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Data Broker: Important Things You Need to Know

by | May 30, 2022 | Industry




Every time you interact with something you leave some little breadcrumbs about yourself. These little breadcrumbs are pieces of information. Having one piece of information will tell you part of a story but the more information you gather the clear and more correct the story become.

Nowadays people give out their information willingly and without realizing that this data can be extracted and stored. Property records, land registries, court records, birth certificates, postcodes, voter registration, or bankruptcy records can all be publicly accessed. And in the digital world, we are living today, online anonymity is a complete myth.

You can find on someone’s social media pages their pictures, information, likes, places they visited, relationship status, hobbies, friends lists, etc… Things have changed, you can DoubleTap if you like something or tweet if it’s the opposite. If you’re in a relationship update your relationship status or want to browse the news do it online.

If you want to trade stocks, use applications or want to buy new clothes, order them from an online shop. Want to track your calories, use an app or if you are having health problems, google it. If you are having relationship problems, google it or think of going outside, take your phone with you.

Today people are giving more and more private deets about themselves online without knowing that it’s being harvested and sold. Even our offline movements are being tracked. There are computers and smart devices in our houses, pockets, and bodies.  And we basically can’t live without them. Our devices are like tracking gadgets that generate a huge amount of data.

These data can be gathered, thanks in large part to cookies that enable websites to remember you. And the practice has gradually evolved to include third-party cookies. Companies that are planting a piece of code in your browser that allows them to track where else you are going on the internet.

We have all found ourselves being targeted by ads for something specific and thought about how they know about that. These third-party services gather small pieces of input about yourself and how you behave on the internet. And the data gathered can be traded freely and without your permission, because they’re not considered personal but pseudonymous.

This data is collected by the brokers who create user profiles. These user profiles are important digital entities that are being sold to other companies for advertising or direct marketing. Data brokers collect enough inputs for consumer profiling which make it easier for marketing agencies to target directly a group of interest.

The information collected could also be used in various targeted activities. Data broking has become a multi-billion dollar industry that acts like middlemen of surveillance and personal data is now a commodity that is traded. So what are data brokers?

What are data brokers?

Data brokers or information resellers are people or companies that sell your personal deets to businesses for marketing or other purposes. For example, a broker can sell you deets about the type of laundry detergent you use or the number of people you know who collect baseball cards. These dealers also sell datasets about your buying habits.

Data brokers are profit-led systems designed to log your behaviors every time you interact with the connected world. Your daily records are being collected by services such as Google Maps, Search, Facebook or contactless credit card transactions. Their main function is to gather input on individuals.

This can include information like whether a person has children and their ages. They can also collect details about a person’s income, home address and gender. You may be surprised to know that many of these companies also buy your inputs like purchase histories and warranty registrations. They then combine the dataset with their own records.

Combine that with public databases such as land registry, council tax or voter records, along with shopping habits, real-time health and location these datasets begin to reveal a lot about you. They may even notice that some of your friends are ignoring you altogether. The truth is information brokers know significantly more about you than you might think.

These brokers can make lists of individual information or they can compile databases of audiences of demographic information. These firms are thriving in a global marketplace where personal information is the most valuable asset. Personal data is considered anything that can be traced directly back to you without the need for additional information.

Using this data, advertising companies can show targeted advertisements to people. Others use information resellers to help detect fraud and these types of companies usually work with mobile phone operators or banks. These resellers are an important part of modern society. The approach may not be illegal and is a method of information gathering that is popular with businesses.

multiple document in a drawer with the word classified written on them
Photo by AbsolutVision on Unsplash

For instance, a data reseller might collect inputs from consumer websites to crack down on fraud. Other businesses use data brokers to verify information on loan applications, so they can calculate the chances of defaulting on a loan. These brokers may also know information about a consumer’s health, political beliefs, criminal records and so on.

A recent study has found that more people than ever are logging on to the internet to access information. This dataset can be sold to advertisers or third parties. Brokers collect this input by crawling the web for public sources of information and selling it. The industry is worth more than USD 200 billion and continues to grow rapidly.

And with huge demand, the business of information brokers is set to explode in the next few years. Federal law doesn’t give you the right to prevent a broker from collecting or sharing your personal deets, but you do have the right to request that your personal information is removed.

Data traffickers are regulated to some extent by state laws. While many people don’t consider information brokers as a business, they’re critical to our daily lives. After all, they gather information about us. This input is critical to a company’s ability to sell advertising. But that’s just the tip of the iceberg.

Why data brokers are important?

The growth of the data broker industry is not surprising given the burgeoning interest in consumer privacy and security. Information brokers are companies that buy and sell personal deets to make money. While the data is not technically transferred from one company to another, it is licensed to several third parties.

In a nutshell, brokers sell ‘pre-packaged consumer bundles’ with more value than the sum of their parts. Increasingly, businesses are leveraging data analytics as a means to improve their bottom line. The use of mobile devices, for example, has resulted in massive amounts of data about consumer behavior.

Companies are using this information to improve their business, from monitoring operations to analyzing consumer actions. Because data analytics is complicated, brokers are increasingly becoming the solution to these complicated analytic needs. They provide operational management and can help identify potential buyers. This can be a useful tool for analyzing large volumes of information.

Information helps companies understand their customers better, predict business trends, provide personalized experiences and increase profit. You’ve likely experienced some of these results yourself where you may have been bothered by phone calls from telemarketers and emails from brands and wondered how they acquired your information in the first place.

When you visit a website, you may have noticed that it collects personal input about you. The input that these companies collect is then packaged and sold to other companies. These companies need this insight to make better business decisions and data resellers make money by selling personal deets to other companies.

Then, companies use this information to develop profiles of their customers. These profiles are then used to push targeted products. Data companies can compile lists of billions of people’s personal information. They could also purchase lists of magazine subscribers to build targeted advertising audiences.

woman in white suit doing a present in a meeting
Photo by Kampus Production

Smartphone users’ personal deets can be harvested by companies as well, through their credit card and smartphone usage. In this way, information brokers make money from your dataset. Some brokers also advertise on data-sharing platforms, which typically consist of hundreds of companies.

Essentially, these companies refine and sell datasets to different third parties for a range of different purposes. Most brokers sell pre-packaged consumer bundles that pertain to certain target audiences and categories. This can include anything from advertising companies to gaming developers.

In many cases, information resellers operate legally and ethically. Countries with lax data privacy laws, companies can share consumer inputs with other companies in exchange for advertising. In many cases, consent to share personal data is implicit in the fine print when signing up for loyalty cards or online discounts. These companies may also combine publicly available sources of information.

You may be surprised to learn that many of these companies buy personal information from public entities also. Typically, brokers collect names, addresses, and other personal details about individuals. Most people don’t even realize that their inputs are being sold and these companies are fast-growing billion-dollar businesses.

This data is valuable to businesses. They then use that information to target advertising campaigns based on those interests. If you’ve recently bought laundry soap, they can send you ads that are relevant to your laundry needs. Brokers can also sell information to financial institutions. And sometimes they use the insight for fraud detection.

Many companies use information from brokers to crack down on fraud. They can also identify individuals who might be at risk of defaulting on their loans and can tailor their marketing to better match these risks. However, with the proliferation of devices that can track our information. Technology has moved beyond where the law is and how to put protections in place for consumers. And the data can be used in a lot of ways that people would never even imagine would be used.

Impacts of data brokers

Data brokers collect or purchase information from a variety of sources, online and offline, with public and private entities. They then aggregate all these datasets and sell them to companies. This is all the more important, since the more data they collect, the more information they can sell to others for more money.

Brokers are pushing the boundaries along with a steady stream of wearables, implants and other devices joining the Internet of things. Companies are measuring our heart rate, our breathing and our sleeping. This data is sent to our phones and then to the cloud. Once it’s in the cloud, it becomes a resource and companies can decide how they want to use it.

Traditionally it was being used for marketing and advertising campaign but now it’s being used in the healthcare and insurance industry. And they are ranking you and scoring you, based on their algorithm’s definition of whether or not your lifestyle leads to healthy habits or unhealthy habits.

The growing area of data broker activity is consumer scores. Although they are not well-known, consumer scores have a profound impact on consumers. A modeled consumer credit score consists of non-credit elements, which allows the consumer data broker industry to avoid giving consumers their FCRA rights (Fair Credit Reporting Act).

The commercial sources for data are vast. For example, some companies have access to your purchase history, loyalty card history and social media accounts. They can also gather information about your location. And if you sign up for a store loyalty program, you might agree to share certain information with the company.

Then, reseller may also have datasets about your income level, political views, and criminal history. These deets are used to target individuals based on their location. They sell that information to other companies that use it to categorize people. The rise of the data brokers industry can be a worrying sign of a growing threat to consumer privacy.

If you are a woman who buys plus-sized clothing online, they predict that you are overweight and more likely to be depressed and therefore more likely to have high healthcare costs. That could lead to people paying higher rates. These companies collect user information, often without consent.

They use the information to segment consumers into different categories. For example, if a person searches for baby clothes, they could be categorized as pregnant or a health risk. Even political parties use brokers to target potential voters during election campaigns. The practice of information resellers can also have a huge impact on the online world, giving rise to deepfakes videos or impacting digital trust.

While this practice isn’t illegal, there is a lack of transparency in the industry and privacy issues. This creates an environment in which many companies are forced to pay hefty fees for this information. The end result is that consumers’ privacy is at stake. As a result, consumers may be exposed to a variety of risks, ranging from monetary theft to identity fraud.

Data brokers are also prone to cyberattacks. The problem is that this information can be used against you and even for illegal purposes. When this information is available to strangers, people are exposed to embarrassment, unwanted marketing, identity theft, stalking and even criminal activity. And this problem is not limited to the internet.

In addition to selling personal deets, brokers often sell invasive lists of medical histories, including sexual preferences, religious views and political affiliation. If you’re looking for a job, for instance, an information broker can sell you a list of specific ailments and even your political and religious views. And because the data is not protected, anyone can buy the lists.

A recent case involved a woman who was denied a pharmacy job because of an inaccurate background check. The broker has linked an incorrect name to her application. The problem with brokers is that people cannot see what’s in their own files. And some brokers don’t even have to be licensed to sell personal information.

While these services might be beneficial to a lot of businesses, these companies aren’t always honest about what they do with your input. For example, your credit score may be inaccurate or your employment history is outdated. This dataset can be used to spy on you. If you are an employee, the only way to stop this is to ask your employer to make changes to your information.

They may even be stigmatized. This is because brokers hold sensitive information about consumers, such as social security numbers and credit card details. The impact of data resellers on consumers is immense and we are still struggling to understand the full extent of their potential. All these can even have a huge impact on user mental health.

Resellers need to comply with strict data governance laws to ensure the protection of the privacy of users. These laws vary widely from country to country, so it is important to understand the data governance laws in your country. Furthermore, some jurisdictions restrict brokers from operating in their territory.

Problem with data brokers

The rise of data brokers has spawned a backlash in the privacy industry. Privacy laws vary from state to state. In California, the California Consumer Privacy Act (CCPA) allows consumers to request information about brokers and to opt-out of data sales. This protection is important because most users are unaware of the extent to which their information is being collected.

Some aren’t even aware that it’s happening. It’s essential to protect your personal information. You can opt-out of directory information sharing and remove your phone number from your outbound caller ID with certain home phone companies. You can also opt-out of pre-shared offers of credit and put a security freeze on your credit report.

But these privacy controls are not enough as many consumers are unaware that their input is being shared. You need to educate yourself and your friends about this and other measures to protect your privacy. While there are options to opt-out of these programs, many people don’t. Opting out is free but most people don’t know they can.

As a consumer, you may be concerned about how brokers are using your information. Currently, opt-out processes are complicated and incomplete and consumers must do them individually. Many information resellers don’t even offer an opt-out process. Moreover, consumers cannot opt-out of a single list across all websites.

The most effective way to opt-out is to choose which websites collect your input and then unsubscribe from all of them. First, you should understand that consumers cannot opt-out of lists unless they specifically request to. Secondly, opting out of lists is difficult because consumers must go through each website’s privacy policies to determine which information is being collected.

Lastly, the impact of data brokers on consumers is difficult to measure, since most lists are vast. And even if you go through all the procedures, you won’t be sure if it is completely removed as nothing is original on the internet, everything is just a copy. And if brokers have your information, they can add it to their databases again.

Likewise, some resellers simply pull data from other websites, update themselves automatically, and don’t delete it even when you ask them to. Consent is a key element of privacy compliance. However, you can’t afford to sacrifice the quality of your user experience in the process of privacy compliance.

Consumers are increasingly impatient online and may click away from websites that require consent. Obtaining consent from users is an essential step to build relationships. Doing so should not be equated with strip mining; companies should consider this as relationship-building rather than data mining. And cybersecurity is of utmost importance.

By collecting and selling datasets about the demographics of consumers, brokers have gained access to an unprecedented amount of personal deets. The problem is that it is easy to search for yourself using Google, but it is not always that easy to choose what information you provide. Brokers usually do not offer any form of opt-out.

While there are no laws prohibiting these companies from using personal information, they must still be regulated. But that doesn’t mean that they operate legally and ethically. Some of these firms operate under the shadows with little regulation and little oversight. In some cases, data brokers are even illegal.

Future of data brokers

Despite the negative effects of information resellers, the industry is booming. Companies in the data broker industry range from small startups to giants. Typical activities include data collection and analytics, list brokering, and audience targeting. The future of data brokers may depend on how businesses use these platforms.

Many of them have long-standing relationships with specific retailers, banks, and catalogs. They may also get their information from third-party data brokers, but this doesn’t mean they don’t turn consumer deets into hard currency. Brokers could send consumer profiles to interested parties in exchange for payment. While this might seem counterintuitive, it could create real policy implications.

It isn’t easy to regulate information resellers, as they are used by multiple actors. Still, some lawmakers are working to make them regulated. Some lawmakers are calling for an industry-wide “duty of care” for brokers. But how can companies make sure they’re not violating consumers’ rights? What should regulators look for? We generate so much information now that these questions are hard to answer.

However, some brokers are starting to show users exactly what data they collect. Acxiom, for example, operates a website where you can view and update your datasets. In addition, you can request updates or deletion of information you don’t want to be collected. The future of data brokers is largely dependent on how well organizations use this technology to improve their business processes.

Companies can utilize brokers to make strategic business decisions based on their customers’ preferences. The increasing use of data in business applications is expected to create lucrative business opportunities for resellers and bring innovation. Transparency Market Research published a report that estimates the global data broker market will grow by 11.5% between 2017 and 2026.

With a steady increase in demand for consumer deets, brokers will only get more sophisticated as their data and software becomes more advanced. Also, advancements in artificial intelligence and blockchain technology can help with database management. Machine learning and augmented intelligence can help to process large amounts of information to seek patterns. Blockchain can be used to increase transparency.

A data marketplace will eventually replace the information broker model. These marketplaces are intended to help buyers and sellers obtain better ROI. They will also improve the transparency of data and consumer choice. It’s a win-win situation for everyone. With a marketplace, consumers will be able to access quality information at a low cost and benefit from greater choice.

There is also a verifiable level of consumer privacy protection. That’s the future of data brokers. It’s time to stop relying on brokers and embrace information exchanges. California recently passed legislation defining data brokers as companies that sell and share consumers’ personal information.

New privacy laws are expected to have a profound impact on the data broker industry. With these new laws, the market will be dominated by the most capable firms. In the meantime, the firms that are best at managing consumer information and analyzing its impact on the overall economy will be in a strong position to succeed. In the end, the future of data brokers depends on how these firms are regulated.