FTC & the Data Brokers: Why You Should Care


Does your business use consumer data? Transaction histories, public records, mailing lists... they all contain information about individuals. You see the business potential in this data.

Consumers see potential, too. It’s just that your vision and theirs may not be exactly the same.

The Federal Trade Commission is talking to data brokers now. Why should you care? If you use any type of consumer data, the outcome of those discussions will affect the way you do business.

The FTC has ordered nine major data brokers to provide information about:

    The nature and sources of the consumer information the data brokers collect; how they use, maintain, and disseminate the information; and the extent to which the data brokers allow consumers to access and correct their information or to opt out of having their personal information sold.

These brokers may be your data sources, or you may sell data to them. These investigations are not just about what brokers do. They will lead to new standards, and perhaps new laws, that affect the ways that your business must approach consumer data in the future.

There’s nothing new about individuals raising objections regarding the collection of data. As Margo Anderson, editor of Encyclopedia of the US Census: From the Constitution to the American Community Survey (second edition), said in a recent presentation, “The United States was the first nation in the history of the world to take a population census and use it to allocate seats in a national assembly according to population.” The objections began soon after, and continue to this day. Indeed, last year the US House of Representatives voted in favor of eliminating a key Census Bureau survey providing demographic information that thousands of businesses use, either directly or indirectly.

Even if you’ve never bought data from a broker, never looked at a Census Bureau report, be aware that consumers are demanding new standards for the handling of personal data. New requirements are coming, and they are going to affect you.

How can you prepare for changes that may be on the way? Think about the model set in the credit reporting industry. Consider how you might meet expectations for allowing consumers to determine what information you collect and store about them, and enabling them to correct errors in the information you keep. While there is no opt-out requirement in credit reporting, the heat is on for marketers and others to allow individuals to opt-out of data collection schemes. Other issues under discussion are the selling and sharing of data, and the combining of data from differing sources.

Simply put, the more powerful and informative the use of the data may be, the more strongly some individuals want out. Data disclosure and opt-outs will soon become industry standards, if not law, and you must prepare to comply. Are you ready?

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Meta S. Brown, Business Analytics Consultant

Meta S. Brown is a consultant, speaker, and writer who promotes the use of business analytics. A hands-on analyst who has tackled projects with up to $900 million at stake, she is a recognized expert in cutting-edge business analytics. She has conducted more than 4,000 hours of presentations about business analytics, and written guides on neural networks, quality improvement, statistical process control, and many other statistical methods. Meta's seminars have attracted thousands of attendees from across the US and Canada, from novices to professors.

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Re: Setting Standards
  • 4/19/2013 8:43:17 AM
NO RATINGS

The FTC's enforcement seems patchy.

Re: Setting Standards
  • 4/19/2013 7:50:48 AM
NO RATINGS

Gotta say that I'm not overly optimistic about the FTC

Re: Setting Standards
  • 4/18/2013 9:54:36 PM
NO RATINGS

We'll see, won't we?

Re: Setting Standards
  • 4/18/2013 2:18:49 PM
NO RATINGS

Public sentiments and pressure is ultimately determines the level of action with all government agencies.

Re: Setting Standards
  • 4/18/2013 12:55:54 PM
NO RATINGS

It all depends on how much power they believe they have. If there is strong public demand for controls on data sharing and use, they either have to play nice, or believe they can avoid regulation by lobbying or through the courts. Do they swing enough weight to carry the day through those channels?

Re: Setting Standards
  • 4/18/2013 10:38:48 AM
NO RATINGS

When push comes to shove, though, it'll be interesting to see how this all plays out with the data brokers. Will they keep playing nice?

Re: Setting Standards
  • 4/18/2013 12:48:45 AM
NO RATINGS

The big data brokers seem to be taking a pretty constructive aproach to this. All the public messages are very positive, very willing to cooperate with the FTC. I think that they not only see the handwriting on the wall, but the opportunity to set the standards for the industry. They know that bad actors put the whole industry at risk.

Re: Setting Standards
  • 4/17/2013 2:17:24 PM
NO RATINGS

FTC enforcement had been weak but will get as strong as necessary to control abuses. That has historically been that the unregulated will push the envelope until strong regulatory action becomes necessary and makes such acts unrewarding.

Re: Setting Standards
  • 4/17/2013 11:09:30 AM
NO RATINGS

How meaningful do most of you find the FTC's enforcement? Strong or weak?

Re: Setting Standards
  • 4/17/2013 9:12:46 AM
NO RATINGS

I think this will be interesting to follow. Data available for mailing lists is enough that you can create reasonably correct personas for different target segments. It's amazing how much is available. I wonder what the FTC will find throughout the industry.

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