Data Brokers

Wireless Carriers to Limit Sale of Location Data to Data Brokers

July 3, 2018 by David Klein

July 3, 2018

Verizon Wireless (“Verizon”) recently announced that it would end the sale of cell phone owners’ real-time location data to companies that buy and sell access to consumer location data. Within days of Verizon’s announcement, AT&T, Sprint, and T-Mobile piggy-backed on Verizon’s move by announcing that they too plan to limit and/or end sales of location data to data brokers. These wireless carriers—the four largest in the United States—have drawn criticism for the sale of cell phone owners’ location data to data brokers, as this information can be used to identify the whereabouts of almost any cell phone in the United States within seconds.

What motivated these wireless carriers to end sales to data brokers?

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More Data Brokers Targeted in Senate Commerce Committee Investigation

February 19, 2014 by David Klein

Senate Commerce Committee Chairman Jay Rockefeller recently expanded his investigation into the data broker industry, focusing specifically on the compilation and sale of products that identify consumers based on their financial vulnerability or health status.

Rockefeller initially launched the investigation in October 2012 to uncover how consumers’ personal information was being collected, shared and used. On December 18, 2013, a report was released in conjunction with Rockefeller’s hearing about the industry. The report noted that one of the primary ways that data brokers package and sell data to marketers is by putting consumers into categories based on characteristics that enable marketers to target potential and existing customers. The report noted that in many cases this may be beneficial because it provides consumers with products and services that are specific to their interests and needs. However, problems arise when these categories describe consumers using financial characteristics and the data ends up in the hands of predatory businesses seeking to identify vulnerable consumers.

Rockefeller noted that in the course of his investigation, some of the largest data brokers, such as Experian, have been evasive in providing information that had been requested by the Committee (which is particularly problematic in light of allegations that Experian’s subsidiary sold consumer data to an alleged identity theft scheme).

Earlier this month, Rockefeller sent Experian and others, including Lexis Nexis, new requests for information seeking, among other things, lists of all purchasers of the personal consumer data that the respective companies had collected and shared. In his correspondence, Rockefeller reiterated that he was “again” requesting information necessary for the Committee’s assessment of the potential consumer harms and benefits associated with data broker practices.

As we have reported in the past, the Federal Trade Commission has been cracking down on the data broker industry. The Senate Commerce Committee’s ongoing investigation seeks to uncover more facts related to industry practices and, if necessary, continue that crackdown.

If you are interested in learning more about this topic, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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FTC Issues Warning Letters to Data Brokers

May 7, 2013 by David Klein

Judging from the ten warning letters mailed to data brokers this week and the six we detailed last month, it is clear that the Federal Trade Commission (FTC) is taking violations of the Fair Credit Reporting Act (FCRA) very seriously. These warning letters come on the heels of the FTC’s decision in December of last year to begin focusing on the privacy practices of the data brokerage industry generally. As shown by the Equifax case, which we previously discussed on this blog, warning letters can lead to large monetary penalties and, thus, should heeded by everyone in the data brokerage business, even if a letter has not been specifically directed towards it.

FCRA Generally and Details of the FTC’s Most Recent Inquiry

The FCRA was created to protect consumers’ privacy and to ensure that those who collect, distribute and sell consumer information – called consumer reporting agencies (CRAs) – properly verify the identities of the parties requesting such information and confirm that such parties have a lawful purpose for receiving consumer information.

The latest set of warning letters resulted after FTC Staff contacted 45 data brokers, posing as individuals and/or companies seeking consumer information. Of the 45 data brokers, it was determined that ten brokers were willing to sell information to the FTC agents without properly following the authentication procedures set forth in the FCRA.

According to the FTC’s website, the ten companies receiving warning letters from the FTC include:

Two companies that appeared to offer “pre-screened” lists of consumers for use in making firm offers of credit: ConsumerBase and one additional company;
Two companies that appeared to offer consumer information for use in making insurance decisions: Brokers Data and US Data Corporation; and
Six companies that appeared to offer consumer information for employment purposes:Crimcheck.com, 4Nannies, U.S. Information Search, People Search Now, Case Breakers and USA People Search.

Takeaway and Best Practices for Data Brokers

While the FTC makes clear that it has not reached a conclusion regarding whether or not the ten companies in question have actually violated the FCRA, the warning letters serve as not-too-subtle reminders for the companies to re-evaluate their verification procedures in accordance with the requirements set forth by the FCRA. Considering the FTC’s recent scrutiny of the data brokerage industry, it would be wise for every company that collects, shares or uses consumer information to evaluate its business practices to avoid encountering an FTC investigation and associated fines and other costs.

If you are interested in learning more about this topic or need to review your data collection, usage and/or distribution practices based on the recent issuance of FTC warning letters, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

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