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Summary:

An FTC investigation into nine big data brokers shows how the companies use inferences to create categories like “Urban Scramble” and “Expectant Parent.”

big data puzzle

The Federal Trade Commission on Tuesday published a report that sheds light on nine data brokers, which collect consumer information for marketing and risk assessment purposes, and calls on Congress to pass legislation to make the industry more transparent.

The report comes after an investigation into the companies, which are unfamiliar to most consumers, but which possess large amounts of often-sensitive information about them.

As the FTC notes, the data brokers — Acxiom, Corelogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf and Recorded Future — frequently share information with each other, and together possess information about billions of consumers. The report also notes the rise of online-offline partnerships, such as one between Datalogix and Facebook.

The most intriguing part of the report describes how data brokers make “inferences” about consumers based on their shopping habits, public records and so on. The report notes how many of the inferences produce innocuous-seeming marketing categories such as “Dog Owner” or “Winter Activity Enthusiast,” but others that are less so: “Urban Scramble” and “Mobile Mixers,” for instance, to describe groups that include a high number of low-income blacks and Latinos.

The data broker categories also include sensitive health-related groupings such as “Expectant Parent” or “Cholesterol Focus.” As the report explains, the categories can be used not only for marketing purposes but also for “risk assessment” by financial companies or insurers.

In the report, the FTC  calls on Congress to pass a law that would create a central portal where consumers can get a better idea of who exactly owns their data and where it came from. It also calls on the companies to adopt best practices, such as “privacy by design,” and notes that many of them already have.

Here’s the FTC’s news release announcing its findings. The full report is below:

FTC Data Broker Report