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FTC report warns consumers about big data brokers

May 31, 2014 at 3:46 PM EDT
The Federal Trade Commission issued a report this week suggesting consumer protections be put in place to combat the collection and selling of consumer information. “Big data” companies collect and sell billions of bits of information about all aspects of consumers’ online lives, including online browsing, purchases, income and even religious and political affiliations. Amy Schatz of Re/code joins Hari Sreenivasan from Washington for more.

HARI SREENIVASAN: Earlier this week, the Federal Trade Commission issued a report that contained consumer protection recommendations concerning what’s referred to as “big data” – the companies that collect and sell billions of bits of information about all aspects of our online lives. Information that includes purchases, income, political affiliations – even religion. As FTC Chairwoman Edith Ramirez put it:

“It’s time to bring transparency and accountability to bear on this industry on behalf of consumers, many of whom are unaware that data brokers even exist.”

For some insight, we turn to Amy Schatz who covers tech policy issues for Re/code.

So, what were the things that this report uncovered that might surprise consumers?

AMY SCHATZ: I think most of the things in the report would surprise consumers, although this isn’t necessarily a new issue – this has been going around for a couple of years – but most people don’t know that there are a bunch of data collectors out there who are collecting data about you. Whether it’s who you voted for or your political beliefs. Whether it’s your zip code or what you purchased at the store last week or what you’re lookeingat online. There are these profiles that are being created online of most Americans now and that information is being traded and shared in a way that a lot of consumers might find a little troubling.

HARI SREENIVASAN: Give me an example of how the data can affect people in the future.

AMY SCHATZ: Well, I think one of the issues that the FTC brought up is that right now all this information is being collected about you and is being put into a profile and your profile. You get put into a category and you might be an urban-dweller or you might be a suburban mom and that information is being used by marketers to sell you stuff like toothpaste or fabric softener. I think that’s something that’s been going on a long time and consumer may or may not care about that, but the point that the FTC brought up is that that information could be used in ways that might be a little more damaging to you. Perhaps it might be used to market you something that might be a little more expensive. Instead of giving you a credit card offer they might give you an offer for a pay-day loan. Or they might try to sell you a certain kind of insurance that might be more expensive than another kind of insurance, simply based on these profiles that have been created about you.

HARI SREENIVASAN: So this is not just on the loyalty programs that my grocery store – this is on almost every credit card transaction. So if I purchase a certain kind of medication – that goes into a profile?

AMY SCHATZ: Right, and all kinds of information is being put into to these profiles and the data brokers are, according to the FTC report and other reporting on this issue, this information is being traded between brokers so that they can create a better, more comprehensive profile of you. And the idea is, one of the concerns about this is that information might be getting into your profile that is not correct. Like maybe you went and purchased arthritis medicine for a friend or relative – that might be put in your profile and that would suggest that you have arthritis but maybe you don’t. And in the future that might change the kind of offers that are made to you and what kind of insurance or other things you might be able to buy.

HARI SREENIVASAN: What are the recommendations? What can Congress do about this? What is Congress willing to do about this considering that many members of Congress use profiles of political affiliation for election time?

AMY SCHATZ: Right, Congress hasn’t shown much interest in doing something on this – although this issue has been out for a few years and there have been bills proposed but there hasn’t been a lot of popular support behind those. One of the reasons that the FTC came out with this report, which they’ve spent a couple of years working on, is that they’re really trying to push Congress to do something if only in terms of transparency to let people know that this is happening. To have a way to opt out of this information gathering or that there’s something that in the future if there’s incorrect information put into your profile that there’s something you could to get it out of there.

HARI SREENIVASAN: All right, Amy Schatz from Re/code, joining us from Washington, thanks so much.

AMY SCHATZ:  Thank you.