Federal Trade Commission to Study Collection and Use of Consumer Information by Data Brokers

In an effort to study privacy practices in the data broker industry, the Federal Trade Commission (FTC) has voted 5-0 to issue orders requiring nine data brokers – companies that collect, analyze, and sell personal information of consumers – to reveal how they gather and use data about consumers, according to an FTC news release available at http://www.ftc.gov/opa/2012/12/databrokers.shtm.

The FTC – the agency that works for consumers to prevent fraudulent, deceptive, and unfair business practices – will use the responses received from the data brokers to prepare a study and to make recommendations on whether, and how, the data broker industry can improve privacy practices.  Specifically, the FTC is seeking details from the nine data brokers regarding:

  • 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.

The FTC also noted that data brokers can benefit consumers and the economy in many ways since having this information about consumers enables companies to prevent fraud and enables customers to better market their products and services. The nine data brokers receiving orders from the FTC are: Acxiom, Corelogic, Datalogix, eBureau, ID Analytics, Intelius, Peekyou, Rapleaf, and Recorded Future.

The FTC is authorized to issue an ‘Order to File a Special Report’ by Section 6(b) of the FTC Act. The text of the Order is available at http://www.ftc.gov/os/2012/12/121218databrokerssection6border.pdf. The ‘Resolution Directing Use of Compulsory Process To Collect Information Regarding Data Brokers’ is available at http://www.ftc.gov/os/2012/12/121218databrokersresolution.pdf.

The March 2012 FTC report ‘Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers’ called on the data broker industry to improve the transparency of its practices and set forth a voluntary framework of best practices based on privacy, consumer control, and increased transparency for the collection and use of consumer data. There are no current laws requiring data brokers to maintain the privacy of consumer data unless used for credit, employment, or other similar purposes. The report is available at http://ftc.gov/os/2012/03/120326privacyreport.pdf.

In June 2012, in the first FTC case to address the sale of Internet and social media data for employment screening, a data broker agreed to pay a $800,000 fine to settle FTC charges that the company marketed profiles to companies in the human resources, background screening, and recruiting industries without taking steps to protect consumers required under the Fair Credit Reporting Act (FCRA). More information is available in a press release at http://www.ftc.gov/opa/2012/06/spokeo.shtm.

Employment Screening Resources (ESR) – ‘The Background Check Authority’ – is a nationwide background screening firm accredited by the National Association of Professional Background Screeners (NAPBS). For more information, visit http://www.esrcheck.com/ or call toll free 888.999.4474.






About Employment Screening Resources (ESR):

Founded by safe hiring expert Attorney Les Rosen in 1997, Employment Screening Resources (ESR) – ‘The Background Check AuthoritySM’– provides accurate and actionable information that empowers employers to make informed hiring decisions for the benefit of their organizations, employees, and the public. CEO Rosen literally wrote the book on background checks with “The Safe Hiring Manual” and ESR is accredited by The National Association of Professional Background Screeners (NAPBS), a distinction held by a small percent of screening firms. Employers choosing ESR know they have selected an agency meeting the highest industry standards. To learn more about ESR, visit http://www.esrcheck.com or call toll free 888.999.4474.

About ESR News:

The Employment Screening Resources (ESR) News blog – ESR News – provides employment screening information for employers, recruiters, and jobseekers on a variety of topics including credit reports, criminal records, data privacy, discrimination, E-Verify, jobs reports, legal updates, negligent hiring, workplace violence, and use of search engines and social network sites for background checks. For more information about ESR News or to send comments or questions, please email ESR News Editor Thomas Ahearn at tahearn@esrcheck.com. To subscribe to the ESR News Blog Feed, visit http://www.esrcheck.com/wordpress/feed/. To subscribe to the complimentary ESRcheck Report monthly newsletter, please visit http://www.esrcheck.com/Newsletter/.