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Consumers Need More Info About How Their Data Is Shared, FTC Says

The FTC suggests new legislation requiring data brokers tell consumers how their info is collected and allow opt-outs.

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Consumers have little idea how much information about their browsing and personal habits is being collected and shared online by data brokers, a new Federal Trade Commission report said Tuesday.

FTC officials are recommending Congress consider legislation that would provide consumers with more transparency about how their data is used by brokers as well as a clear way to opt out.

“You may not know them, but data brokers know you,” FTC Chairwoman Edith Ramirez said in a call with reporters. “This is an industry that operates largely in the dark.”

The report breaks little new ground in explaining how data brokers compile profiles on Americans that can be used by marketers to sell them stuff, although many consumers don’t know this is going on. And it’s not clear how willing Congress will be to rein in the industry, since political consultants routinely use data brokers to help candidates target likely voters.

But the FTC’s recommendations to Congress could prompt more talk about the need for regulation of the data broker industry since the agency’s report comes just weeks after the White House released a separate report on “big data” that raised similar concerns about how companies could use information collected about consumers to discriminate against them, such as denying them credit cards or insurance coverage.

The FTC report details how nine data brokers investigated by FTC officials collect and store billions of bits of online and offline information about practically every U.S. consumer, mostly without their knowledge.

Data brokers create profiles of Americans by combining bits of data about consumers’ purchases, social media activity, magazine subscriptions, political affiliations and other personal information. Marketers use the information to better target consumers.

One data broker alone had collected more than 700 billion data elements about consumers and adds an additional three billion more each month, FTC investigators found.

“The sheer magnitude of what is going on is astounding,” Ramirez said. FTC officials also recommended that data brokers provide information about the original source of the raw data so it’s easier for consumers to correct any misinformation that might be included in their files.

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