Rockefeller: Data Broker Practices Raise Some Serious Consumer Protection Concerns

Chairman says he's considering further steps to promote transparency

December 18, 2013

JDR Head ShotWASHINGTON, D.C. -- Chairman John D. (Jay) Rockefeller IV today gave an opening statement at the U.S. Senate Committee on Commerce, Science, and Transportation hearing titled, "What Information Do Data Brokers Have on Consumers, and How Do They Use It?" Below are his remarks as prepared for delivery:

The disclosures about U.S. intelligence activities over the past few months have sparked a very public debate in this country about what kinds of information the government should be gathering, and how we protect the privacy of Americans who have done nothing wrong.

The Snowden disclosures have harmed our country’s national security, but they have made Americans think more than they usually do about how their lives – both online and offline – can be tracked, monitored and analyzed.

I am glad we are talking about these important privacy issues. We have all benefited from the rapid advances in computing technology. But we also cherish our personal freedoms. And we want to be able to protect ourselves and our loved ones from the unwanted gaze of the government and our neighbors.

What’s been missing from this conversation so far is the role that private companies play in collecting and analyzing our personal information.

A group of companies – known collectively as “data brokers” – are gathering massive amounts of data about our personal lives and selling this information to marketers.

We don’t hear a lot about the private-sector data broker industry, but it is playing a large and growing role in our lives. Let me provide a little perspective: In 2012, the data broker industry generated $156 billion in revenues. That’s more than twice the size of the entire intelligence budget of the United States Government – all generated by the effort to learn about, and sell, the details about our private lives.

One of the largest data broker companies, Acxiom, recently boasted to its investors that it can provide “multi-sourced insight into approximately 700 million consumers worldwide.”

When government or law enforcement agencies collect information about us, they are restrained by our Constitution and our laws; and they are subject to the oversight of courts, Inspectors General, and Congress.

But data brokers go about their business with little or no oversight. While there are laws on the books that protect the privacy of Americans’ health and financial information, they do not cover data brokers’ marketing activities.

Collecting consumers’ information for marketing purposes is not a new business. For decades before the Internet was invented, retailers, marketers - and yes, political candidates - compiled mailing lists that they used to send catalogues, coupon books, or other materials to their potential customers.

But the data broker industry has been revolutionized in recent years by the tremendous advances in computing and data analysis. And as consumers spend more and more time socializing and shopping online, they are generating rich new streams of personal data to collect and analyze.

These days, data brokers don’t just know our address, our income level, and maybe our political affiliation. They have collected thousands of data points about each one of us.

  • They know if you have diabetes or suffer from depression;
  • They know if you smoke cigarettes;
  • They know your reading habits; 
  • They know how much you and your family members weigh; 
  • And they may even know how many whiskey drinks you have consumed in the last 30 days.

Like the pieces of a mosaic, data brokers combine data points like these into startlingly detailed and intimate profiles of American consumers. Under current laws, we have no right to see these pictures of ourselves that these companies have created.

For the past year, this Committee has been trying to bring some much needed oversight to the data broker industry. We have been pushing the data brokers to answer same kind of questions many Americans have been asking their government since the Snowden disclosures.

  • What information are you collecting about us?, and
  • How are you using this information?

Today’s hearing is the first time we are publicly discussing what we are learning in this investigation. The Commerce Committee staff has also prepared a report for me on the progress of this investigation. I ask unanimous consent to put a copy of this report in the record of this hearing.

One of the things we have learned in this investigation is that data brokers engage in many unobjectionable activities. They do what marketers have always done – they help businesses find potential customers.

But we also have found some practices that raise some serious consumer protection concerns. In particular, I am disturbed by the evidence showing that that data brokers segment Americans into categories based on their incomes, and they sort economically vulnerable consumers into groups with names like:

  • “Rural and Barely Making It”
  • “Tough Start: Young Single Parents”
  • “Rough Retirement: Small Town and Rural Seniors” and
  • “Zero Mobility.”

I want to know how and why data brokers are putting Americans consumers into categories like these. And I want to know which companies are buying these lists to target their marketing to these groups.

Some companies in the data broker industry have responded positively to our oversight efforts. Over the past year, they have provided complete answers to my questions, even the tough questions.

But several of the largest data brokers – Acxiom, Epsilon, and Experian – are continuing to resist my oversight. To date, they have not given me complete answers about where they get their consumer data, and to whom they sell it.  

I am putting these three companies on notice today that I am not satisfied with their responses and am considering further steps I can take to get this information. And I want to assure them that the oversight efforts this Committee has started will continue.