Financial Data Brokers Have You Pegged

In the world of Big Data, do you fall into the industry’s Extra Needy category, or are you viewed as American Royalty? Perhaps Ethnic Second City Struggler or Small Town Shallow Pockets is a more apt description of you? Or how about Eager Senior Buyer or Tough Start: Young Single Parent?

While the media are focused on Facebook’s privacy breaches, a growing multibillion-dollar industry of data brokers is mining personal information online in order to sell our data dossiers to financial and other companies – sometimes to the detriment of our personal finances.

Big Data collection also can be innocuous, when it is used for marketing. In this form, it’s just the high-tech version of snail mail solicitations for credit cards, retail catalogs, or the services of a neighborhood real estate agent.

But Pam Dixon, the executive director of the World Privacy Forum, said evidence is growing that some consumers are being exploited by the unfettered sharing of personal data. Further, individuals generally do not have a legal right to see their dossiers, which are proprietary – “and we don’t know what they’re being used for,” she said.

In one egregious case, brokers sold data on an elderly veteran, who was then victimized by a scam that stripped him of his life savings. Some brokers compile lists of people living in trailer parks to sell to companies making “predatory offers to those in financial trouble,” Dixon testified before the Senate.

In a high-profile case last year, the Federal Trade Commission shut down a company, Blue Global, on allegations that it set up numerous websites to solicit some 15 million loan applications with the promise of matching consumers to loans “with the lowest interest rates.” The FTC complaint called these offers “misleading” with “a high probability of fraud,” because the broker “indiscriminately” matched customers with payday lenders or sources of high-dollar personal loans but not necessarily to other financial companies that could offer them more favorable terms, the FTC said.

Brokers get their information from anyone who transacts online – when we fill out a mortgage form, apply for a credit card, buy something on Amazon, browse the Internet, or file publicly available documents, such as property records, marriage certificates, or bankruptcy filings. The companies compile the reams of data purchased from these sources into a financial, medical, or other dossier on each of us by matching up a few points of data – a birth date, email address, cell phone number, and Social Security number.

A new concern being raised by patient advocates and state insurance regulators is that insurers may use the data to begin pricing health policies based on lifestyle information. The streams of retail and other data that customers, often unwittingly, provide online contains myriad clues to their health – smoker, minority, heavy TV watcher, Fitbit wearer, maternity-clothes shopper, or someone going through a stressful bankruptcy or divorce. Again, while Big Data, when used in this way, is a breach of privacy, individuals can’t get access to how their personal information is being used.

Advances in artificial intelligence and an explosion of data sources clearly give brokers “a greater ability to make inferences about individuals,” said Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse.

Sometimes, the same kinds of data that are used to market attractive offers, such as credit cards with airline miles, to well-heeled potential customers are also used to assign others a “derogatory credit score” – sometimes using inaccurate information. These vulnerable customers may then be “deluged with predatory offers,” Dixon said.

Data brokers are largely unregulated. In contrast to the credit rating agencies, they fall outside of the regulatory framework designed to protect the privacy and distribution of financial and medical data. People are under the incorrect impression, Dixon said, that “there’s some law out there – they don’t know the name of it – that’s going to protect them from harm.”

So, who has your data and what do they know about you?

One way to protect some data is to opt out of data collection efforts by signing up for the Do Not Call List and similar services. However, there are dozens of such opt-outs, and filling them out is complicated, time consuming, and ineffective in stopping the onslaught of data collection.

In other words, there’s not much we, as consumers, can do about Big Data.

For those who want to try opting out, the World Privacy forum offers a Top 10 list of opt-out options and provides websites for opting out of data brokers.

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