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FTC takes on data brokers

By Janna Herron · Bankrate.com
Wednesday, December 19, 2012
Posted: 4 pm ET

The Federal Trade Commission is requiring nine companies that collect personal data about consumers to reveal how they gather and use that information. The FTC plans to use their responses as part of a study of privacy practices in the industry.

The agency on Tuesday sent requests to Acxiom, Corelogic, Datalogix, eBureau, ID Analytics, Intelius, Peekyou, Rapleaf and Recorded Future. The FTC is looking for the following details.

  • The nature and sources of consumer information they collect.
  • How the companies use, maintain and distribute that information.
  • If they allow consumers to see the information they collect, if consumers can correct inaccuracies or opt out of having their information sold.

These companies gather information about consumers from a variety of public and nonpublic sources. For example, they may use court records and information gathered from purchases, the FTC says.

"They are always collecting information," says Paul Stephens, director of policy and advocacy at the nonprofit Privacy Rights Clearinghouse. They're watching "when you're online, or perhaps when you visit a store, or when you take your car for servicing," Stephens says. "Any situation where you are giving out personal information, data is being collected about you."

During a typical pizza delivery order, for example, collection agencies will capture a consumer's name, address and phone number, Stephens says. If the person pays by credit card, that information is collected, too. Corelogic, one of the companies that received the FTC's request, said it has information on 99.9 percent of the U.S. population when it introduced a new credit report last year.

The key, according to Stephens, is what happens to that information after it's collected. In many cases, that information is sold to companies to help them sell goods and services to consumers. Some companies may use the information to help detect fraud.

That's what the FTC's study will help unearth. The FTC noted that consumers are often unaware that companies keep this information. Even when consumers are allowed to see the data that have been collected on them, they're often unsure how to access the data.

The Fair Credit Reporting Act only requires consumer information to remain private if it's related to credit, employment, insurance, housing or other similar purposes. It doesn't cover information used for marketing purposes.

"Most of the time we just think of the credit bureaus being consumer reporting agencies," says John Ulzheimer, president of consumer education at SmartCredit.com. "But they're just a fraction of the overall number of companies that sell information about consumers."

Follow me on Twitter: @JannaHerron

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