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The FTC found that data brokers collect and store billions of data points covering nearly all American consumers. One of the data brokers the FTC examined holds information on more than 1.4 billion consumer transactions, according to the report.
The brokers collect information through online and offline sources, including consumer purchase data, social media activity, warranty registrations, magazine subscriptions and religious and political affiliations.
Those data are then analyzed and used to make inferences about consumers, including their political leanings and age.
For example, a category cited in the report called "rural everlasting" includes singles older than 66 with "low educational attainment and low net worths."
The categories can have a mixed effect for consumers.
The report cited a group called "biker enthusiasts," saying the designation could help consumers by providing them with more relevant ads but could also harm them with insurance providers looking to flag risky behavior.
The nine data brokers included in the FTC's analysis are Acxiom, CoreLogic, Datalogix, EBureau, ID Analytics, Intelius, PeekYou, Rapleaf and Recorded Future.
One commissioner said the opaque system of profiling creates the potential for, say, a consumer who data brokers believe has cancer to be denied a long-term cellphone plan without the consumer's knowing why.
A trade association for the industry criticized the report, saying it highlighted real-world benefits provided by data brokers while citing only "theoretical" harm.
"One interesting thing about this report is that after thousands of pages of documentation submitted over the two years of thorough inquiry by the FTC, the report finds no actual harm to consumers, and only suggests potential misuses that do not occur," said Peggy Hudson, a vice president at the Direct Marketing Assn.
© 2014 Los Angeles Times (CA) under contract with NewsEdge. All rights reserved.
Posted: 2014-05-29 @ 11:59am PT
Yes, they are finally waking up! Now understand: this is not about groups, but about single-consumer market segments.