputation.

References

1. ↑ ^{1.0 1.1} Richards, Neil M.; King, Jonathan H. "Big Data Ethics," Wake Forest Law Review vol. 49, no. 2 (2014): p. 393-432, http://heinonline.org/HOL/Page?handle=hein.journals/wflr49&div=16&g_sent=1&casa_token=&collection=journals.
2. ↑ ^{2.0 2.1 2.2 2.3 2.4 2.5 2.6} Ramirez, Edith , et al. "Data Brokers: A Call For Transparency and Accountability." Federal Trade Commission, 27 May 2014, www.ftc.gov/reports/data-brokers-call-transparency-accountability-report-federal-trade-commission-may-2014.
3. ↑ "18 U.S. Code § 2721 - Prohibition on release and use of certain personal information from State motor vehicle records." LII / Legal Information Institute, www.law.cornell.edu/uscode/text/18/2721.
4. ↑ "Web crawler." ScienceDaily, ScienceDaily, www.sciencedaily.com/terms/web_crawler.htm.
5. ↑ “Company-Histories.com.” Acxiom Corporation -- Company History, www.company-histories.com/Acxiom-Corporation-Company-History.html.
6. ↑ ^{6.0 6.1} "PDF." Acxiom Corporation, 2017, https://s21.q4cdn.com/580938034/files/doc_financials/annual_reports/Annual-Report-2017-(Web-ready).pdf.
7. ↑ "PDF." Acxiom Corporations, 2012, https://www.acxiom.com/wp-content/uploads/2013/09/Acxiom-Marketing-Products.pdf.
8. ↑ “Consumer Data Information.” Acxiom, 2018, www.acxiom.com/about-us/privacy/consumer-data-information/.
9. ↑ ^{9.0 9.1 9.2} “Personal Topology – ID Analytics.” ID Analytics, ID Analytics, 2018, www.idanalytics.com/our-business-model/personal-topology/.
10. ↑ ^{10.0 10.1} “Intelius .” Intelius, Intelius, Inc. , 2018, www.intelius.com/?searchform=name&adword=www.intelius.com&utm_source=google&utm_medium=cpc&utm_campaign=brand%2Bofficial%2Bsite&gclid=EAIaIQobChMIs9rtwuHs2QIVk7fACh1UcQSHEAAYASAAEgJ18PD_BwE.
11. ↑ “Company Overview of Intelius, Inc.” Bloomberg, Bloomberg, 2018, www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=13647613.
12. ↑ “Data Brokers and "People Search" Sites.” Privacy Rights Clearinghouse, Privacy Rights Clearinghouse, 17 Oct. 2017, www.privacyrights.org/consumer-guides/data-brokers-and-people-search-sites#How accurate is data broker information.
13. ↑ ^{13.0 13.1} Brill, Julie. “Reclaim Your Name.” Federal Trade Commission, Federal Trade Commission, 26 June 2013, www.ftc.gov/public-statements/2013/06/reclaim-your-name.
14. ↑ ^{14.0 14.1} Ramirez, Edith, et al. “Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues (FTC Report).” Federal Trade Commission, Federal Trade Commission, Jan. 2016, www.ftc.gov/reports/big-data-tool-inclusion-or-exclusion-understanding-issues-ftc-report.
15. ↑ ^{15.0 15.1} “Report to the General Assembly of the Data Broker Working Group Issued Pursuant to Act 66 of 2017.” Department of Financial Regulation, State of Vermont, 15 Dec. 2017, www.dfr.vermont.gov/dfr-and-attorney-general%E2%80%99s-office-release-data-brokers-working-group-report.

Big textAlso called Information brokers. Concept of Data Brokers: These are companies that collect information about you: names, addresses, incomes, social security number, where you go on the internet and who you connect with online and so much more. This information is sold to other companies to help with marketing, and there are few regulations governing these “data brokers”. ^[1] Specifically going to talk about the ethical concerns of “data brokers” in regards to privacy. The data that we don't know is being collected and shared about us.

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