This editorial appeared in Sunday's Washington Post:
Many Americans are discovering the hard way that they live in a world of prying eyes. This is the underside of the digital revolution. Tens of millions of people have been harmed by the loss or compromise of their credit card and other personal information. Whether shopping online or in a store, whether using a mobile phone or browsing social media, more snooping goes on than most people realize.
The Federal Trade Commission under chairwoman Edith Ramirez has just highlighted one disturbing aspect of this trend in a report about the practices of data brokers. These are little-known firms with names like Acxiom, PeekYou and Rapleaf that amass large amounts of data on consumers and then share or sell the data, often without people knowing it. The FTC report follows a similar one published in December by the majority staff of the Senate Committee on Commerce, Science, and Transportation.
There's been much outrage at the National Security Agency for collecting domestic telephone metadata. But anyone who's worried about surveillance ought to pay attention to the scope and nature of data collection in the private sector. For example, the nine data brokers studied by the FTC were not only vacuuming up billions of bits of raw information, but they were also drawing conclusions about consumers based on inferences that may or may not be true. Labeling someone as a pet owner may be innocuous. But there are other categories created by data brokers that can pigeonhole individuals with certain ethnic, income or health labels that may be only partially correct. The FTC found that some companies have identified people as "Urban Scramble" or "Mobile Mixers," both of which include a high concentration of Latinos and African-Americans with low incomes. The category "Biker Enthusiast" might draw coupons from a motorcycle dealer, but it could also be a red light for an insurance company.
Good data, if properly used, can help prevent fraud and improve offerings to consumers. But what happens if the data collected are wrong? What if a consumer is labeled a higher risk because of a category that is inferred by the data broker but not really true? Most consumers don't even know about the categories and can't easily correct mistakes. Vast amounts of facts are being saved by these brokers. Of the nine firms studied, just one broker's database has information on 1.4 billion consumer transactions and 700 billion aggregated data elements; a second broker's database covers $1 trillion in consumer transactions.
In 1970, Congress passed a law allowing people to keep track of their credit reports — when information is used for decisions about credit, employment, housing and insurance. But the law does not cover the collection of consumer data for marketing purposes. An effort at industry self-regulation in the 1990s was short-lived. A new legislative drive is underway to provide consumers with a way to check and correct what's collected about them by data brokers. In this opaque corner of the digital revolution, the time has come for genuine transparency.
© 2014 Washington Post