For decades, policymakers have expressed concerns about the lack of transparency of companies that buy and sell consumer data without direct consumer interaction.

In today’s economy, Data is big business. Data brokers companies that collect consumers’ personal information and resell or share that information with others—are important participants in this Data economy.

On a daily basis, consumers engage in a variety of online and offline activities that reveal personal information about them. Some typical activities include using a mobile device, shopping for a home or car, subscribing to a magazine, making a purchase at a store or through a catalog, browsing the Internet, responding to a survey in order to get a coupon, using social media, subscribing to online news sites, or entering a sweepstakes. As consumers engage in these daily activities, the entities they interact with collect information about them and, in many instances, provide or sell that information to data brokers.

Data brokers provide the information they compile to clients, who can use it to benefit consumers. Their clients may use the information to send relevant offers and coupons to consumers, which can give consumers more choices and lower their costs for searching for products and services. In addition, consumers may benefit from increased and innovative product offerings fueled by increased competition from small businesses that are able to connect with consumers that they may not have otherwise been able to reach. Data broker clients can also use data broker products to detect and prevent fraud, which can lower costs for businesses and, in turn, consumers.

At the same time, data broker practices may raise privacy concerns. Data brokers typically collect, manipulate, and share information about consumers without interacting directly with them. Consumers are largely unaware that data brokers are engaging in these practices and, to the extent that data brokers offer consumers explanations and choices about how the data brokers use their data, that information may be difficult to find and understand.

The past few years we has been made progress to improve transparency and choice. While data brokers provide important benefits to consumers, and some data brokers have taken steps to improve their privacy practices, overall transparency in this industry continues to be lacking. And with the emergence of new sources of information, improvements in analytics methods, and the availability of more granular information about individual consumers, the need for consumer protections in this area has never been greater.

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