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S. HRG. 113–693 

WHAT INFORMATION DO DATA BROKERS HAVE 

ON CONSUMERS, AND HOW DO THEY USE IT? 

HEARING 

BEFORE THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

DECEMBER 18, 2013 

Printed for the use of the Committee on Commerce, Science, and Transportation 

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JOHN D. ROCKEFELLER IV, West Virginia, Chairman 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

MARK PRYOR, Arkansas 

CLAIRE MCCASKILL, Missouri 

AMY KLOBUCHAR, Minnesota 

MARK WARNER, Virginia 

MARK BEGICH, Alaska 

RICHARD BLUMENTHAL, Connecticut 

BRIAN SCHATZ, Hawaii 

EDWARD MARKEY, Massachusetts 

CORY BOOKER, New Jersey 

JOHN THUNE, South Dakota, Ranking 

ROGER F. WICKER, Mississippi 

ROY BLUNT, Missouri 

MARCO RUBIO, Florida 

KELLY AYOTTE, New Hampshire 

DEAN HELLER, Nevada 

DAN COATS, Indiana 

TIM SCOTT, South Carolina 

TED CRUZ, Texas 

DEB FISCHER, Nebraska 

RON JOHNSON, Wisconsin 

ELLEN L. DONESKI, Staff Director 

JAMES REID, Deputy Staff Director 

JOHN WILLIAMS, General Counsel 

DAVID SCHWIETERT, Republican Staff Director 

NICK ROSSI, Republican Deputy Staff Director 

REBECCA SEIDEL, Republican General Counsel and Chief Investigator 

(III) 

C O N T E N T S 

Page 

Hearing held on December 18, 2013 ...................................................................... 1 

Statement of Senator Rockefeller ........................................................................... 1 

Staff report entitled ‘‘A Review of the Data Broker Industry: Collection, 

Use, and Sale of Consumer Data for Marketing Purposes’’ by the Office 

of Oversight and Investigations Majority Staff .......................................... 4 

Statement of Senator Thune ................................................................................... 54 

Prepared statement of Alicia Puente Cackley, Director Financial Markets 

and Community Investment, U.S. Government Accountability Office ..... 56 

Statement of Senator Booker .................................................................................. 119 

Statement of Senator Johnson ................................................................................ 121 

Statement of Senator Blumenthal .......................................................................... 123 

Statement of Senator Markey ................................................................................. 126 

Statement of Senator McCaskill ............................................................................. 129 

Statement of Senator Fischer ................................................................................. 135 

WITNESSES

Jessica Rich, Director, Bureau of Consumer Protection, Federal Trade Commission .................................................................................................................. 66 

Prepared statement .......................................................................................... 68 

Pam Dixon, Executive Director, World Privacy Forum ........................................ 72 

Prepared statement .......................................................................................... 73 

Joseph Turow, Robert Lewis Shayon Professor of Communication, Associate 

Dean for Graduate Studies, Annenberg School for Communication, University of Pennsylvania ............................................................................................. 102 

Prepared statement .......................................................................................... 104 

Tony Hadley, Senior Vice President of Government Affairs and Public Policy, 

Experian ................................................................................................................ 105 

Prepared statement .......................................................................................... 107 

Jerry Cerasale, Senior Vice President of Government Affairs, Direct Marketing Assocation ................................................................................................. 110 

Prepared statement .......................................................................................... 111 

APPENDIX

Response to written question submitted to Jessica Rich by: 

Hon. John D. Rockefeller IV ............................................................................ 143 

Hon. Kelly Ayotte ............................................................................................. 143 

Response to written questions submitted to Jerry Cerasale by: 

Hon. Amy Klobuchar ........................................................................................ 145 

Hon. Kelly Ayotte ............................................................................................. 145 

(1) 

WHAT INFORMATION DO DATA BROKERS 

HAVE ON CONSUMERS, AND HOW DO THEY 

USE IT? 

WEDNESDAY, DECEMBER 18, 2013 

U.S. SENATE, 

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, 

Washington, DC. 

The Committee met, pursuant to notice, at 2:31 p.m., in room 

SR–253, Russell Senate Office Building, Hon. John D. Rockefeller 

IV, Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 

U.S. ENATOR FROM WEST VIRGINIA 

The CHAIRMAN. The Committee will come to order. 

There are, at this point, two people sitting at the dais, and they 

are two wonderful people, but I would be pleased if there were 

more. Senator Blumenthal and Senator Pryor, Senator Markey, 

Senator Fischer, Senator Warner will be here. 

But this is the day that we almost vote on the budget, actually. 

We don’t quite. We always find ways to do it. You have the motion 

to proceed to it, and then you have a motion to—whatever. And 

then tomorrow at some point we vote on the budget. Just be grateful you are in private life. 

[Laughter.] 

The CHAIRMAN. OK. You are all welcome. 

The disclosures about U.S. intelligence activities over the past 

few months have sparked a very public debate in this country 

about what kinds of information the government should be gathering and how we protect the privacy of Americans who have done 

nothing wrong. 

The Snowden disclosures have harmed our country’s national security, but they have made Americans think more than they usually do about how their lives, both online and offline, can be 

tracked, monitored, and analyzed. People are aware of that, not to 

the extent that they are in Great Britain, where they are so accustomed to being videotaped in everything they do. We are still going 

through that adjustment period. 

I am glad we are talking about these important privacy issues, 

in general and today. We have all benefited from the rapid advances in computing technology, but we also cherish our personal 

freedoms. We always use that word, ‘‘cherish’’ our personal freedoms. But we do. And it is a complicated subject. And we want to 

2 

be able to protect ourselves and our loved ones from the unwanted 

gaze of the government and our neighbors. 

What has been missing from this conversation so far is the role 

that private companies play in collecting and analyzing our personal information. A group of companies known collectively as 

‘‘data brokers’’ are gathering massive amounts of data about our 

personal lives and selling this information to marketers. We don’t 

hear a lot about the private-sector data broker industry, but it is 

playing a large and growing role in our lives. 

Let me provide a little perspective. In the year 2012, which you 

will recall was last year, the data broker industry generated $156 

billion in revenues—that is more than twice the size of the entire 

intelligence budget of the United States Government—all generated by the effort to learn about and sell the details about our 

private lives. Whether we know it or like it or not, makes no difference. 

One of the largest data broker companies, Acxiom, recently 

boasted to its investors that it can provide, quote, ‘‘multi-sourced 

insight into approximately 700 million customers worldwide.’’ 

When government or law enforcement agencies collect information about us, they are restrained by our Constitution and our 

laws, and they are subject to the oversight of courts, inspectors 

general, and the United States Congress through the Intelligence 

Committee in the Senate and the House. 

And I have served on the Intelligence Committee since before 9/ 

11, and I can declare to you absolutely without a single thought 

that the protection that NSA provides to security and secrecy is far 

better than what we are going to be talking about today. They have 

rules. They have all kinds of judges and hoops that you have to 

jump through. The FBI is involved, DOJ. It is all—it is very tight. 

And every day you read the paper, you would think it didn’t 

exist, it is just the government gone wild. But particularly when 

it comes to domestic, which is called Section 215, it is very tightly 

monitored, and there is never content, there is never e-mail, and 

there is never a name—never a name. There is just a telephone 

number. 

But data brokers go about their business with little or no oversight. While there are laws on the books that protect the privacy 

of Americans’ health and financial information, they do not cover 

data brokers’ marketing activities. 

Collecting consumers’ information for marketing purposes is not 

a new business. For decades before the Internet was invented, retailers, marketers, and, yes, political candidates compiled mailing 

lists that they used to send catalogs, coupon books, or other materials to their potential customers. 

But the data broker industry has been revolutionized in recent 

years by the tremendous advances in computing and data analysis. 

And as consumers spend more and more time socializing and shopping online, they are generating rich new streams of personal data 

to collect and analyze, on the part of the data brokers. 

These days, data brokers don’t just know our address, our income 

level, our political affiliation, most probably, they probably know 

the weight of everybody in the family. They have collected thouVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 S:\GPO\DOCS\95838.TXT JACKIE
3 

sands of data points about each one of us, and we are simply not 

aware of it, except in theory. 

They know if you have diabetes or suffer from depression. They 

know if you smoke cigarettes. They know your reading habits, your 

browsing habits. They know how much you and your family members weigh. And they may even know how many whiskey drinks 

you have consumed in the last 30 days. 

We wouldn’t reveal that kind of information, would we? 

Senator THUNE. Of course not. 

The CHAIRMAN. No. 

[Laughter.] 

The CHAIRMAN. Like the pieces of a mosaic, data brokers combine 

data points like these into startlingly detailed and intimate profiles 

of American consumers. 

Under current laws, we have no right to see these pictures of 

ourselves that these companies have created. We have no right. For 

the past year, this committee has been trying to bring some muchneeded oversight to the data broker industry. 

Where is the copy of our report? Oh, it is under here. I have it. 

We have been pushing the data brokers to answer the same 

kinds of questions many Americans have been asking the government since the Snowden disclosures: What information are you collecting about us, and how are you using the information? 

Today’s hearing is the first time we are publicly discussing what 

we are learning in this investigation. The Commerce Committee 

staff has also prepared a report for me and for the Ranking Member on the progress of this investigation. It is thus. More to come. 

I ask unanimous consent to put a copy of this report in the 

record of this hearing. 

[The report follows:] 

4 


1218COVE1.eps
5 

Table of Contents 

Executive Summary 

Background 

A. GAO Review of Privacy Laws Applicable to Data Brokers 

B. Voluntary Industry Guidelines 

C. Privacy and Consumer Protection Issues Regarding Data Broker Practices 

Privacy Issues 

Potentially Harmful Uses of Data Broker Products 

Use of Predictive Scoring Products for Marketing 

Data Breaches 

D. Recent FTC and Congressional Reviews of the Data Broker Industry 

II. Committee Investigation 

III. Committee Majority Staff Findings Regarding Industry Practices 

A. Data Broker Collection of Consumer Data 

1. Nature of Data Collected 

2. Sources of Consumer Data 

a. Government Records and Other Publicly Available Data 

b. Purchase or License 

c. Cooperative Arrangements 

d. Self-Reporting by Consumers 

e. Social Media 

B. Data Broker Products 

1. How Data Brokers Package Consumer Information 

2. Issues Regarding Data Broker Products 

a. Products that Identify Financially Vulnerable Populations 

b. Scoring Products that Mirror Tools Regulated under the Fair Credit 

Reporting Act 

C. Data Broker Customers and How They Use Data Broker Products 

1. Who Buys the Data 

2. New Mechanisms for Using Data 

D. Data Broker Transparency and Privacy Practices 

1. Disclosure Limitations 

2. Consumer Access and Control Rights 

3. Opt-Out Rights 

IV. Conclusion 

Appendices and Exhibits 

Appendix I: Federal Laws that May Be Applicable to Information Collected by 

Data Brokers 

Appendix II: Sample List of Targeting Products Identifying Financially Vulnerable 

Populations 

Appendix III: Sample List of Offline Elements Available for Online Advertising 

Exhibit A: Sample Consumer Surveys 

Exhibit B: Sample Product Descriptions 

Exhibit C: Experian ChoiceScore Marketing Description 

6 

Executive Summary 

Consumers are conducting more and more of their daily business online and 

through their mobile devices. They use the Internet and their smart phones and tablets to make purchases, research medical conditions, plan vacations, interact with 

friends and relatives, do their jobs, map travel routes, and otherwise pursue their 

interests. With these activities, consumers are creating a voluminous and unprecedented trail of data regarding who they are, where they live, and what they own. 

At the same time, the Internet and other technological advances have made consumer data easier to access, analyze, and share. Information that in years past was 

accessible only through a trip to the library or courthouse can now be readily available to millions online, as computing capabilities for storing and reviewing information continue to grow at exponential rates. 

These changes have fueled the growth of a multi-billion dollar industry that largely operates hidden from consumer view. Today, a wide range of companies known 

as ‘‘data brokers’’ collect and maintain data on hundreds of millions of consumers, 

which they analyze, package, and sell generally without consumer permission or 

input. Since consumers generally do not directly interact with data brokers, they 

have no means of knowing the extent and nature of information that data brokers 

collect about them and share with others for their own financial gain. 

Data brokers collect and sell information for a variety of purposes including for 

fraud prevention, credit risk assessment, and marketing. Their customer base encompasses virtually all major industry sectors in the country in addition to many 

individual small businesses. Some of the most well-known products sold by data brokers are credit reports that businesses use to make eligibility determinations for, 

among other things, credit, insurance, and employment—activities where consumers 

have detailed statutory consumer protections regarding the accuracy and sale of 

their information. 

This Committee Majority staff report focuses on data broker activities that are 

subject to far less statutory consumer protection: the collection and sale of consumer 

data specifically for marketing purposes. In this arena, data brokers operate with 

minimal transparency. 

One of the primary ways data brokers package and sell data is by putting consumers into categories or ‘‘buckets’’ that enable marketers—the customers of data 

brokers—to target potential and existing customers. Such practices in many cases 

may serve the beneficial purpose of providing consumers with products and services 

specific to their interests and needs. However, it can become a different story when 

buckets describing consumers using financial characteristics end up in the hands of 

predatory businesses seeking to identify vulnerable consumers, or when marketers 

use consumers’ data to engage in differential pricing. 

Further, the data breaches that have repeatedly occurred in this industry and 

with others in the data economy underscore the public’s need to understand the volume and specificity of data consumer information held by data brokers. 

In light of these issues and the Chairman’s longstanding commitment to consumer 

protection and privacy matters, the Committee opened an inquiry last October to 

shine a light on how the data broker industry operates, with a specific focus on nine 

representative companies that sell consumer data for marketing purposes. The Committee’s inquiry sought answers to four basic questions: 

• What data about consumers does the data broker industry collect? 

• How specific is this data? 

• How does the data broker industry obtain consumer data? 

• Who buys this data and how is it used? 

In response to the Committee’s inquiries, the companies queried provided documents and narrative explanations. While some of the companies have been completely responsive to this inquiry, several major data brokers to date have remained 

intent on keeping key aspects of their operations secret from both the Committee 

and the general public. 

Based on review of the company responses and other publicly available information, this Committee Majority staff report finds: 

(1) Data brokers collect a huge volume of detailed information on hundreds of millions of consumers. Information data brokers collect includes consumers’ personal characteristics and preferences as well as health and financial information. Beyond publicly available information such as home addresses and phone 

numbers, data brokers maintain data as specific as whether consumers view 

a high volume of YouTube videos, the type of car they drive, ailments they 

may have such as depression or diabetes, whether they are a hunter, what 

7 

1Federal Trade Commission, Protecting Consumer Privacy in an Era of Rapid Change, at 68 

(Mar. 2012) (hereafter ‘‘FTC Privacy Report’’). These companies may also be referred to as ‘‘information resellers.’’ See Government Accountability Office, Information Resellers: Consumer 

Privacy Framework Needs to Reflect Changes in Technology and the Marketplace, GAO–13–663 

(Sept. 2013) (hereafter ‘‘GAO Information Resellers Report’’). 2For example, after the introduction of zip codes in 1963, direct mail marketing companies 

used zip code data to make assumptions about individuals, such as the kinds of magazines they 

read, the foods they ate, and political affiliations. In 1974, social scientist Jonathan Robbin created PRIZM (Potential Rating Index for Zip Markets), which combined ZIP Codes with census 

data and consumer surveys to help target direct mail marketing. Michael J. Weiss, The Clustering of America (1988). 3Financial Times, Data Brokers Compile Lists to Map Your Life before you Reach the Cradle 

(June 13, 2013). 

types of pets they have; or whether they have purchased a particular shampoo 

product in the last six months; 

(2) Data brokers sell products that identify financially vulnerable consumers. 

Some of the respondent companies compile and sell consumer profiles that define consumers in categories or ‘‘score’’ them, without consumer permission or 

knowledge of the underlying data. A number of these products focus on consumers’ financial vulnerability, carrying titles such as ‘‘Rural and Barely Making It,’’ ‘‘Ethnic Second-City Strugglers,’’ ‘‘Retiring on Empty: Singles,’’ ‘‘Tough 

Start: Young Single Parents,’’ and ‘‘Credit Crunched: City Families.’’ One company reviewed sells a marketing tool that helps to ‘‘identify and more effectively market to under-banked consumers’’ that the company describes as individuals including ‘‘widows’’ and ‘‘consumers with transitory lifestyles, such as 

military personnel’’ who annually spend millions on payday loans and other 

‘‘non-traditional’’ financial products. The names, descriptions and characterizations in such products likely appeal to companies that sell high-cost loans and 

other financially risky products to populations more likely to need quick cash, 

and the sale and use of these consumer profiles merits close review; 

(3) Data broker products provide information about consumer offline behavior to 

tailor online outreach by marketers. While historically, marketers used consumer data to locate consumers to send catalogs and other marketing promotions through the mail, or contact via telephone, increasingly the information data brokers sell marketers about consumers is provided digitally. Data 

brokers provide customers digital products that target online outreach to a 

consumer based on the dossier of offline data collected about the consumer; 

(4) Data brokers operate behind a veil of secrecy. Data brokers typically amass 

data without direct interaction with consumers, and a number of the queried 

brokers perpetuate this secrecy by contractually limiting customers from disclosing their data sources. Three of the largest companies—Acxiom, Experian, 

and Epsilon—to date have been similarly secretive with the Committee with 

respect to their practices, refusing to identify the specific sources of their data 

or the customers who purchase it. Further, the respondent companies’ voluntary policies vary widely regarding consumer access and correction rights 

regarding their own data—from virtually no rights to the more fulsome policy 

reflected in the new access and correction database developed by Acxiom. 

I. Background 

While there is no statutory definition for ‘‘data brokers,’’ the Federal Trade Commission (FTC) has defined this term to include ‘‘companies that collect information, 

including personal information about consumers, from a wide variety of sources for 

the purpose of reselling such information to their customers for various purposes, 

including verifying an individual’s identity, differentiating records, marketing products, and preventing financial fraud.’’ 1 This report relies on the FTC definition of 

data broker, and focuses specifically on the collection and sale of consumer information for the purpose of marketing. 

The practice of collecting and selling consumer data to help businesses conduct 

marketing has existed for many decades. Long before the advent of the Internet, email, or the mobile economy, data brokers developed expertise in compiling consumer data to facilitate targeted outreach to consumers through direct mail.2 Toward that end companies have for many years assembled information about consumers from public records, surveys and sweepstakes entries, to develop consumer 

lists for use by marketers in targeting mailings and phone calls.3

What is new in recent years, however, is the tremendous increase in the volume 

and quality of digitally recorded data—and the technological advances that have faVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00011 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE
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4See Kenneth Cukier and Viktor Mayer-Schho ̈enberger, The Rise of Big Data: How It’s Changing the Way We Think about the World, Foreign Affairs, at 28–40 (May/June 2013) (noting that 

while in 2000 ‘‘only one quarter of all the world’s stored information was digital’’ and ‘‘the rest 

was preserved on paper, film, and other analog media,’’ by 2013 ‘‘less than two percent of all 

stored information is non-digital’’); Charles Duhigg, The Power of Habit: Why We Do What We 

Do in Life and Business, Chapter 7; Software & Information Industry Association, Data-Driven 

Innovation: A Guide for Policymakers—Understanding and Enabling the Economic and Social 

Value of Data, at 1–9 (2013); Organization for Economic Co-operation and Development, The 

Evolving Privacy Landscape: 30 Years After the OECD Privacy Guidelines, OECD Digital Economy Papers, No. 176, at 16–18 (2011) (online at http://dx.doi.org/10.1787/5kgf09z90c31-en). 5See Pew Internet & American Life Project, Broadband and Smartphone Adoption Demographics (Aug. 27, 2013) (online at http://www.pewinternet.org/Infographics/2013/Broadbandand-smartphone-adoption.aspx) (‘‘Today 56 percent of American adults own a smartphone or 

some kind, compared with 70 percent who have broadband at home’’); Pew Internet & American 

Life Project, Cell Phone Activities 2012. 6Salon.com, How Netflix is Turning Viewers into Puppets (Feb. 1, 2013). 7Time Magazine, Data Mining: How Companies Now Know Everything About You (Mar. 10, 

2011). 8 Entrepreneur, How Fitbit Is Cashing In on the High-Tech Fitness Trend (July 27, 2012). 9 NPR, The Salt, The ‘Smart Fridge’ Finds the Lost Lettuce, for A Price (May 4, 2012). 10GAO Information Resellers Report, supra n.1, at 34. 11GAO Information Resellers Report, supra n.1, at 5 (noting: ‘‘Several privacy related organizations and websites maintain lists of data brokers—for example, Privacy Rights Clearinghouse 

lists more than 250 on its website—but none of these lists claim to be comprehensive. The Direct 

Marketing Association, which represents companies and nonprofits that use and support datadriven marketing, maintains a proprietary membership list, which it says numbers about 2,500 

organizations (although that includes retailers and others that typically would not be considered 

information resellers)’’). 12 E.g., New York Times, You for Sale: Mapping, and Sharing, the Consumer Genome 

(June 16, 2012) (focusing on data broker Acxiom and reporting that the company maintains 

about 1,500 data points per consumer that include information on the size of home loans, household incomes, or whether a household is concerned about certain health conditions). 13GAO Information Resellers Report, supra n. 1 at 1. To address these objectives, GAO analyzed laws, studies and other documents, and interviewed representatives of Federal agencies, 

the date broker industries, consumer and privacy groups, and others. Id. 14GAO Information Resellers Report, supra n.1, at 7. 15GAO Information Resellers Report, supra n.1, at 16. 

cilitated access to, storage, analysis, and sharing of this information.4 Information 

that was previously public but required a trip to places such as a library or courthouse to retrieve can now be instantaneously accessible to millions when posted on 

the Internet. At the same time, consumers increasingly are expanding their digital 

data footprint as they go about their daily routines. 

For example, millions of consumers are now using computers, smart phones, and 

tablets to make purchases, plan trips, and research personal financial and health 

questions, among other activities.5 These digitally recorded decisions provide insights into the consumer’s habits, preferences, and financial and health status. A 

wide and ever-expanding variety of other routine activities also are becoming part 

of consumers’ digital trail—from viewing decisions regarding video streaming services 6 to online searches and mapping requests 7 to personal fitness monitoring 

through wearable devices 8 to stocking ‘‘smart’’ refrigerators that record food purchases and monitor expiration dates.9

Amid this continuing growth in consumers’ digital records, there has been a ‘‘vast 

increase’’ in the number and types of companies that collect and sell consumer 

data.10 No comprehensive list of such companies currently exists, but estimates indicate the data broker industry consists of many hundreds of members.11 Media accounts and other reports in recent years have provided glimpses into some of the 

ways data brokers are obtaining, compiling, and sharing consumer data.12 However, 

data broker activities have remained largely obscured from public view because 

these companies generally do not collect data directly from consumers and many of 

their practices lie outside the ambit of Federal consumer protection laws. 

A. GAO Review of Privacy Laws Applicable to Data Brokers 

In light of these changes regarding the availability and sale of consumer information, Chairman Rockefeller requested that the Government Accountability Office 

(GAO) review the privacy laws applicable to consumer information collected and sold 

for marketing purposes.13 In response, in September 2013, GAO released a report 

concluding that there is no one comprehensive privacy law governing information 

collection and sale of consumer data by private sector companies 14 and that further, 

existing privacy laws have ‘‘limited scope’’ regarding the collection, use, and sale of 

consumer data for marketing purposes.15

9 

16 15 U.S.C. § 1681b(c). The Fair Credit Reporting Act provides consumers opt-out rights for 

such information. 15 U.S.C. § 1681b(e). 17GAO Information Resellers Report, supra n.1, at 16–19. 18GAO Information Resellers Report, supra n.1, at 7. 19 A ‘‘consumer report’’ means any written, oral, or other communication of any information 

by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, 

credit capacity, character, general reputation, personal characteristics, or mode of living which 

is used or expected to be used or collected in whole or in part for the purpose of making eligibility decisions. 15 U.S.C. § 1681a (d). 20 15 U.S.C. § 1681b (e). Pre-screened offers of credit or insurance—sometimes called ‘‘pre-approved’’ offers—are sent to consumers unsolicited, usually by mail. They are based on information in consumers’ credit reports that indicates that the individuals receiving the offer meet the 

criteria set by the company making the offer. The FCRA limits the circumstances in which consumer reports can be used to make pre-screened offers, and provides that all such offers must 

include a notice of consumers’ right to stop receiving future pre-screened offers. 21GAO Information Resellers Report, supra n.1, at 19. 22See, e.g., Senate Committee on Commerce, Science and Transportation, The Need for Privacy Protections: Is Industry Self-Regulation Adequate, 112th Cong. (2012) (S. Hrg. 112–785). 23 Id. 24 Id. 25Direct Marketing Association, Direct Marketing Association Guidelines for Ethical Business 

Practice (May 2011). 

Specifically, GAO found that under current law, consumers have no Federal statutory right to know what information data brokers have compiled about them for 

marketing purposes, or even which data brokers hold any such information. Further, with the exception of information used for pre-screened offers of credit and insurance,16 consumers generally do not have the right to control what personal information is collected, maintained, used, and shared about them—even where such information concerns personal or sensitive matters about an individual’s physical and 

mental health. In addition, no Federal law provides consumers with the right to correct inaccuracies in the data or assumptions made by data brokers on their own profiles.17

GAO does note that a ‘‘more narrowly tailored’’ set of laws concerning private sector use of consumer information exists which ‘‘apply for specific purposes, in certain 

situations, to certain sectors, or to certain types of entities.’’ 18 For example, the Fair 

Credit Reporting Act imposes a number of obligations on consumer reporting agencies (CRAs), which are entities that assemble consumer information into ‘‘consumer 

reports,’’ 19 commonly referred to as credit reports, for use by issuers of credit and 

insurance, and by employers, landlords, and others in making eligibility decisions 

affecting consumers. The FCRA prohibits the sale of consumer reports for other 

than a permissible purpose. The FCRA does not allow the use of credit reports for 

marketing purposes, though marketing via pre-screened offers of credit and insurance is allowed, where it is a firm offer of credit and consumers are provided the 

opportunity to opt-out of such offers in the future.20

GAO also found that current Federal law does not fully address the use of new 

technologies, despite the fact that social media, web tracking, and mobile devices 

allow for faster, cheaper and more detailed data collection and sharing among resellers and private-sector entities.21

Appendix I at the end of this report provides a detailed summary of the FCRA, 

and other existing Federal privacy laws and their applicability to the collection and 

dissemination of consumer data by data brokers. 

B. Voluntary Industry Guidelines 

The direct advertising and data broker industries have consistently asserted that 

Congress should defer to industry self-regulation rather than enacting broader consumer privacy legislation.22 Industry members assert that their interest in avoiding 

reputational harm motivates them to engage in strong self-regulation and provides 

consumers with meaningful privacy protections.23 Privacy advocates, on the other 

hand, have argued that self-regulation does not adequately addresses concerns regarding the potential for consumer abuse in this arena.24

Industry trade associations that include data brokers have identified voluntary 

best practice guidelines for its members.25 For example, the Direct Marketing Association (DMA) issued Guidelines for Ethical Business Practice that include principles of conduct, including recommendations on how members should handle and 

protect consumer information. Specifically, these guidelines provide that the members should offer notice of its policy ‘‘regarding the rental, sale, exchange or transfer 

of data about them’’ and the ability to opt-out of inclusion on a mailing list or other 

10 

26 Id. at 18–19. 27 Id. at 20 (Article #33: Collection, Use, and Transfer of Health-Related Data). 28See AdChoices website at http://www.youradchoices.com/ (accessed Dec. 13, 2013). 29See FTC Privacy Report, supra n.1, at 61–69. 30Financial Times, Companies Scramble for Consumer Data (June 12, 2013). 31Keynote Address by Commissioner Julie Brill, Reclaim Your Name, 23rd Computers Freedom and Privacy Conference (June 26, 2013). 32See GAO Information Resellers Report, supra n.1, at 40–41 (summarizing industry arguments on benefits of information sharing for consumers). 33 Charles Duhigg, The Power of Habit, Chapter 7. 34Testimony of Pam Dixon, Executive Director, World Privacy Forum, House Committee on 

Energy and Commerce, Subcommittee on Communications, Technology, and the Internet 

(Nov. 19, 2009). See also Dwork & Mulligan, It’s Not Privacy, and It’s Not Fair, 66 

marketing methods,26 as well as specific ways to handle health information.27 A 

number of the companies that are the subject of the Committee’s inquiry are DMA 

members and have agreed to abide by the association’s guidelines. 

In addition, the Digital Advertising Alliance, the trade association of the online 

advertising industry, has implemented Ad Choice, a program that allows consumers 

some control over their online information as it is used for online behavioral advertising.28

C. Privacy and Consumer Protection Issues Regarding Data Broker Practices 

Privacy and information experts have raised concerns regarding data broker practices. These include issues relating to consumer privacy rights with respect to the 

use of their own personal information; the potential harmful ways consumer profiles 

can be used; the extent to which data broker products categorize consumers based 

on financial characteristics are serving as substitutes or supplements for the consumer report products that are more highly regulated; and the vulnerability of data 

broker computer systems to a data breach. 

Privacy Issues. One major issue raised by privacy advocates is that data brokers 

operate without transparency to consumers. Since data brokers generally collect information without the consumers’ knowledge, consumers have limited means of 

knowing how the companies obtain their information, whether it’s accurate, and for 

what purposes they are using it.29

Privacy experts further point out that consumers currently lack control over the 

compilation and use of data that may contain intimate details about them. For example, the Financial Times reported one data broker is selling lists of addresses and 

names of consumers suffering from conditions including cancer, diabetes, and depression, and the medications used for those conditions; another is offering lists 

naming consumers, their credit scores, and specific health conditions.30 Citing these 

and other examples, FTC Commissioner Julie Brill recently raised the question: 

‘‘What damage is done to our individual sense of privacy and autonomy in a society 

in which information about some of the most sensitive aspects of our lives is available for analysts to examine without our knowledge or consent, and for anyone to 

buy if they are willing to pay the going price.’’ 31

Data brokers argue that the creation and use of consumer profiles for marketing 

does not pose substantial privacy issues for consumers because this information cannot be used in decisions affecting a consumer’s eligibility for credit or insurance, or 

in employment or housing decisions. Rather, such profiling benefits consumers by 

facilitating targeted outreach about products and services that are relevant to consumers’ specific interests, needs, or preferences.32

However, an incident involving Target highlights how marketing based on consumer profiling may pose unintended privacy issues. According to a New York Times 

report, Target developed a pregnancy prediction model to enable the company to target marketing of certain products to expectant mothers. In one case, Target sent 

maternity and baby clothes coupons to the household of a teenage girl who, through 

use of this model, they predicted was pregnant. These mailings alerted the girl’s father that she was pregnant—before she had told him the news herself.33

Potentially Harmful Uses of Data Broker Products. Some consumer advocates also 

have noted that targeted marketing means consumers have unequal access to helpful information, offers, and benefits, and have questioned the fairness of this result 

when the basis for such targeting are consumer profiles constructed without the consumer’s knowledge, input, or permission—and that in fact may not be accurate. 

World Privacy Forum Executive Director Pam Dixon has elaborated as follows: 

Two people going to one website or one retail store could already be offered entirely different opportunities, services, or benefits based on their modern permanent record comprised of the previous demographic, behavioral, transactional, 

and associational information accrued about them.34

11 

Stan.L.Rev.Online 35 (Sept. 3, 2013) (arguing that increasing use of consumer profiles by marketers and others could inadvertently result in social discrimination where unfair or inaccurate 

profiles are created and reinforced without consumers’ input). 35Wall Street Journal, Websites Vary Prices, Deals Based on Users’ Information (Dec. 24, 

2012). 36Wall Street Journal, On Orbitz, Mac Users Steered to Pricier Hotels (Aug. 23, 2012). 37The FTC charged Equifax with a host of FCRA violations, including that it provided credit 

report information to entities that lacked a permissible purpose. The FTC further charged that 

Equifax’s failure to employ appropriate measures to control access to sensitive consumer information was unfair, in violation of Section 5 of the FTC Act. Direct Lending was also charged 

with violating Section 5 and the FCRA for, among other reasons, obtaining pre-screened lists 

without having a permissible purpose and failing to maintain reasonable procedures to ensure 

that prospective users to whom it had resold the reports had a permissible purpose. Equifax 

and Direct Lending combined paid nearly $1.6 million to resolve charges that they violated the 

Fair Credit Reporting and the FTC Act. Press Release, FTC Settlements Require Equifax to Forfeit Money Made by Allegedly Improperly Selling Information About Millions of Consumers Who 

Were Late on Their Mortgages, Federal Trade Commission (Oct. 10, 2012) (available at http:// 

www.ftc.gov/news-events/press-releases/2012/10/ftc-settlements-require-equifax-forfeit-moneymade-allegedly). 38Press Release, Consumer Reporting Agency to Pay $1.8 Million for Fair Credit Reporting Act 

Violations, Federal Trade Commission (June 27, 2011) (available at http://www.ftc.gov/newsevents/press-releases/2011/06/consumer-reporting-agency-pay-18-million-fair-credit-reporting). 39 New York Times, Bilking the Elderly, with a Corporate Assist (May 20, 2007). 40Press Release, FTC to Host Spring Seminars on Emerging Consumer Privacy Issues, Federal 

Trade Commission (Dec. 2, 2013) (available at http://www.ftc.gov/news-events/press-releases/ 

2013/12/ftc-host-spring-seminars-emerging-consumer-privacy-issues). 

A related issue is whether ready access to increasingly detailed consumer data 

lends to differential pricing. Indeed, several recent media accounts have described 

cases where website retailers offered consumers different prices for the same product based on analysis of customer characteristics. For example, a Wall Street Journal report found that office supply retailers have varied prices displayed for the 

same product based on customers’geolocation and other factors.35 In another example the travel website Orbitz reportedly showed costlier travel options to visitors 

whose browsers indicated they were using Mac computers, because this brand was 

assumed to be used by more affluent consumers.36 While it does not appear from 

these news accounts that third party data broker products were involved with these 

particular examples, these reports underscore that targeting the most ‘‘relevant’’ information to consumers does not always equate to providing consumers information 

about the best deals. 

A few recent cases also have highlighted the value of consumer profiles to predatory businesses seeking to target vulnerable consumers. In October of 2012, the FTC 

alleged that the credit reporting division of Equifax improperly sold more than 

17,000 ‘‘prescreened’’ lists of consumers who were late on their mortgage payments 

to Direct Lending Source, Inc. and its affiliate companies. Direct Lending subsequently resold some of these lists to third parties, who ‘‘used the lists to pitch loan 

modification and debt relief services to people in financial distress,’’ including to 

companies that had been the subject of prior law enforcement investigations.37

In June 2011, Teletrack, Inc. paid a $1.8 million penalty to settle FTC charges 

that it sold lists of consumers who had previously applied for non-traditional credit 

products, including payday loans, to third parties—primarily pay day lenders and 

sub-prime auto lenders—that wanted to use the information to target potential customers. The FTC alleged that the information Teletrack sold constituted consumer 

reports and could not be sold for marketing.38

Similarly, the New York Times reported in 2007 that data broker InfoUSA had 

sold lists of consumers with titles such as ‘‘Suffering Seniors’’ to individuals who 

then used the lists to target elderly Americans with fraudulent sales pitches.39

Use of Predictive Scoring Products for Marketing. Consumer advocates have suggested that that use of scoring products that predict consumer behavior merits further scrutiny. Companies reportedly are using predictive scoring products for a 

range of purposes, such as assessing which customers will receive special offers, or 

looking at credit risks associated with certain mortgage applications—but consumers are generally not aware of these products and do not have access to the data 

underlying them. The FTC plans to hold a hearing in the Spring to examine the 

use of these products, including the types of consumer protections that should be 

provided.40

Data Breaches. Finally, a series of incidents over recent years have underscored 

that data brokers—like others who collect and maintain sensitive consumer data— 

12 

41Wall Street Journal, Breach Brings Scrutiny (April 5, 2011); United States v. ChoicePoint, 

Inc., No. 1 06–CV–0198 (N.D. Ga. filed Jan. 30, 2006); Press Release, Agency Announces Settlement of Separate Actions Against Retailer TJX, and Data Broker Reed Elsevier and Seisint for 

Failing to Provide Adequate Security of Consumer Data, Federal Trade Commission (Mar. 27, 

2008) (available at http://www.ftc.gov/news-events/press-releases/2008/03/agency-announcessettlement-separate-actions-against-retailer-tjx). 42FTC Privacy Report, supra n.1, at 24–26. 43FTC Privacy Report, supra n.1. 44FTC Privacy Report, supra n. 1, at 68, 72–73. 45FTC Privacy Report, supra n.1. 46Press Release, FTC to Study Data Broker Industry’s Collection and Use of Consumer Data, 

Federal Trade Commission (Dec. 18, 2012) (available at http://www.ftc.gov/news-events/pressreleases/2012/12/ftc-study-data-broker-industrys-collection-use-consumer-data). Three of the 

nine companies the FTC is examining are included in this inquiry. 47 Id. 48 New York Times, Congress to Examine Data Sellers (July 24, 2012). 49 AdWeek, Lawmakers Come Up Short in Data Brokers Probe (Nov. 8, 2012). 

are vulnerable to data breaches.41 Privacy advocates emphasize the need to make 

sure appropriate protections against data breach are in place for consumer data.42

D. Recent FTC and Congressional Reviews of the Data Broker Industry 

Several recent inquiries have explored data broker practices and related privacy 

and consumer protection issues. The FTC has held a series of workshops, opened 

a formal inquiry, written reports, and proposed principles for industry self-regulation on how companies collect, use and protect consumer data. In March of 2012, 

the Commission released a comprehensive report on protecting consumer’s data privacy in light of the rapid advances of technological change. The Commission recommended that Congress consider enacting baseline privacy legislation across industry sectors. The report also called for greater transparency in the data broker 

and advertising industries.43

The 2012 report identified the data broker industry as one of the Commission’s 

main focuses in implementing an enhanced privacy protection framework.44 In examining the privacy implications of the data broker industry, the FTC has also 

noted how advances in technologies have rapidly allowed for the aggregating and 

selling of consumer information that combines data reflecting consumers’ online activities as well as ‘‘offline’’ information that has been accessible since before the 

Internet.45

In December 2012, the FTC opened an inquiry pursuant to its authority under 

Section 6(b) of the FTC Act to examine privacy implications of the data broker industry’s collection and use of consumer data.46 This investigation is underway and 

will result in a study and recommendations on whether, and how, the data broker 

industry could improve its privacy practices.47

In addition to the FTC’s ongoing work, in the summer of 2012, a bipartisan group 

of eight lawmakers led by Reps. Ed Markey (D–MA) and Joe Barton (R–TX) opened 

an inquiry into how data brokers collect and use consumer’s personal data.48 In November 2012 the lawmakers concluded their inquiry, finding that, ‘‘Many questions 

about how these data brokers operate have been left unanswered, particularly how 

they analyze personal information to categorize and rate consumers.’’ 49

II. Committee Investigation 

In light of the gaps in public knowledge regarding data broker practices, in October 2012 the Committee opened an inquiry into the data broker industry to help 

the Committee better understand industry practices and the information data brokers collect and share about American consumers for marketing purposes. To obtain 

a snapshot of industry practices, the Committee focused on nine companies that collect and sell consumer information: Acxiom, Experian, Epsilon, Reed Elsevier, 

Equifax, TransUnion, Rapleaf, Spokeo, and Datalogix. 

The companies include the three major credit reporting companies—Experian, 

Equifax, and TransUnion—each of which also sells consumer data for marketing 

purposes; and well-established targeted marketing companies—Acxiom, Epsilon, 

Reed Elsevier, and Datalogix—that maintain data on millions of consumers. In addition, the sample reflects companies with discrete focus on major data collection techniques and marketing uses: Rapleaf, which in 2010 specialized in collecting public 

data from social media sites, and Spokeo, which offers individual consumer look-up 

services. 

13 

50Senate Committee on Commerce, Science, and Transportation, Rockefeller Seeks Information 

About Data Brokers’ Practices (Oct. 10, 2012). 51For example, one company noted ‘‘there are over 250,000 websites who state in their privacy 

policy that they share data with other companies for marketing and/or risk mitigation purposes.’’ Acxiom response to Chairman John D. Rockefeller IV (Mar. 26, 2013). 52Krebsecurity.com, Experian Sold Consumer Data to ID Theft Service (Oct. 20, 2013); 

PCMag.com, Experian Confirms Subsidiary’s Data Sold to Identity Theft Operation (Oct. 22, 

2013). 53Senate Committee on Commerce, Science, and Transportation, Rockefeller’s Latest Letter to 

Experian Requests Information on Reported Data Disclosures to Identity Theft Services (Oct. 24, 

2013). 54 Acxiom Corp., 2013 10–K Annual Report for the Period Ending March 31, 2013 (filed 

May 29, 2013). 55http://www.datalogix.com/about/. The other companies queried by the Committee hold 

data on millions more. For example, Rapleaf claims to have at least one data point for over 80 

percent of U.S. consumer e-mail addresses. http://www.rapleaf.com/why-rapleaf/. 56 Equifax Response to the Committee (Aug, 23, 2013) (EFX PROD6 000010–001361). Acxiom 

claims to have ‘‘over 3,000 propensities for nearly every U.S. consumer.’’ Acxiom Corporation 

(2013). Form 10K 2013. 

On October 9, 2012, Chairman Rockefeller sent letters to the nine data broker 

companies requesting information about each company’s data collection and use 

practices.50 The letters highlighted four basic questions: 

• What data about consumers does the industry collect? 

• How specific is the data the industry collects about consumers? 

• How does the industry obtain this data? 

• Who buys the data and how is it used? 

All nine companies provided narrative and documentary responses to the Committee letter. Some of these companies were forthcoming regarding all questions. 

For example, Equifax’s response included a list of the specific entities that are data 

sources and customers they provided after clearing this disclosure with each entity. 

However, several large data brokers—Acxiom, Experian, and Epsilon—to date have 

refused to identify to the Committee their specific data sources. Instead, they have 

described general categories of sources—such as ‘‘surveys’’ and ‘‘public records.’’ 

One of the main consumer-facing data sources identified in the company responses is websites.51 In an attempt to learn more about consumer information data 

brokers obtain from websites, on September 24, 2013, Chairman Rockefeller sent 

letters to twelve popular personal finance, health, and family-focused websites 

whose privacy policies allowed for sharing with third parties and that also indicate 

they collected consumer data through ‘‘surveys,’’ ‘‘sweepstakes,’’ and ‘‘questionnaires,’’ which were identified by data brokers to the Committee as sources of consumer information. The letters asked whether the websites shared information with 

third parties, and if so, with whom. 

On October 23, 2013, following press reports alleging that an Experian subsidiary 

sold data to an alleged identity theft operation,52 Chairman Rockefeller sent a second letter to Experian requesting information about the incident and the company’s 

customer vetting practices, and pressing the company to provide the Committee a 

complete list of its data purchasers and sources.53 Experian to date has not provided 

the Committee either its specific data sources or its data purchasers. 

In the course of the inquiry, Committee Majority staff reviewed thousands of 

pages of documents produced by respondent companies including narrative responses, company manuals and training materials, contracts, and marketing materials. 

III. Committee Majority Staff Findings Regarding Industry Practices 

The responses received by the Committee during this inquiry provide a glimpse 

into the operations of a large and continually evolving industry. The nine data brokers queried by the Committee hold a vast and varied amount of consumer data. 

Acxiom alone has ‘‘multi-sourced insight into approximately 700 million consumers 

worldwide,’’ 54 and Datalogix asserts its data ‘‘includes almost every U.S. household.’’ 55 Some of the companies maintain thousands of data points on individual 

consumers, with one providing the Committee a list of approximately 75,000 individual data elements that are in its system.56 Data collected by these companies includes detailed and personal information including data on consumers’ health and 

financial status. 

One of the main types of products offered for sale by respondent data brokers are 

‘‘modeled’’ profiles of consumers that categorize consumers, or that ‘‘score’’ likelihood 

for certain behaviors, based on inferences drawn from consumer data. The respondVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00017 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE
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57See infra Section III.B.2(a) discussing consumer protection issues relating to such lists. 58 Epsilon Targeting, Data Intelligence (EPS–COM–002026). 59 Experian Narrative Response to Senate Commerce Committee (Dec. 14, 2013); Datalogix 

Narrative Response to Senate Commerce Committee (Nov. 16, 2013). 60 Epsilon, TotalSource Plus Data Enhancement Element Listing (EPS–COM–5–25); Acxiom, 

The Power of Insight: Consumer Data Products Catalog (ACXM 190); Lexis Nexis, MarketView 

Demographic Data Dictionary (REP001397–1403). 61 Acxiom, The Power of Insight: Consumer Data Products Catalog (ACXM 173–226); Lexis 

Nexis, MarketView Demographic Data Dictionary (REP001397–1403). 62 Epsilon, TotalSource Plus Data Enhancement Element Listing (EPS–COM–16). Epsilon has 

provided that it collects data about health ailments solely through its ‘‘Shoppers Voice’’ survey 

through which consumers ‘‘self-report’’ data, which is described in more detail in Section 

III.A.2.d. 63 Acxiom, The Power of Insight: Consumer Data Products Catalog (ACXM 184). 

ent companies offer for sale a number of modeled products that group consumers 

based on their degree of financial vulnerability, such as ‘‘Rural and Barely Making 

It,’’ or ‘‘Ethnic Second-City Strugglers.’’ The Committee has no evidence that any of 

the specific queried companies are currently selling such products for inappropriate 

purposes. However, the creation and use of these types of products merits close scrutiny, particularly in light of their value to predatory businesses that seek to target 

consumers who are economically fragile.57

Data brokers continue to develop new approaches to facilitate marketing outreach 

to consumers online. Some data brokers now offer products that enable marketers 

to tailor online advertisements based on off-line data about the consumer provided 

by the data broker. 

As they conduct these various activities, data brokers remain largely invisible to 

the consumers whose information populates their databases. Consumers have limited means of learning that these companies hold their data, and respondent companies provide consumers rights of access and control regarding their data that vary 

widely by companies. Several of the largest respondent companies have been similarly secretive with the Committee, refusing to identify specific sources of their data, 

and specific customers who purchase it. And provisions in company contracts with 

customers perpetuate this secrecy by placing restrictions on customer disclosures regarding data sources. 

Below is a detailed discussion of the Committee Majority Staff’s findings regarding the information companies have provided to date regarding the collection, compilation, and sale of consumer data. 

A. Data Broker Collection of Consumer Data 

The information the Committee obtained in this inquiry regarding the nature and 

specificity of information collected by data brokers paints a picture consistent with 

the following observation offered by one of the respondent companies: ‘‘The amount 

of available data has created an unprecedented amount of information about consumers: Their attitudes and behaviors, perceptions about brands, what they’re buying and even where they happen to be at the moment the data is captured.’’ 58

1. Nature of Data Collected 

Much of the information data brokers collect is demographic, such as consumers’ 

names, addresses, telephone numbers, e-mail addresses, gender, age, marital status, 

presence of and ages of children in household, education level, profession, income 

level, political affiliation, and information about their homes and other property. In 

addition, data brokers collect many other categories of information about individuals. Some examples include: 

• Consumer purchase and transaction information, including whether a purchase 

was made through a catalog, online, or in-store, as well as the frequency of such 

purchases;59

• Consumers’ available methods of payment, including type of credit card and 

bankcard issuance date;60

• Purchase of automobiles, including makes and models of cars purchased or 

whether a consumer prefers new or used cars;61

• Health conditions. One company collects data on whether consumers suffer from 

particular ailments, including Attention Deficit Hyperactivity Disorder, anxiety, 

depression, diabetes, high blood pressure, insomnia, and osteoporosis, among 

others;62 another keeps data on the weights of individuals in a household.63 An 

additional company offers for sale lists of consumers under 44 different catVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00018 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE
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64 Experian, List Services Catalog (EXP002569). Experian provides its catalog, which contains 

more detail about element listings on its website (available at http://www.experian.com/assets/ 

data-university/brochures/ems-list-services-catalog.pdf). 65 Acxiom, The Power of Insight: Consumer Data Products Catalog (ACXM 173–206); Acxiom 

Narrative Response to Senate Commerce Committee at 7 (Mar. 1, 2013); and Acxiom, Acxiom 

Predictive Scores for Social Media (ACXM 473). 66Letter from TransUnion to Chairman John D. Rockefeller IV (Dec. 14, 2012). 67 Equifax Response to Senate Commerce Committee (Aug, 23, 2013) (EFX PROD6 000010– 

001361). Equifax made clear in their response that the individual data elements are not sold 

as is, but are used to create their products and models. Individual-level data elements are aggregated for use in products sold to customers. Id. 68 Id. 69 Id. 70 Id. 71 Id. 72 Acxiom, The Power of Insight: Consumer Data Products Catalog (ACXM 173–226). 73 Epsilon, TotalSource Plus Data Enhancement Element Listing (EPS–COM–5–25). 74 In November 2013, the Attorney General of New Jersey settled a case that suggested web 

browsing activity is potentially an additional source of information for data brokers. The case 

alleged that Dataium, a data company, used software to track websites visited by consumers, 

a practice known as ‘‘history sniffing,’’ and then sold consumer preferences inferred from web 

browsing along with consumers’ names, phone numbers, and e-mail addresses to Acxiom. See 

Office of New Jersey Attorney General, Acting Attorney General Announces Settlement Resolving 

Allegations Data Company Engaged in Online ‘‘History Sniffing’’ (Nov. 21, 2013) (available at 

http://nj.gov/oag/newsreleases13/pr20131121a.html). 75 E.g., Acxiom Narrative Response to Senate Commerce Committee (Feb. 15, 2013). 

egories of health conditions, including obesity, Parkinson’s disease, Multiple 

Sclerosis, Alzheimer’s disease, and cancer, among others;64

• Social media activity, including the number of a consumer’s friends and followers, and whether they view YouTube videos.65

The specificity of consumer data that brokers collect, maintain, and share varies 

depending on the entity. For example, TransUnion reported that it maintains and 

offers for sale primarily demographic data.66 On the other hand, Equifax maintains 

approximately 75,000 individual data elements for its use in creating marketing 

products, including information as specific as whether a consumer purchased a particular soft drink or shampoo product in the last six months,67 uses laxatives or 

yeast infection products;68 OB/GYN doctor visits within the last 12 months,69 miles 

traveled in the last 4 weeks,70 and the number of whiskey drinks consumed in the 

past 30 days.71 Some companies offer ‘‘data dictionaries’’ that include more than one 

thousand potential data elements, including whether the individual or household is 

a pet owner, smokes, has a propensity to purchase prescriptions through the mail,72

donates to charitable causes, is active military or a veteran, holds certain insurance 

products including burial insurance or juvenile life insurance, enjoys reading romance novels, or is a hunter.73

2. Sources of Consumer Data 

The information the responding companies provided to the Committee suggests 

that these data brokers primarily obtain consumer data through five major avenues: 

government records and other public data; purchase or license from other data collectors; cooperative agreements with other companies; self-report by consumers, 

often through surveys, questionnaires, and sweepstakes; and social media.74

Three companies—Acxiom, Experian, and Epsilon—declined to share specific data 

sources with the Committee, citing confidentiality clauses in their contracts, and 

concerns about putting themselves at a competitive disadvantage among the reasons. Instead, these companies provided general descriptions of the types of entities 

that are data sources. 

a. Government Records and Other Publicly Available Data 

Many companies reported obtaining information from public records sources. 

These include: census data; property records; court filings, including criminal convictions, judgments, liens, and bankruptcies; driver’s license records; voter registrations; telephone directories; real estate listings; and marriage and death certificates.75 Data brokers also obtain publicly available information from licensing filings including licenses for physicians and other medical professionals, attorneys, accountants, engineers, notaries, and real estate professionals, as well as hunting, 

16 

76 Id at 5. 77 Id. 78Datalogix Narrative Response to Senate Commerce Committee, at 1 (Nov. 2, 2012). 79 Consumers who use loyalty cards allow retailers to collect information about their purchases in exchange for discounts, coupons, or other perks such as discounts on gasoline purchases. In 2012, Americans had a collective total of 2.65 billion loyalty program memberships. 

See Bulking Up: The 2013 Colloquy Loyalty Census, Growth and Trends in U.S. Loyalty Program Activity, Colloquy (June 2013). 80Financial institutions provide anonymous financial data, meaning it does not include consumers name, house number or street name; and information aggregated at the ZIP+4 level. 

Letters from Paul Zurawski, Senior Vice President Government Affairs and Regulatory Management, Equifax, to Chairman John D. Rockefeller IV (Feb. 13, 2013) and (Jan. 23, 2013). 81See Section III.B for a discussion of modeling and scoring. 82 Experian Narrative Response to Senate Commerce Committee (May 24, 2013). 83Letter from Jeanette Fitzgerald, Senior Vice President and General Counsel, Epsilon, to 

Chairman John D. Rockefeller IV (Nov. 2, 2012); Epsilon, Abacus Cooperative Overview (EPS– 

COM–002114). 84Letter from Jeannette Fitzgerald, Senior Vice President and General Counsel, Epsilon, to 

Chairman John D. Rockefeller IV, at 5–6 (Nov. 2, 2012). 85 Experian, Z–24 Catalog Database File Information (EXP001665). 86 Experian Narrative Response to Senate Commerce Committee, at 5 (Dec. 14, 2012). 

Experian breaks purchase information into 64 different categories. Experian (EXP001667). 

fishing, and pilot licenses.76 License information can supply contact information and 

license issuance and expiration dates.77

b. Purchase or License 

Companies reported that several types of entities either sell or license them data, 

including: 

Retailers. Retailers provide data brokers with consumers’ purchase information, 

which can include consumer name, postal addresses, e-mail addresses, items 

purchased, transaction history, and whether the purchase was made in a store, 

online, or through a catalog.78 Often, the information provided does not identify 

the specific item purchased, but rather the category or type of product, such as 

‘‘collectibles’’ or ‘‘ladies apparel.’’ Retailers are able to collect this information 

about consumers through many methods, among them store or brand loyalty/ 

rewards cards.79

Financial institutions. Responding companies reported receiving information 

from a variety of financial institutions, such as banks, credit unions, brokerage 

services, and online trading platforms. Such sources provide information regarding bank deposits, brokerage assets, annuities, and mutual funds. Companies 

reported that the information obtained is not tied to specific consumers, but is 

received in an anonymized or aggregated form 80 and used to create models and 

scoring products.81

Other data brokers. All of the responding companies reported obtaining information from other data brokers either by purchasing or under sharing arrangements. Some have specified which other data brokers provide such information, 

while others refused to specify other data broker sources beyond generic descriptions such as ‘‘third-party partners.’’ 82

c. Cooperative Arrangements 

Another way data brokers obtain information is through cooperative arrangements in which companies provide information about their customers in exchange 

for information to enhance their existing customer lists or identify new customers. 

Examples described by responding companies include: 

• Epsilon operates a cooperative consisting of over 1,600 participating companies, 

which include catalog and retail companies, non-profits, and publishers.83 Participants contribute household purchase information in exchange for information about prospective customers. Epsilon organizes this data into 22 ‘‘primary 

purchase categories,’’ such as children’s apparel and merchandise.84

• Experian manages a database open to catalog sellers as well as brick and mortar and e-commerce retailers. Participants provide customer transactional 

records, which may include consumer’s name, address, gender, e-mail address, 

phone number, channel of purchase (e.g., online or in-store), dollar amount, payment method, transaction date, and transaction product category.85 Experian 

summarizes the information to describe buying behaviors at the household level 

within general product categories—such as ‘‘Kitchen and Tabletop,’’ ‘‘Books,’’ or 

‘‘Vitamins/Health Products.’’ 86 For example, ‘‘if a high-end retailer of men’s 

17 

87 Experian Narrative Response to Senate Commerce Committee, at 5 (Dec. 14, 2012). 88 Equifax, Member Data Submissions (EFX PROD3 0143). 89Letter from Paul Zurawski, Senior Vice President Government Affairs and Regulatory Management, Equifax to Chairman John D. Rockefeller, at 3 (Feb. 13, 2013); Equifax Corporation, 

IXI Services Core Products for Network Members (EFX PROD3 0191). 90Datalogix Narrative Responses to Senate Commerce Committee (Nov. 2, 2012) and (Nov. 16, 

2012). 91 E.g. Experian Narrative Response to Senate Commerce Committee (Feb. 8, 2013); and Letter from Jeanette Fitzgerald, Senior Vice President and General Counsel, Epsilon, to Chairman 

John D. Rockefeller (Nov. 2, 2012). 92 Epsilon, Shopper’sVoice Consumer Product Survey of America (2012) (EPS–COM–000001– 

000004). 93 Id. at 2. 94 Epsilon, Shopper’s Voice Survey (EPS–COM–003757). 95 Epsilon, TargetSource Survey Data, at 3 (EPS–COM–003150). 96 Epsilon, TargetSource Survey Data, at 5 (EPS–COM–003152). 97 Experian, Simmons National Consumer Studies (online at http://www.experian.com/simmons-research/national-consumer-studies.html). 

business suits reports a customer purchase of approximately $500, Experian 

would maintain a record showing only that the household engaged in a transaction involving Men’s High-End Apparel.’’ 87

• Equifax runs a cooperative for financial institutions that contribute data at 

least twice per year about consumer and small business investments and bank 

accounts. According to the company, this information is anonymized, often including only zip code and year of birth;88 it does not include information that 

could be used to individually identify consumers. Participants have access to 

certain information and products available only to members, including products 

that estimate total outstanding credit and that track assets.89

• Datalogix offers a cooperative arrangement that allows retailers to share information including customers’ names, mailing addresses, e-mail addresses, purchase transaction histories, and transaction channel, such as Internet, catalog, 

or retail purchase. In return for supplying information, participants can receive 

mailing lists, or access to online audiences to identify new customers.90

d. Self-Reporting by Consumers 

The responses to the Committee’s inquiries indicate that data brokers obtain information directly from consumers through warranty cards, sweepstakes entries, 

and other types of surveys. Some of the data brokers conduct their own marketing 

surveys, both on-and off-line, and shared examples with the Committee.91 These 

surveys ask detailed questions about household demographics, income levels, shopping preferences, and other personal matters such as health and insurance related 

information. For example, some surveys ask whether anyone in the household suffers from diabetes, or what types of insurance the household currently has or plans 

to obtain.92 Surveys provided to the Committee disclose to consumers that the information they provide may be shared for marketing purposes in exchange for entry 

into a sweepstakes or other chances at prizes. However, the surveys do not generally indicate that they are affiliated with a specific data broker. 

For example, Epsilon obtains consumer data through its ‘‘Shopper’s Voice’’ survey. 

The survey contains several pages of specific questions about the household, including demographic information, hobbies and interests, products purchased, and ailments. The survey includes questions about a range of health-related matters. For 

example, one category, titled ‘‘Heart Health,’’ asks whether anyone in the household 

has a family history of heart disease, heart attack, high blood pressure or high cholesterol, whether anyone suffers from angina, atrial fibrillation, and whether these 

ailments are treated with a prescription.93 The survey also asks the respondent to 

indicate whether they personally or another member of the household suffer from 

other listed ailments, such as depression, Bipolar disorder or other major depressive 

disorder, Lupus, or Parkinson’s disease.94 The Shopper’s Voice survey is mailed to 

approximately 36 million households each January; approximately 5.2 million 

households complete and return it to Epsilon.95 Consumers are encouraged to respond to the survey by being offered an opportunity for savings via coupons and a 

chance to win $10,000.96 See Exhibit A for a complete example of the survey questions. 

Experian collects data through the ‘‘Simmons National Consumer Surveys,’’ which 

over 30,000 consumers fill out each year.97 Questions cover subjects including demographic, hobbies and interests, military experience, participation in the lottery, and 

18 

98 Experian, Simmons National Consumer Survey (EXP001785–1923). 99 Experian Narrative Response to Senate Commerce Committee (Feb. 8 2013). 100Sample letters that accompany Simmons National Consumer Survey (EXP002099) and 

(EXP002100). 101 Experian Narrative Responses to Senate Commerce Committee (May 24, 2013) (July 26, 

2013); and Acxiom Narrative Response to Senate Commerce Committee (Apr. 5, 2013). 102 Experian Narrative Response to Senate Commerce Committee, at 2–3 (May 24, 2013). 103 Acxiom Narrative Response to Senate Commerce Committee (Apr. 5, 2013). 104 Committee staff interview with website general counsel (Dec. 3, 2013). 105 Acxiom Narrative Response to Senate Commerce Committee (April 5, 2013). It is unclear 

at this point whether or how information from this website flowed to Acxiom. 106Website responses to Senate Commerce Committee (Oct. 2013). 

product preferences.98 Consumer responses are aggregated and used to create models that assign a shared set of characteristics to all households within a particular 

zip code. Simmons surveys include the Simmons National Consumer Survey; the 

Simmons National Kids and Teens Studies; the National Hispanic Consumer Survey; and the Simmons Lesbian, Gay, Bisexual and Transgender Study.99 Adults may 

be paid $25 for their participation in the survey and teens receive $14 in addition 

to a keychain.100

According to narrative responses from Acxiom and Experian, consumers report 

personal information to them by completing surveys, entering sweepstakes, registering to receive coupons, or filling out other forms on Internet sites. The websites 

either directly feed this information to data brokers or provide it to other ‘‘data compilers’’ who then pass it to data brokers.101

Experian uses survey results in products including Experian’s ‘‘BehaviorBank.’’ As 

Experian explained: 

BehaviorBank is a database of self-reported information provided by consumers 

with the clear understanding of the consumer that the responses will be used 

for marketing. . .Experian acquires all such information from third-party partners. Such third parties typically either recruit consumers for their own surveys 

or obtain data from companies that have surveyed their own customers. In some 

cases, consumers are offered an incentive, such as an opportunity to win a 

prize, for participation in the survey.102

Experian refused to identify to the Committee the third-party website sources of 

data for the company. 

Similarly, Acxiom said consumer-facing websites are a source of their consumer 

data, but declined to provide the Committee the specific identities of these websites 

except for six self-selected samples websites. Instead the company stated generally, 

‘‘there are over 250,000 websites who state in their privacy policy that they share 

data with other companies for marketing and/or risk mitigation purposes.’’ 103

Of the six websites provided by Acxiom, one was not functional when Committee 

majority staff attempted to access it. The remaining five asked consumers for varying levels of personal information in exchange for benefits such as coupons and discounts, or the opportunity to compare health insurance quotes. The general counsel 

for the company that maintains the health insurance quote website, when contacted 

by Committee majority staff, said the company had no information sharing agreement with Acxiom, and that the entities that contract to receive the website’s information are contractually prohibited from sharing that data with third parties such 

as Acxiom.104 Acxiom represented that this website data source was provided by one 

of Acxiom’s data aggregators.105

To explore the issue of website data sources further, Chairman Rockefeller 

queried 12 popular health and financial focused websites whose privacy policies appeared to allow for the sharing of consumer data obtained through surveys, sweepstakes, and questionnaires. In response, several websites acknowledged collecting 

personal information from consumers through surveys or sweepstakes entries. However, they largely denied sharing that data with third parties except in limited circumstances, including for their own advertising purposes, sweepstakes prize fulfillment, or with other third-party vendors to perform services on the websites’ own 

behalf. 

Two of the website companies reported relationships with Acxiom, but those relationships were for the benefit of the websites: one retained Acxiom’s services to store 

consumer information solely for its own marketing efforts, and the other to perform 

services such as collecting additional information about visitors to its website. While 

neither arrangement allowed for Acxiom to share or use the data provided for 

Acxiom’s own purposes, one company did share with Committee majority staff that 

Acxiom had approached them to become a data supplier, a request it declined.106

19 

107 Acxiom Narrative Response to Senate Commerce Committee at 7 (Mar. 1, 2013). Acxiom 

asserts that they ‘‘do not collect specific activity from social media sites, such as individual postings, lists of friends or any data that is not public.’’ (ACXM 1422). 108See Wall Street Journal, Facebook in Privacy Breach (Oct. 18. 2010), and Wall Street Journal, A Web Pioneer Profiles Users by Name (Oct. 25, 2010). 109 Rapleaf, Report Data Dictionary, (RAP–SEN–001–00121–RAP–SEN–001–00125). 110Letter from Phil Davis, Chief Executive Officer, Rapleaf, to Chairman John D. Rockefeller 

IV (Nov. 21, 2012). According to Rapleaf, the information it maintained was non-sensitive data 

consisting of age range, gender, zip code, and marital status. Id. 111Letter from Kenneth M. Dreifach, Counsel to Rapleaf, to Melanie Tiano, Counsel to the 

Senate Commerce Committee (Dec. 28, 2012); Committee staff conversation with Rapleaf Counsel (Dec. 5, 2012). 112 Acxiom Narrative Response to Senate Commerce Committee (Feb. 15, 2013). 113 Id. 

e. Social Media 

Social media is a source of consumer information for many of the queried data 

brokers. For example, Acxiom says it obtains data about consumers’ social media interests and usage to predict the likelihood that a consumer would fall into one of 

the following categories: ‘‘business fan,’’ ‘‘heavy social media user ’’ (including 

Facebook, LinkedIn, Twitter, and YouTube), ‘‘mobile social networker,’’ ‘‘text messaging user,’’ ‘‘poster’’ (including poster of photos, texts, and responders), ‘‘video 

sharer,’’ ‘‘social influencer,’’ and ‘‘social influenced.’’ 107

In 2010, the Wall Street Journal and other media outlets reported that Rapleaf 

was collecting information about consumers’ social media accounts and selling that 

information to other companies.108 Rapleaf had been ‘‘crawling’’ publicly available 

data consumers placed on social media sites such as Facebook, MySpace, LinkedIn, 

and others, to gather information including consumers’ names, age, gender, location, 

colleges and universities attended, and occupations, information about membership 

on social media sites such as Facebook, Flickr, LinkedIn, Twitter, CafeMom, Amazon Wishlist, Pandora, Photobucket, and Dailymotion, number of friends and followers, and the URL of consumers’ profiles.109

Following public backlash and requests by Facebook, Rapleaf deleted most of the 

information it collected through webcrawling.110 However, companies that purchased this data before Rapleaf ceased this activity were not required to delete the 

information that they had previously purchased.111

B. Data Broker Products 

Data brokers compile and analyze consumer data to create products and services 

that provide customers with data that has varying degrees of specificity about individual consumers. Most of the products described by respondent companies are essentially lists of consumers grouped by shared characteristics or predicted behaviors. The companies also provide data on individual consumers to supplement data 

customers may already have on the consumer. 

Data broker products can consist of ‘‘actual’’ or ‘‘modeled’’ elements. Actual data 

includes factual information about individuals, such as their date of birth, contact 

information, and presence of children in a household. ‘‘Modeled’’ data results from 

drawing inferences about consumer characteristics or predicted behavior based on 

actual data. For example, a company may infer a consumer’s marital status based 

upon use of the prefix ‘‘Mrs.’’; characterize an individual as having an interest in 

golf based on the fact that an individual subscribes to a golf magazine; 112 or characterize an individual as having a health interest in allergies based on the fact that 

the individual made a non-prescription purchase of over the counter allergy medication.113

The companies also use actual data to create ‘‘look-a-like’’ models. Look-a-like 

models use known information—such as living within a particular zip code and having children in the household—to predict characteristics such as the likelihood that 

an individual drives an SUV. With this model, a data broker could create a list of 

consumers likely to drive an SUV that a customer could purchase for targeted marketing. 

Two prominent means by which data brokers provide consumer data to customers 

are ‘‘original lists’’ and ‘‘data appends.’’ Original lists are sold to customers seeking 

a list of consumers who fit certain criteria—for example, women who live in CleveVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00023 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE
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114 Except in instances where a company offers some type of individual look-up product, ‘‘original list’’ information is not generally available to be purchased on an individual consumer basis. 

Spokeo, for example, offers consumers an individual look-up service that provides the ability to 

search for information about specific individuals. Products offered by Spokeo allow customers 

to search for people by name or address or through a ‘‘reverse search’’ service—where customers 

may enter a telephone number or e-mail address to identify the individual associated with that 

number or address. Customers are able to obtain a ‘‘person’s name, address, phone number, email address, occupation, property value, family relations, and social media accounts.’’ Letter 

from Angela Saverice-Rohan, General Counsel, Spokeo, Inc., to Chairman John D. Rockefeller 

IV (Nov. 2, 2012). 115 Committee staff conversations with respondent companies; several companies reported that 

segments are priced and sold by the thousand. 116Wall Street Journal, Placing Products: Marketing Firm Slices U.S. into 240,000 Parts to 

Spur Clients’ Sales (Nov. 3, 1986). 117 Nielsen, My Best Segments (online at http://www.claritas.com/MyBestSegments/Default.jsp?ID=70&pageName=Learn percent2BMore&menuOption=learnmore). 118 Acxiom, Precision Targeting and Messaging in Social Networks: Acxiom Predictive Scores 

for Social Media (ACXM 473–474). 119 Experian, Mosaic USA New Segment and Group Names (EXP002634–002678). 

land and have an interest in cooking.114 Typically, customers purchase this information in large quantities, hundreds or thousands of names at a time.115

‘‘Data append,’’ on the other hand, occurs when a customer has some information 

about specific consumers, but they want to create more complete profiles. In that 

case, the customer provides some identifying information about their customers, 

such as a list of names and zip codes or e-mail addresses, to a data broker company 

to purchase additional information about the specific consumers on the list. 

The products companies described to the Committee include consumer profiles 

characterizing consumers based on degree of financial vulnerability and propensity 

to use payday loans and other non-traditional financial products. These types of 

data broker products merit close scrutiny as they appear tailor made for businesses 

that profit from taking advantage of consumers. Following is a discussion of major 

types of data broker products, methods for sharing these products, and questions 

raised by certain products described by respondent companies. 

1. How Data Brokers Package Consumer Information 

One product data brokers offer is ‘‘segments,’’ or groupings of consumers defined 

by shared characteristics and likely behaviors. Many data brokers offer some variation of segmenting products, and several of the large data brokers included in the 

Committee’s review offer dozens of different segment choices. 

The idea of segmenting consumers for marketing purposes is not a novel concept. 

In the 1970s, Claritas—which merged with Nielsen in 2001—developed a segmenting product called PRIZM, which defined groups of consumers based on demographics and behaviors.116 PRIZM is now advertised as ‘‘the industry-leading lifestyle segmentation system that yields rich and comprehensive consumer insights to 

help you reveal your customer’s preferences.’’ 117 When clustering first began, companies generally relied on census data to predict the behavior of consumers. Today, 

however, there are endless avenues to obtain consumer data. 

Another type of product described by data brokers involves ‘‘scoring,’’ a form of 

analytics that utilizes data to make predictions about likely consumer behavior. 

Scoring products are designed to provide marketers insight about existing and prospective customers by assigning a number or range that signifies each consumer’s 

likelihood to exhibit certain characteristics or perform certain actions. For example, 

Acxiom offers a product that can provide marketers with predictive indicators of 

consumers’ social media behaviors, assigning a number from 1–20 on the basis of 

whether they are likely to be a ‘‘social influencer’’ or are ‘‘socially influenced,’’ and 

whether they are a frequent ‘‘text poster’’ or ‘‘business fan.’’ 118

2. Issues Regarding Data Broker Products 

a. Products that Identify Financially Vulnerable Populations 

A number of products described by data brokers focus on characterizing a consumer’s economic status. For example, some of the consumer profiles they sell identify economically comfortable consumers. Consumers in clusters titled ‘‘Established 

Elite,’’ ‘‘Power Couples,’’ ‘‘American Royalty,’’ and ‘‘Just Sailing Along,’’ indicate a 

level of affluence that might be used to identify a likely audience for luxury products 

or investments. Data broker descriptions of such products provide further detail. For 

example, Experian describes ‘‘American Royalty’’ as ‘‘[w]ealthy, influential and successful couples and families living in prestigious suburbs.’’ 119

Understanding the financial circumstances of consumers is important for assessing how to best the reach those most likely to purchase particular goods or products. 

21 

120 Experian, Mosaic USA New Segment and Group Names (EXP002634–2636); Acxiom, 

Personicx Classic, (Mar. 1, 2013); Epsilon, Niches 3.0 (EPS–COM–003484—003496); Equifax, 

Economic Cohorts: Economic-based Household Segmentation (EFX Prod4 0002–0292); Equifax, 

Financial Cohorts: Direct-Measured Asset-Based Household Segmentation (EFX PROD4 0293– 

0543). See Appendix II. 121See Exhibit B for sample product descriptions. 122 Experian, Mosaic USA Segment Descriptors (EXP002946). 123 Experian, Mosaic USA Segment Descriptors (EXP002947). In another example, ‘‘Resilient 

Renters’’ is described as ‘‘singles with high-school and vocational/technical educations. At a 

mean age of 39, they are renters in the second-tier cities and, if employed, earn wages in service 

and clerical positions.’’ Acxiom Narrative Response to Senate Commerce Committee, Acxiom 

Personicx Classic (Mar. 1, 2013). 124 Experian, ChoiceScore: Improve Targeting and Customer Acquisition in the Untapped 

Under-banked Population (EXP002353). See Exhibit C for ChoiceScore Marketing description. 125 Id. 

However, some of the targeting products described by the companies appear to focus 

specifically on identifying financially vulnerable populations. The table below represents a sample of the segments offered for sale by the queried companies: 

Table I: Company Product Names 

Source: Company Responses 120

The product descriptions that data brokers provide to potential customers further 

elaborate on such vulnerability.121 For example, ‘‘Hard Times’’ is described by 

Experian as, ‘‘Older, down-scale and ethnically-diverse singles typically concentrated 

in inner-city apartments.’’ 122 The description continues: ‘‘This is the bottom of the 

socioeconomic ladder, the poorest lifestyle segment in the Nation. Hard Times are 

older singles in poor city neighborhoods. Nearly three-quarters of the adults are between the ages of 50 and 75; this is an underclass of the working poor and destitute 

seniors without family support. . . . One-quarter of the households have at least one 

resident who is retired.’’ 123

A number of scoring products similarly focus on consumers’ financial vulnerabilities. One example is Experian’s ‘‘ChoiceScore,’’ which the company asserts ‘‘helps 

marketers identify and more effectively market to under-banked consumers.’’ 124 According to the company’s marketing materials for this product, ‘‘each year, underbanked consumers alone spend nearly $11 billion on non-traditional financial transactions like payday loans and check-cashing services.’’ 125 These consumers include 

‘‘new legal immigrants, recent graduates, widows, those with a generation bias 


1218RPT1.eps
22 

126 Id. 127 Experian, List Services Catalog: ChoiceScore (EXP002601). 128 Id. 129The New York Times, Bilking the Elderly, with Corporate Assist (May 20, 2007). 130The procedures range from a very basic requirement that each new customer agree to 

Terms of Service to a thorough vetting process of each new customer. While several data brokers 

report that customers must agree to abide by the companies’ terms of service or use, other companies described a stricter vetting process that include additional screening components. Company Narrative Responses to Senate Commerce Committee (2012). 131 Acxiom Narrative Response to Senate Commerce Committee (Feb. 15, 2013). 132Sample Equifax Contract (EFX SUPP 008). 133The New York Times, Bilking the Elderly, with Corporate Assist (May 20, 2007). 134Krebsecurity.com, Experian Sold Consumer Data to ID Theft Service (Oct. 20, 2013); 

PCMAG.com, Experian Confirms Subsidiary’s Data Sold to Identity Theft Operation (Oct. 22, 

2013). 135Letter from Chairman John D. Rockefeller to Mr. Don Robert, Chief Executive Officer, 

Experian (Oct. 23, 2013). 

against the use of credit, followers of religions that historically have discouraged 

credit,’’ and ‘‘consumers with transitory lifestyles, such as military personnel.’’ 126

The ChoiceScore options include a ‘‘Confidence Score’’ that ‘‘identifies and assigns 

a score, determining the propensity for a consumer to be in the under-banked population,’’ and a ‘‘Risk Score,’’ a ‘‘non-credit based score used to identify the most and 

least desirable consumers.’’ 127 Suggested applications of the product include: ‘‘target 

under-marketed new prospect segments eager to accept direct-marketing offers; target invitation-to-apply credit card offers, secured card, prepaid debit and other nontraditional financial service offerings; and suppress records of those less likely to get 

approved.’’ 128

This Committee inquiry did not review whether any of the specific identified lists 

that designate financially vulnerable consumers have been used in a harmful manner. However, precedent underscores the value of such products to unscrupulous 

businesses that seek to take advantage of consumers. For example, the New York 

Times has reported on telemarketing criminals that succeeded in raiding the banking account of a 92-year old Army veteran.129 Data broker InfoUSA sold his name 

and contact information to a scam artist. As detailed in the Times’ account, InfoUSA 

advertised lists such as ‘‘Elderly Opportunity Seekers,’’ described as older people 

‘‘looking for ways to make money;’’ ‘‘Suffering Seniors,’’ older people with cancer or 

Alzheimers disease; and ‘‘Oldies but Goodies,’’ people described as ‘‘gullible . . . 

[who] want to believe their luck can change.’’ 

InfoUSA was not one of the companies examined in this Committee inquiry, but 

the concerns raised by lists identifying financially vulnerable customers are illustrated by this example. The names, descriptions and characterizations in these products—all generated by the data brokers—likely appeal to companies that sell highcost loans and other financially risky products to populations more likely to need 

quick cash, such as payday and installment lenders. 

Most of the companies provided to the Committee customer vetting and oversight 

policies that they assert ensure that information is used properly.130 Further, several of the contracts reviewed by the Committee include provisions that prohibit resale of consumer data to certain types of businesses such as ‘‘debt repair’’ 131 and 

one specifically prohibits resale for ‘‘payday or short-term lending.’’ 132 However, because data brokers operate in the shadows, with little oversight or regulation, companies in this industry have discretion regarding their voluntary enforcement of 

such restrictions. Indeed, an investigation into InfoUSA showed that employees routinely ignored rules about selling data to known fraudsters.133 Unfortunately, three 

of the largest companies—Acxiom, Experian, and Epsilon—to date have declined to 

disclose their customers to the Committee. As a result, the precise range and nature 

of their customer base remains unknown. 

One recent incident involving Experian’s credit services arm underscored that customer vetting and oversight practices are not always failsafe. In October 2013, 

media accounts reported that an alleged identity theft operation had purchased consumer data from Court Ventures, a company Experian acquired in March 2012, and 

that sales of data to the operation went on ‘‘for almost a year after Experian did 

their due diligence’’ and purchased the company.134 Concerned about implications 

of these reports regarding Experian’s customer vetting processes, Chairman Rockefeller wrote Experian asking the company to confirm whether such sales had occurred, how long such sales had continued after Experian had acquired Court Ventures, and Experian’s vetting of Court Ventures customers prior to and after acquisition. He also pressed the company for a complete customer list.135

Experian’s response acknowledged that a person possibly engaged in criminal activity had been a Court Ventures customer before and after Experian’s acquisition 

23 

136Letter from Tony Hadley, Senior Vice President of Government Affairs and Public Policy, 

Experian, to Chairman John D. Rockefeller IV (Nov. 8, 2013). 137 Experian, Summarized Credit Statistics (EXP002109–EXP002110). This credit product includes the following: 

• Median equivalency score—assesses the potential risk for seriously derogatory behavior. 

The scores range from 360 to 840 (high score equals low risk) to accommodate the industry 

standard use of credit scores, 

• Median risk score—similar to median equivalency score, this option also characterizes 

neighborhoods or market segments based on their likelihood of having future derogatory credit 

activity. This score range (0–1000) has a direct correlation, where a low score equals a low risk, 

and, 

• Median bankruptcy score—pinpoints neighborhoods or market segments that may be 

more likely to file for bankruptcy or become seriously delinquent over the next 12 months. This 

score is a leading indicator of potential derogatory impacts. Scores range from 108 to 1257, with 

a high score indicating great likelihood. Id. 138 Equifax, Aggregated FICO Scores: Utilize Aggregated FICO for Marketing Applications 

(EFX PROD3 0258–0260). 139 Equifax, Aggregated FICO Scores from IXI Services (EFX SUPP 168–169). 140 Contracts that respondent data brokers provided the Committee make clear they require 

customers to comply with FCRA’s prohibition against using marketing information for eligibility 

determinations. 141See discussion at part I.C regarding consumer protection issues relating to scoring products. 

of the company, and underscored that Experian stopped sales to this customer immediately after notification by authorities that this customer was under investigation. However, the company did not make clear how long the sales occurred undetected by Experian after acquisition of Court Ventures. The company further refused 

to provide specific customers to the Committee.136

Given that identifying vulnerable consumers is critical to the business of predatory lenders and fraudfeasors, and precedent where such entities have turned to 

data brokers for consumer data, the sale and use of data broker products segmenting financially vulnerable consumers merits close scrutiny. 

b. Scoring Products that Mirror Tools Regulated under the Fair Credit Reporting 

Act 

Some of the scoring products the respondent companies sell for marketing purposes resemble credit scoring tools that, under the Fair Credit Reporting Act, cannot 

be used for marketing. In materials describing one such product, ‘‘Summarized 

Credit Statistics,’’ Experian emphasizes the distinction between the aggregated credit related information offered by the product and individual credit information, explaining: ‘‘because individual credit information may not be used for marketing purposes without a pre-approved offer, Experian developed Summarized Credit Statistics to characterize a neighborhood’s consumer credit activity.’’ 137

Similarly, Equifax offers ‘‘Aggregated FICO Scores,’’ which Equifax distinguishes 

from FICO scores which are generally prohibited for use in marketing under the 

Fair Credit Reporting Act. In its marketing materials for this product, the company 

states that ‘‘FICO Scores are no longer only for credit approvals: With aggregated 

FICO Scores, [customers] can leverage the basis of FICO scores for non-FCRA marketing applications such as prospecting and ITA [invitations to apply].’’ 138 The company further explains that ‘‘for the first time, marketers now have access to an aggregated, non-FCRA measure derived from the FICO Score.139

This Committee inquiry did not focus on FCRA compliance issues.140 However, 

the emergence of marketing products that closely resemble credit scoring tools underscores the need for additional review of key questions including: 

• whether there are privacy concerns surrounding the use of these tools 

• whether additional consumer protections should be provided, and 

• whether use of some of these scores might be considered eligibility determinations that should be scrutinized under the Fair Credit Reporting Act.141

C. Data Broker Customers and New Mechanisms for Using Data Broker Products 

Responding data brokers told the Committee they sell their marketing products 

to a range of customers for a variety of types of marketing. These customers use 

data broker products for traditional mailing lists and increasingly to tailor outreach 

to individual consumer computers or mobile devices. Following is a discussion of the 

types of customers with whom data brokers share marketing products and what 

companies told the Committee about how their products are shared and used. 

24 

142 Acxiom, Fact Sheet: Consumer Insight Products (ACXM 458). Acxiom also provided several 

examples of specific publicly identified clients. E.g., Acxiom Response to Senate Commerce Committee (Nov. 2, 2012). 143 Experian Narrative Response to Senate Commerce Committee, at 19 (Nov. 2, 2012). 144Letter from Lydia Parnes, Counsel to Epsilon, to Erik Jones, Deputy General Counsel to 

the Senate Commerce Committee, at 10 (Feb. 13, 2013). 145Letter from Lydia Parnes, Counsel to Epsilon, to Melanie Tiano, Counsel to Senate Commerce Committee (July 24, 2013). An example is a company that specializes in in serving notfor-profit clients on fund-raising matters, which then uses marketing data furnished by 

Experian to help their clients refine fund-raising mailing campaigns. Id. Epsilon also described 

to the Committee several examples of specific publicly identified clients. Epsilon Response to 

Senate Commerce Committee, (Feb. 13, 2013) (EPS–COM–003612–003650). 146 Committee staff telephone interview with retail bank purchaser of segmenting buckets 

(Nov. 21, 2013). 147 Joseph Turow, The Daily You, at 185 (2011) (citing a 2005 survey that showed 80 percent 

of respondents ‘‘believed that ‘companies today have the ability to follow my activity across 

many sites on the web.’’) 148See Appendix III for a sampling of some of the data elements one company reported offering for online targeting. 

1. Who Buys the Data 

The respondent companies told the Committee they sell consumer data to a wide 

range of customers. The types of customers included financial institutions, hotel 

chains, wireless telephone service providers, cable companies, and jewelry stores, as 

well as other data brokers or resellers. While, some companies provided identities 

of specific customers, others instead provided only general descriptions of the types 

of customers that purchase their data. For example, Acxiom’s customers include ‘‘47 

Fortune 100 clients; 12 of the top 15 credit card issuers; seven of the top 10 retail 

banks; eight of the top 10 telecom/media companies; seven of the top 10 retailers; 

11 of the top 14 automotive manufacturers; six of the top 10 brokerage firms; three 

of the top 10 pharmaceutical manufacturers; five of the top 10 life/health insurance 

providers; nine of the top 10 property and casualty insurers; eight of the top 10 lodging companies; two of the top three gaming companies; three of the top five domestic 

airlines; six of the top 10 U.S. hotels.’’ 142

Experian’s customers include ‘‘retailers, including online, storefront, and catalog 

sellers; consumer products manufacturers; charities and other nonprofit organizations; advertising agencies; media placement agencies; government agencies; Internet service providers; Internet portals; businesses offering services, especially local 

businesses; direct mail service providers; real estate agents; local, state, and Federal 

politicians; and colleges and universities.’’ 143

Epsilon provided a list of the industries associated with their customers, which 

includes ‘‘business to business, broker, consumer packaged goods, direct to consumer, emerging markets, finance, healthcare, high tech—telco, insurance, multichannel marketers (catalog), not for profit, publishing, research, retail, strategic 

partners, tobacco, and travel and entertainment.’’ 144 The company further elaborated on several of these categories, explaining that list brokers are ‘‘buying agents 

for companies that send direct mail,’’ that ‘‘research the types of available lists that 

a mailer could use for their offer.’’ Emerging markets are ‘‘a collection of types of 

clients that are new to using direct marketing to reach customers,’’ and strategic 

partners are ‘‘companies that license data as inputs for models they create and resell to other companies.’’ 145

2. New Mechanisms for Using Data 

In their responses to the Committee, data brokers described client uses of their 

data in general terms such as fraud detection, identity authentication, and marketing. Specific customers named in some responses of the queried data brokers provided Committee staff with additional detail regarding their use of data broker 

products. 

For example, one retail bank noted if it were seeking to determine ideal locations 

of new branches it may be interested in examining predicted borrowing and spending behaviors of their existing customers. Such information also might help banks 

when they are setting goals based upon the likely needs of their clientele, such as 

whether one branch should give more loans while another should open more new 

accounts.146

Further, the data broker responses made clear that customers are using data 

broker products to reach consumers both through on-line and off-line outreach. 

While American consumers are beginning to understand, and even expect, that their 

online activities will be tracked in order to send them online advertisements,147 it 

is unclear whether they understand the extent to which data concerning their offline 

activities also may be collected and used to tailor online advertisements.148

25 

149 As Datalogix explained its digital product offerings: 

The DLX Digital Display Media product is a direct and natural evolution of Direct Mail product for the digital era, in virtually every way. In the traditional mail world, the data was and 

is used to deliver catalogues and marketing promotions through the mail channel to the personal address of a family or individual. In the display business, the data is used to deliver an 

advertisement via a banner advertisement. If the consumer clicks on the advertisement, the consumer is taken to a company-sponsored website that provides detail about the product or service 

in an analogous way to a catalog. Websites have replaced or augmented catalogues as a preferred method of consumer shopping in the last decade. 

Letter from Eric Roza, Chief Executive Officer, Datalogix, to Chairman John D. Rockefeller 

IV (Nov. 16, 2012). 150 A cookie is a text file that a website’s server places on a consumer’s web browser. Cookies 

can be used to transmit information back to the website’s server about the browsing activities 

on the site as well as be used to track a computer across different sites. See Federal Trade Commission, FTC Staff Report: Self-Regulatory Principles for Online Behavioral Advertising (Feb. 

2009). 151 Cookie syncing is the process of mapping user id’s from one system to another. See 

AdMonsters, Cookie Syncing (Apr. 20, 2010) (online at http://www.admonsters.com/blog/cookiesynching). 152Gartner, Acxiom’s Audience Operating System Could Reinvent Data-Driven Marketing (Sep. 

26, 2013). 153 Committee staff conversation with Jennifer Barrett Glasgow, Chief Privacy Officer, Acxiom 

(Dec. 10, 2013). 154For use online, the Ability to Pay Index assigns consumers a score from one to four. A score 

of one represents consumers with the highest likelihood of being able to pay. Equifax, Ability 

to Pay Digital (EFX SUPP 164); Equifax, Aggregated FICO Digital Targeting Segments (EFX 

PROD3 0294). 155 Experian Narrative Response to Senate Commerce Committee, at 10–11 (Feb. 26, 2013). 

The marketing materials suggest that customers can identify and track consumer groups based 

upon a variety of elements, including visits to specific websites; online searches for specific 

terms; demographics, including age, income, gender, race, and ethnicity; summarized credit 

scores; presence of children; hobbies; ailments and prescriptions; and life events, such as new 

parents, movers, or new homeowners. Experian, AudienceView (EXP002472–2473). 156Letter from Eric Roza, Chief Executive Officer, Datalogix, to Chairman John D. Rockefeller 

IV (Nov. 16, 2013). 

Historically, data about consumers was used to locate consumers to send catalogs 

and other marketing promotions through the mail or contact via telephone. Increasingly, the information that data brokers make available about consumers—including 

demographic characteristics, financial information, and offline purchases and interests—is provided to clients digitally such that it informs the client’s ability to target 

consumers online.149

The primary method for achieving online data sharing described by respondent 

companies is through the use of ‘‘cookies,’’ 150 and other technical means, such as 

‘‘cookie syncing,’’ or ‘‘cookie matching.’’ 151 However, as Internet browser companies 

take steps to block cookie traffic, other technology to track consumers is developing 

rapidly, and some data broker companies appear to be finding new ways to follow 

consumers across different channels such as mobile devices. For example, in September 2013, Acxiom announced its ‘‘Audience Operating System (AOS).’’ AOS will 

combine data from multiple sources and enable digital marketers to segment and 

target audiences across channels and devices and would eliminate the need for 

third-party cookies, the current technology used to track consumers across the Internet.152

Data brokers are increasingly focused on using their offline consumer profiles for 

the purposes of serving online advertisements. Acxiom, for example, currently offers 

approximately 47 percent of its 1,500 data elements to help marketers target consumers online by personalizing websites for individual consumers or serving advertisements.153 Similarly, Equifax offers many of its products digitally, including modeled FICO scores and the Ability to Pay Index.154 Experian’s Hitwise product enables marketers to obtain aggregate reports on the online behavior of their existing 

consumers by anonymously matching Experian offline marketing data with website 

traffic pattern analysis.155

Data brokers have asserted that digital products offer more privacy protections for 

consumers than traditional mail marketing because the data on consumers used in 

this context is not ‘‘personally identifiable’’ as that term is commonly understood. 

They point out that for marketing online, information about a consumer is often associated with a code instead of the consumer’s name.156 However, some privacy and 

information experts have expressed concerns that re-identification techniques may 

26 

157See How Anonymous Is Your Data? So, Should You Be Worried That We’re on a Fast Track 

to Mass Privacy Invasions?, Advertising Age (Mar. 18, 2013) (discussing the re-identification of 

online data that has been anonymized). 158 Joseph Turow, The Daily You, supra n. 146, at 190; see also Paul Ohm, Broken Promises 

of Privacy, 57 UCLA Law Review 1701, 1704 (2010) (‘‘Data can either be useful or perfectly 

anonymous, but never both.’’). 159 Acxiom Narrative Response to Senate Commerce Committee, at 3 (Apr, 15, 2013). 160For discussion of these guidelines see Part I.B. 161DMA Guidelines, supra n.25, Article 31. 162DMA Guidelines, supra n.25, Article 36. 163Sample contract provided to the Senate Commerce Committee. 164Sample contract provided to the Senate Commerce Committee. 165 E.g., Sample Contract provided to the Senate Commerce Committee. 

be used with such data,’’ 157 and questioned whether data that identifies specific 

computers and devices can truly be considered ‘‘anonymous.’’ As marketing scholar 

Joseph Turow wrote: 

Industry claims of anonymity surrounding all these data may soften the impact 

of the sorting and labeling processes. But in doing so, it seriously undermines 

the traditional meaning of the word. If a company can follow and interact with 

you in the digital environment—and that potentially includes the mobile phone 

and your television set—its claim that you are anonymous is meaningless, particularly when firms intermittently add offline information to the online data 

and then simply strip the name and address to make it ‘‘anonymous.’’ 158

D. Data Broker Transparency and Privacy Practices 

Data brokers generally are not consumer facing, therefore, most consumers have 

no way of knowing that data brokers may be collecting their data. Further, a number of companies have contracts with their customers that limit customer disclosures regarding their data sources. And since consumers generally do not have Federal statutory rights of access, correction, or control with respect to the information 

data brokers maintain on them for marketing, companies can establish privacy protections for this data largely at their own discretion. 

Industry representatives continue to support self-regulation as the best approach 

for protecting the privacy of consumer data used for marketing, and many of the 

data broker responses to the Committee highlighted the importance of self-regulation. In fact, Acxiom cited a company philosophy—‘‘just because you can doesn’t 

mean you should’’ 159—as a guiding principle for how to handle the mass quantities 

of consumer data available to them. 

Most company responses indicated they have incorporated many of the best practices set forth in the Guidelines for Ethical Business Practices issued in 2009 by the 

Direct Marketing Association.160 These guidelines provide ‘‘generally accepted principles of conduct’’ for ‘‘database compilers’’ that cover subjects including consumer 

choice and privacy notices, handling sensitive and specifically health-related information, oversight of customer data use, and information security. The guidelines 

also provide for a consumer right to opt out of the marketing process but do not 

provide for consumer access and correction rights with respect to their own data.161

This section discusses respondent company practices relevant to transparency and 

privacy. 

1. Disclosure Limitations 

Although DMA Guidelines recommend that members ‘‘not prohibit an end-user 

marketer from divulging the database compiler as the source of the marketer’s information,’’ 162 a number of the companies have contracts with customers that place 

restrictions on customer disclosure of their data source. For example, one company’s 

contract language provides: ‘‘All marketing communications used in connection with 

any list or data element provided to client shall . . . be devoid of any reference to 

. . . the source of the recipient’s name and address.’’ 163 Similarly, another company’s contracts provide that the company ‘‘may not be advertised, or otherwise disclosed to any third party, as the source of the Licensed Data unless Client first obtains the express, written permission’’ of the company.’’ 164

The contracts reviewed by the Committee do, however, provide exceptions to such 

restrictions where a consumer makes a direct inquiry to the data broker’s customer.165

2. Consumer Access and Control Rights 

The respondent data brokers varied widely with respect to access and correction 

rights. For example, Experian and Equifax provide consumers no right to view their 

own data or correct it. Rapleaf provides consumers access to their data, and allows 

27 

166 Response Letter from Robert W. Kamerschen, U.S. Chief Counsel and Senior Vice President, Equifax to Chairman John D. Rockefeller IV, at 5 (Nov. 2, 2012). 167 Experian Narrative Response to Senate Commerce Committee, at 16 (Nov. 2, 2013). 168 Id. 169See Section III.C.2. According to documents provided to the Committee, as of June 2012, 

Acxiom had 160 elements available in the digital products. The 160 elements include some modeled data that would not be available for access and correction. This is out of Acxiom’s over 

1,500 data elements currently listed as available in their data catalog. Acxiom Narrative Response to Senate Commerce Committee (Mar. 1, 2013). Conversations with Acxiom suggest that 

this number may now be as high as 47 percent of the available 1,500 data elements. Committee 

staff conversation with Jennifer Barrett Glasgow, Chief Privacy Officer, Acxiom (Dec. 10, 2013). 170 Epsilon Narrative Response to Senate Commerce Committee (Nov. 2, 2012). 

them to correct data that Rapleaf originates, but the company does not provide correction rights to data originating from others. 

Equifax states that a large percentage of the products it offers are aggregated or 

modeled scores that are then attributed to every household or individual sharing a 

particular ZIP+4 Code. Equifax asserts that because the consumer data obtained is 

de-identified and therefore not about a particular consumer, Equifax does not provide an opportunity for consumer notice, access, or correction.166 Similarly, Experian 

does not provide consumers the ability to access or correct the data maintained because the company ‘‘does not maintain sufficient personal information to allow adequate authentication of an individual who requests access,’’ 167 and much of the information is modeled or inferred or provides general information, such as income 

ranges, rather than details, such as exact income, making correction rights unnecessary.168

Acxiom in September 2013 unveiled a new website—Aboutthedata.com—that allows consumers to see and correct certain information that Acxiom has collected 

about them. In order to access information, consumers must enter their full name, 

address, date of birth, last four digits of their social security number, and e-mail 

address. Once a consumer’s information has been authenticated, the consumer can 

view, and correct or delete broad categories of what Acxiom calls ‘‘core’’ data. 

While the new Acxiom database marks a step forward in promoting transparency, 

it does not provide consumers a complete view of the data the company holds on 

consumers for marketing purposes. First, consumers do not have access to data to 

which Acxiom has applied analytics. For example, a consumer could see data points 

showing their occupation and that they have children, but if Acxiom inferred from 

those two data points that the consumer is a ‘‘working parent,’’ the consumer would 

not have access to that inferred element. Second, the database includes only those 

data points that are currently incorporated into Acxiom’s digital—as opposed to offline—products. According to Acxiom representatives, as of early December, about 47 

percent of Acxiom’s offline data was included in the digital products, and the company is aiming to have complete overlap of the two data sets within a few years.169

3. Opt-Out Rights 

Several companies reported that they provide an avenue for consumers to opt out 

of having their information shared for marketing purposes. The companies that provide these options typically give notice to consumers of this option via their privacy 

policies and company websites. They can also entirely opt out of having any of their 

data collected. 

Acxiom’s policy is to permanently delete the records of consumers who choose to 

opt out. However, a number of other respondent companies provide that, when a 

consumer opts out of having their information shared, the companies do not delete 

the consumer’s information. Rather, as Epsilon describes: 

When a consumer opts-out with Epsilon, Epsilon marks the consumer’s information as ‘‘Do Not Share,’’ rather than deleting the information. Epsilon does this 

to preserve the consumer’s preference; if the consumer’s information is deleted, 

in the future, Epsilon would have no way to know that the consumer requested 

that their information not be shared. When a consumer is marked as ‘‘Do Not 

Share,’’ Epsilon will know that the consumer did not want their information 

shared in case the consumer’s information is later resubmitted. Epsilon adheres 

to this policy to ensure that consumers’ opt-out requests are persistent and honored.170

Similarly, when a consumer requests that Experian suppress the use of their information for marketing purposes, ‘‘Experian does not completely eliminate data in 

response to a suppression request. [Experian] must continue to internally maintain 

28 

171 Experian Narrative Response to Senate Commerce Committee, at 16 (Nov. 2, 2012). 1Government Accountability Office, Information Resellers: Consumer Privacy Framework 

Needs to Reflect Changes in Technology and the Marketplace, GAO–13–663 (Sept. 2013) (hereafter ‘‘GAO Information Reseller Report’’). 2 Id.. 

3Pub. L. No. 91–508, Tit. VI, 84 Stat. 1114, 1128 (1970) (codified as amended at 15 U.S.C. 

§§ 1681–1681x). 4 15 U.S.C. § 1681a. 

a record pertaining to the suppressed household in order to properly manage consumer records, such as the consumer’s choice for suppression.’’ 171

It is worth noting that since consumers are often not aware that data brokers 

hold their information, it is not clear how they would be aware that they have optout rights, or how to exercise them. 

IV. Conclusion 

The responses the Committee received in its inquiry into the data broker industry 

provide a snapshot of how data brokers collect, use, and share consumer data for 

marketing purposes. This information makes clear that consumers going about their 

daily activities—from making purchases online and at brick-and-mortar stores, to 

using social media, to answering surveys to obtain coupons or prizes, to filing for 

a professional license—should expect that they are generating data that may well 

end up in the hands of data brokers. They should expect that this data may well 

be amassed with many other details about them data brokers already have compiled. And they should expect that data brokers will draw on this data without their 

permission to construct detailed profiles on them reflecting judgments about their 

characteristics and predicted behaviors. 

The responses also underscore that consumers have minimal means of learning— 

or providing input—about how data brokers collect, analyze, and sell their information. The wide variety of consumer access and control policies provided by the representative companies show that consumer rights in this arena are offered virtually 

entirely at the companies’ discretion. The contractual limitations imposed by companies regarding customer disclosures of their data sources place additional barriers 

to consumer transparency. And the refusal by several major data broker companies 

to provide the Committee complete responses regarding data sources and customers 

only reinforces the aura of secrecy surrounding the industry. 

This Committee inquiry has been conducted at a time when sources of consumer 

data and technological capabilities for storage and speedy analysis of data continue 

to expand. As data brokers are creating increasingly detailed dossiers on millions 

of consumers, it is important for policymakers to continue vigorous oversight to assess the potential harms and benefits of evolving industry practices and to make 

sure appropriate consumer protections are in place. 

APPENDIX I 

FEDERAL LAWS THAT MAY BE APPLICABLE TO INFORMATION COLLECTED

BY DATA BROKERS

In its September 2013 Information Resellers Report, GAO found that no single 

comprehensive Federal privacy law governs the collection, use, and sale of personal 

information maintained and sold by data brokers.1 Instead, a ‘‘more narrowly tailored’’ set of laws concerning private sector use of consumer information exists 

which ‘‘apply for specific purposes, in certain situations, to certain sectors, or to certain types of entities.’’ 2 The Fair Credit Reporting Act (FCRA), the Gramm-LeachBliley Act (GLBA), Section 5 of the Federal Trade Commission Act (FTC Act), and 

to some extent the Health Insurance Portability and Accountability Act of 1996 

(HIPAA), and the Children’s Online Privacy Protection Act (COPPA) are the primary laws that govern the collection and use of consumer information. A brief summary of the applicable portions of each of these laws follows below. 

I. Fair Credit Reporting Act 

The Fair Credit Reporting Act (FCRA) 3 imposes a number of obligations on consumer reporting agencies (CRAs), which are entities that assemble consumer information into ‘‘consumer reports’’ for use by issuers of credit and insurance, and by 

employers, landlords, and others in making eligibility decisions affecting consumers.4 Whether the obligations and protections of the FCRA apply to consumer 

data depends largely on the purpose for which the information is collected, and the 

intended and actual use of the information, rather than the origin or nature of the 

29 

5 15 U.S.C. § 1681b(e). Pre-screened offers of credit or insurance—sometimes called ‘‘pre-approved’’ offers—are sent to consumers unsolicited, usually by mail. They are based on information in consumers’ credit reports that indicates that the individuals receiving the offer meet the 

criteria set by the company making the offer. The FCRA limits the circumstances in which consumer reports can be used to make pre-screened offers, and provides that all such offers must 

include a notice of consumers’ right to stop receiving future pre-screened offers. 6 15 U.S.C. § 1681e(b). 

7 15 U.S.C. § 1681i(a)–(d) 

8 15 U.S.C. § 1681b(a), (c). Permissible purposes under the FCRA include, but are not limited 

to, the use of a consumer report in connection with a determination of eligibility for credit, insurance, or a license; in connection with the review of an existing account; and for certain employment purposes. Other typical uses that are subject to FCRA protections include tenant 

screening, and check cashing services. 9See, e.g., Press Release, ‘‘Certegy Check Services to Pay $3.5 Million for Alleged Violations 

of the Fair Credit Reporting Act and Furnisher Rule,’’ Federal Trade Commission (Aug. 15, 2013) 

(available at www.ftc.gov/news-events/press-releases/2013/08/certegy-check-services-pay-35-million-alleged-violations-fair); Press Release ‘‘Marketers of Criminal Background Screening Reports 

To Settle FTC Charges They Violated Fair Credit Reporting Act’’ Federal Trade Commission, 

(Jan. 10, 2013) (available at www.ftc.gov/news-events/press-releases/2013/01/marketers-criminal-background-screening-reportsto-settle-ftc); Press Release,‘‘Spokeo to Pay $800,000 to Settle 

FTC Charges Company Allegedly Marketed Information to Employers and Recruiters in Violation 

of FCRA,’’ Federal Trade Commission,(June 7, 2012) (available at www.ftc.gov/news-events/ 

press-releases/2012/06/spokeo-pay-800000-settle-ftc-charges-company-allegedly-marketed). 10Pub. L. No. 106–102, 113 Stat. 1338 (1999) (codified as amended in scattered sections of 

12 and 15 U.S.C.). 11 15 U.S.C. § 6809(3)(A). 12 15 U.S.C. § 6801(a). 13 15 U.S.C. § 6801(b). 14 15 U.S.C. § 6802(b). 15 15 U.S.C. § 6802(e). 16 16 C.F.R. Part 313. 17 16 C.F.R. Part 313.11(a). 

information itself. The FCRA does not apply to the collection and use of information 

for the purpose of marketing, except it allows marketing of pre-screened offers of 

credit and insurance where consumers are provided the opportunity to opt out of 

future such offers.5

The FCRA requires that CRAs make reasonable efforts to assure the ‘‘maximum 

possible accuracy’’ 6 of the information they provide to data users, and further requires they maintain procedures through which consumers can dispute and correct 

inaccurate information in their consumer reports.7 CRAs also must take reasonable 

measures to ensure that they provide credit reports only to those entities that have 

a statutorily-specified ‘‘permissible purpose’’ to receive them.8 The FTC has recently 

taken actions against a number of companies for allegedly violating the FCRA.9

II. Gramm Leach Bliley Act 

The Gramm Leach Bliley Act (GLBA) 10, also known as the Financial Services 

Modernization Act of 1999, imposes privacy and security obligations on nonpublic 

personal information that consumers provide to ‘‘financial institutions,’’ which 

GLBA defines as businesses that are engaged in ‘‘financial activities,’’ including traditional banking, lending, and insurance functions, as well as other activities such 

as providing investment advice, brokering loans, credit reporting, and real estate 

settlement services.11 Financial institutions subject to GLBA must comply with two 

key provisions of the Act—the ‘‘Financial Privacy Rule,’’ and ‘‘Safeguards Rule.’’ The 

Financial Privacy Rule governs the collection and disclosure of consumers’ personal 

information.12 The ‘‘Safeguards Rule,’’ requires that financial institutions design, 

implement and maintain safeguards to protect consumers’ nonpublic information.13

The GLBA Privacy Rule generally prohibits covered financial institutions from 

disclosing nonpublic personal information about consumers to non-affiliated third 

parties without first providing consumers with notice and the opportunity to opt out 

of the disclosure.14 However, the GLBA provides a number of statutory exceptions 

under which disclosure is permitted without specific notice to the consumer, including consumer reporting (pursuant to the FCRA), fraud prevention, law enforcement 

and regulatory or self-regulatory purposes, compliance with judicial process, and 

public safety investigations.15

Entities that receive information under an exception to the GLBA are subject to 

reuse and re-disclosure restrictions, even if those entities are not themselves financial institutions.16 In particular, the recipients may only use and disclose the information ‘‘in the ordinary course of business to carry out the activity covered by the 

exception under which . . . the information [was received].’’ 17 Thus, for example, 

if a data broker obtains ‘‘credit header information’’—which includes a consumer’s 

name, address, and social security number—from a financial institution pursuant to 

30 

18 15 U.S.C. § 45. Banks, savings and loans, credit unions, common carriers, and air carriers 

are exempt from the FTC’s Section 5 jurisdiction. 19See, e.g, Press Release, Google Will Pay $22.5 Million to Settle FTC Charges it Misrepresented Privacy Assurances to Users of Apple’s Safari Internet Browser, Federal Trade Commission (Aug.9, 2012) (available at www.ftc.gov/news-events/press-releases/2012/08/google-willpay-225-million-settle-ftc-charges-it-misrepresented); Press Release, Online Data Broker Settles 

FTC Charges Privacy Policies were Deceptive, (Sept. 22, 2010) (available at http://www.ftc.gov/ 

news-events/press-releases/2010/09/online-data-broker-settles-ftc-charges-privacy-pledges-were) 

(charging that U.S. Search, Inc.’s promises that they would prevent consumers’ personal information from appearing in their reverse lookup database in exchange for a $10 fee were false); 

Press Release, Agency Announces Settlement of Separate Actions Against Retailer TJX, and Data 

Brokers Reed Elsevier and Seisint for Failing to Provide Adequate Security for Consumers Data, 

Federal Trade Commission (Mar. 27, 2008) (available at http://www.ftc.gov/news-events/pressreleases/2008/03/agency-announces-settlement-separate-actions-against-retailer-tjx). 20 In October of 2012, the FTC alleged that the credit reporting division of Equifax improperly 

sold more than 17,000 ‘‘prescreened’’ lists of consumers who were late on their mortgage payments to Direct Lending Source, Inc. and its affiliate companies. Direct Lending subsequently 

resold some of these lists to third parties, who used the lists to pitch loan modification and debt 

relief services to people in financial distress, including to companies that had been the subject 

of prior law enforcement investigations. See Press Release, FTC Settlements Require Equifax to 

Forfeit Money Made by Allegedly Improperly Selling Information about Millions of Consumers 

Who Were Late on Their Mortgages, Federal Trade Commission (Oct. 10, 2012) (available at 

http://www.ftc.gov/news-events/press-releases/2012/10/ftc-settlements-require-equifax-forfeitmoney-made-allegedly). 21Pub. L. No. 104–191, 110 Stat. 1936 (1996) (codified as amended in scattered sections of 

18, 26, 29, and 42 U.S.C.). 22 45 C.F.R. Part 160.103. Individually identifiable health information is information which 

can be linked to a particular person. This information can relate to the individual’s past, present 

or future physical or mental health or condition, or, the past, present, or future payment for 

the provision of health care to the individual. 23 45 C.F.R. Part160.103. 24 Exceptions include refill reminders or otherwise communicate about a drug or biologic that 

is currently being prescribed for the individual, only if any financial remuneration received by 

the covered entity in exchange for making the communication is reasonably related to the covered entity’s cost of making the communication. 45 CFR 164.501 25 15 U.S.C. §§ 6501–6506 (Pub.L. 105–277, 112 Stat. 2581–728, enacted October 21, 1998). 

the GLBA exception ‘‘to protect against or prevent actual or potential fraud,’’ then 

that data broker may not reuse and re-disclose that information for marketing purposes. 

III. Federal Trade Commission Act 

Section 5 of the Federal Trade Commission (FTC) Act provides the Commission 

with broad jurisdiction to regulate unfair or deceptive practices in competition and 

consumer protection.18 Section 5 forms the basis of the FTC’s substantial body of 

law that covers advertising, marketing, certain financial practices, and privacy, 

among other areas. In the privacy space, section 5 applies to both deceptions and 

violations of written privacy policies and statements made to consumers about how 

they will safeguard or use consumer information.19 The Commission’s Section 5 authority extends to the sale of data for marketing purposes.20

IV. Health Insurance Portability and Accountability Act 

The Health Insurance Portability and Accountability Act (HIPAA) 21 protects certain personal health information from use and disclosure. HIPAA applies to individually identifiable health information 22 held by ‘‘covered entities,’’ which include 

health insurers, health care providers—if they transmit any information in an electronic form for certain covered transactions—and health care clearinghouses, as well 

as their vendors, subcontractors, and business associates.23 The HIPPA Privacy 

Rule governs the use and disclosure of personal health information and, with some 

exceptions, requires an individual’s written authorization prior to using consumers’ 

protected health information for marketing and sale.24 However, HIPPA affords fairly narrow protections and its restrictions on sharing do not apply to health information held by non-covered entities, including data brokers. 

V. Children’s Online Privacy Protection Act 

The Children’s Online Privacy Protection Act 25 (COPPA) applies to the online collection and use of personal information from children under age 13. Websites and 

online services, including mobile apps, covered by COPPA are required to post privacy policies, provide parents with direct notice of their information practices, and 

get verifiable consent from a parent or guardian before collecting personal information from children. Personal information is defined as information that would allow 

someone to identify or contact a child. It includes, among other things, name, physical or e-mail address, geolocation, and ‘‘persistent identifier’’ which can be used to 

31 

26 16 C.F.R. Part 312.2. 27 16 C.F.R. Part 312.5. 

recognize a user over time and across different websites or online services.26 The 

law specifies what information must be included in the notice provided to parents 

and how and when to acquire parental consent.27

COPPA’s restrictions and protections could apply to this investigation because 

websites have been identified as one of the sources from which data brokers obtain 

consumer information. COPPA does not restrict the collection of a child’s information from the child’s parent or other adult. 


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53 

The CHAIRMAN. One of the things that we have learned in this 

investigation is that data brokers engage in many unobjectionable 

activities. They do what marketers have always done: They help 

businesses find potential customers. 

But we have also found some practices that raise some serious 

consumer protection concerns. In particular, I am disturbed by the 

evidence showing that the data brokers segment Americans, categorize them into categories, name those categories, based on their 

incomes, and then they sort economically vulnerable customers into 

groups with names like ‘‘rural and barely making it’’—not making 

it up, that is one of their categories—‘‘tough start: young single 

parents’’; ‘‘rough retirement: small-town and rural seniors’’; and 

‘‘zero mobility.’’ 

I want to know how and why data brokers are putting American 

consumers into categories like these, and I want to know which 

companies are buying these lists to target their marketing to these 

groups. Maybe it is totally innocuous and benign. I don’t start out 

accepting that, but maybe it is. That is why we are doing this investigation. 

Some companies in the data broker industry have responded 

positively to our oversight efforts. 

When I became Chairman here several years ago, we went over 

to Henry Waxman and stole a couple of his best people and set up 

an investigations unit, which for some reason we had never had. 

And we gave ourselves subpoena power; for some reason, we had 

never done that. It is a powerful tool when you are doing investigations, which is what we tend to do in here. 

I want to know which companies are buying these lists to target 

their marketing to those groups. 

Some companies in the data broker industry have responded very 

positively to our oversight efforts. Over the past year, they have 

provided complete answers to my questions, even the tough ones. 

But several of the largest data brokers—specifically, Acxiom, Epsilon, and Experian—are continuing to resist oversight, just resist 

it. To date, they have not given me complete answers about where 

they get their customer data on consumers and to whom they sell 

it. 

I am putting these three companies on notice today that I am not 

satisfied with their responses and I am considering further steps— 

and I have steps that I can use—that I can take to get this information. We have oversight over this activity in American commerce. And if you do oversight, whether it is over intelligence or 

whether it is over this, you do it seriously and you do it with a purpose and you want to get the truth. 

So I am putting these companies on notice that I am not satisfied 

and I have further steps that I can take to get this information. 

And I want to assure them that the oversight efforts in this committee that we have started will continue. 

I call now on my distinguished friend from a similar urban 

state—— 

Senator THUNE. That is right. 

[Laughter.] 

The CHAIRMAN.—Senator John Thune. 

54 

STATEMENT OF HON. JOHN THUNE, 

U.S. SENATOR FROM SOUTH DAKOTA 

Senator THUNE. Well, thank you, Mr. Chairman, for holding this 

hearing. 

And thank you also to the witnesses for coming here today. 

Our economy is increasingly data-driven, and data brokers play 

a growing role in facilitating the provision of goods and services to 

consumers. Data or information brokers are companies that collect 

data, including personal information, about consumers from a wide 

variety of sources, such as public records, websites, and retailers, 

and then resell such information for purposes that range from 

verifying an individual’s identity to preventing fraud to marketing 

products. 

As the Chairman noted in his initial letters to several data brokers in 2012, the purpose of his inquiry has been to better understand the industry and I look forward to today’s hearing as we 

focus on how the information collected by data brokers is used for 

marketing purposes. 

Without question, data-driven marketing can provide benefits 

and greater convenience to consumers. It can lower the cost of 

products and services because businesses can target marketing 

more precisely. It also can help businesses create and sell products 

that consumers actually want, lowering start-up costs for new businesses. 

Data-driven marketing is one important reason that many of us 

are able to use search engines and our e-mail accounts for free. It 

also allows consumers to receive frequent-shopper benefits and coupons. And it promotes the targeting of resources to reduce the 

amount of junk mail and catalogs that aren’t tailored to a consumer’s particular interests—at least, that is the goal. 

Put simply, this industry is at the center of something the Commerce Committee cares about: commerce. In today’s economy, datadriven marketing is widely used across all sectors of the economy: 

financial, insurance, automotive, retail, technology, health care. It 

is even used by nonprofits, governments, and political campaigns. 

In fact, many media outlets have noted how the use of commercial 

data resources helped the president’s reelection campaign in 2012. 

As we will hear from the Direct Marketing Association, the marketing data industry is also helping to fuel job creation and technical innovation in our slowly recovering economy. 

While the industry creates many benefits, this hearing will also 

explore important questions about the privacy implications of data 

brokers’ activities, including issues of transparency, profiling, and 

concerns about allegations of differential pricing. 

Questions have also been raised about whether consumers are 

aware of the instances in which their personal information may be 

collected, bought, and sold, resulting in calls for more transparency 

into data broker practices. 

Advocates have also raised concerns that data brokers create profiles of individual consumers based on the aggregation of sensitive 

and sometimes personal data, including health conditions. 

These are important issues, and I look forward to the discussion 

today. 

55 

In a rapidly changing marketplace, the Federal Trade Commission has done important work concerning data brokers and related 

privacy issues, including developing educational efforts. They have 

also brought enforcement actions under the FTC Act and the Fair 

Credit Reporting Act. The FTC is also completing a study about 

practices in the data broker industry and will provide recommendations to Congress based on their findings next year. I look forward 

to their testimony. 

The Government Accountability Office has recently produced a 

report on the data broker industry, which I understand will be submitted as part of the record for this hearing as well as to help inform this committee. 

[The report follows:] 

GAO Highlights 

Why GAO Did This Study 

Members of Congress and others have raised privacy concerns about information 

resellers (data brokers) and consumer information. In part, their concerns stem from 

consumers not always knowing the nature and extent of the information collected 

and how it is used. Growing use of the Internet, social media, and mobile applications has intensified privacy concerns because these media greatly facilitate gathering of personal information, tracking of online behavior, and monitoring of individuals’ locations and activities. This statement for the record discusses: (1) existing 

Federal laws and regulations on the privacy of consumer information held by information resellers, (2) any gaps that may exist in this legal framework, and (3) views 

on approaches for improving consumer data privacy. 

This statement draws from a September 2013 report (GAO–13–663), which focuses on information used for marketing. GAO analyzed relevant laws and regulations; interviewed representatives of Federal agencies, trade associations, consumer 

and privacy groups, and resellers; and identified and reviewed approaches for improving consumer data privacy. 

What GAO Recommends 

In September 2013, GAO suggested that Congress should consider strengthening 

the consumer privacy framework and review issues such as the adequacy of consumers’ ability to access, correct, and control their personal information; and privacy 

controls related to new technologies such as web tracking and mobile devices. 

Information Resellers 

Consumer Privacy Framework Needs to Reflect Changes in Technology 

and the Marketplace 

What GAO Found 

No overarching Federal privacy law governs the collection and sale of personal information among private-sector companies, including information resellers. Instead, 

laws tailored to specific purposes, situations, or entities govern the use, sharing, and 

protection of personal information. For example, the Fair Credit Reporting Act limits the use and distribution of personal information collected or used to help determine eligibility for such things as credit or employment, but does not apply to information used for marketing. Other laws apply specifically to health care providers, 

financial institutions, or to the online collection of information about children. 

The current statutory framework for consumer privacy does not fully address new 

technologies—such as tracking of online behavior or mobile devices—and the vastly 

increased marketplace for personal information, including the proliferation of information sharing among third parties. No Federal statute provides consumers the 

right to learn what information is held about them for marketing and who holds 

it. In many circumstances, consumers also do not have the legal right to control the 

collection or sharing with third parties of sensitive personal information (such as 

health information) for marketing purposes. As a result, although some industry 

participants have stated that current privacy laws are adequate, GAO found that 

gaps exist in the current statutory framework for information privacy. The framework also does not fully reflect the Fair Information Practice Principles, widely accepted principles for protecting the privacy and security of personal information that 

56 

1GAO, Information Resellers: Consumer Privacy Framework Needs to Reflect Changes in Technology and the Marketplace, GAO–13–663 (Washington, D.C.: Sep. 25, 2013). 2 In a 2006 report, we examined financial institutions’ use of information resellers, focusing 

on consumer information used for eligibility determinations, compliance with legal requirements, and fraud prevention. GAO, Personal Information: Key Federal Privacy Laws Do Not Require Information Resellers to Safeguard All Sensitive Data, GAO–06–674 (Washington, D.C.: 

June 26, 2006). 

have served as a basis for many privacy recommendations Federal agencies have 

made. 

Views differ on the approach that any new privacy legislation or regulation should 

take. Some privacy advocates have argued that a comprehensive privacy law would 

provide greater consistency and address gaps in law left by the current sector-specific approach. Others have stated that a comprehensive, one-size-fits-all approach 

would be burdensome and inflexible. Some privacy advocates also cited the need to 

provide consumers with greater ability to access, control the use of, and correct information about themselves, particularly for data being used for purposes different 

than those for which they originally were provided. Industry representatives have 

asserted that restrictions on the collection and use of personal data would impose 

compliance costs, inhibit innovation, and reduce consumer benefits. Nonetheless, the 

rapid increase in the amount and type of personal information that is collected and 

resold warrants reconsideration of how well the current privacy framework protects 

personal information. The challenge will be providing appropriate privacy protections without unduly inhibiting the benefits to consumers, commerce, and innovation that data sharing can accord. 

PREPARED STATEMENT OF ALICIA PUENTE CACKLEY, DIRECTOR FINANCIAL MARKETS

AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

Chairman Rockefeller, Ranking Member Thune, and Members of the Committee: 

I am pleased to submit this statement on our recent work on privacy, personal 

information, and information resellers.1 As you know, information resellers (also 

known as data brokers) offer several types of products to customers that include retailers, advertisers, individuals, nonprofit organizations, law enforcement, and government agencies. This statement is based on a report we issued this September in 

response to a request from this committee to review privacy issues related to the 

consumer data that information resellers collect, use, and sell. Others also have 

raised privacy concerns about resellers and consumer information. In part, their 

concerns stem from consumers not always knowing the nature and extent of the information collected and how it is used. Moreover, growing use of the Internet, social 

media, and mobile applications has intensified privacy concerns because these media 

greatly facilitate the gathering of personal information, tracking of online behavior, 

and monitoring of individuals’ locations and activities. 

Our September report examined: (1) existing Federal laws and regulations related 

to the privacy of consumer information held by information resellers, (2) any gaps 

that may exist in this legal framework, and (3) views on approaches for improving 

consumer data privacy. We focused on privacy issues related to information used for 

marketing and individual reference services (look-up or people-search); we did not 

focus on information used for other purposes such as determining credit or employment eligibility.2

For our September 2013 report, we reviewed and analyzed relevant laws, regulations, and enforcement actions. We interviewed representatives of Federal agencies, 

trade associations, consumer and privacy groups, and resellers to obtain their views 

on data privacy laws related to resellers. We identified and reviewed approaches 

(legislative, regulatory, or self-regulatory) for improving consumer data privacy that 

Federal entities—such as the White House, Federal Trade Commission (FTC), and 

Department of Commerce (Commerce)—or representatives of industry, consumer, 

and privacy groups advocated. We interviewed representatives of these entities and 

reviewed relevant studies, hearings, position papers, public comments, and other 

sources. Further details of our scope and methodology can be found in our published 

report. 

We conducted the performance audit on which this statement is based from August 2012 through September 2013, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence 

57 

3Organisation for Economic Co-operation and Development, Guidelines on the Protection of 

Privacy and Transborder Flow of Personal Data (Paris, France: Sept. 23, 1980). OECD’s 30 

member countries include the United States. OECD has been considering whether to revise or 

update its privacy guidelines to account for changes in the role of personal data in the economy 

and society. 4Pub. L. No. 93–579, 88 Stat. 1896 (1974) (codified as amended at 5 U.S.C. § 552a). The act 

generally prohibits (with a number of exceptions) the disclosure by Federal entities of records 

about an individual without the individual’s written consent and provides U.S. persons with a 

means to seek access to and amend their records. 

obtained provides a reasonable basis for our findings and conclusions based on our 

audit objectives. 

Background 

Resellers maintain large, sophisticated databases with consumer information that 

can include credit histories, insurance claims, criminal records, employment histories, incomes, ethnicities, purchase histories, and interests. Resellers largely obtain their information from public records, publicly available information (such as 

directories and newspapers), and nonpublic information (such as from retail loyalty 

cards, warranty registrations, contests, and web browsing). Characterizing the precise size and nature of the reseller industry can be difficult because of limited publicly known information about the industry. 

In 1972, a U.S. government advisory committee first proposed the Fair Information Practice Principles (FIPP) for protecting the privacy and security of personal 

information. While FIPPs are not legal requirements, they provide a framework for 

balancing privacy with other interests. The Organisation for Economic Co-operation 

and Development (OECD) developed a revised version of the FIPPs that has been 

widely adopted (see table 1).3

Table 1.—Fair Information Practice Principles 

Principle Description 

Collection limitation The collection of personal information should be limited, obtained by 

lawful and fair means, and, where appropriate, with the knowledge or 

consent of the individual. 

Data quality Personal information should be relevant to the purpose for which it is 

collected, and should be accurate, complete, and current as needed for 

that purpose. 

Purpose specification The purposes for the collection of personal information should be disclosed before collection and upon any change to those purposes, and the 

use of the information should be limited to those purposes and compatible purposes. 

Use limitation Personal information should not be disclosed or otherwise used for purposes other than a specified purpose without consent of the individual or 

legal authority. 

Security safeguards Personal information should be protected with reasonable security safeguards against risks such as loss or unauthorized access, destruction, 

use, modification, or disclosure. 

Openness The public should be informed about privacy policies and practices, and 

individuals should have ready means of learning about the use of personal information. 

Individual participation Individuals should have the following rights: to know about the collection of personal information, to access that information, to request correction, and to challenge the denial of those rights. 

Accountability Individuals controlling the collection or use of personal information 

should be accountable for taking steps to ensure the implementation of 

these principles. 

Source: OECD. 

FIPPs served as the basis for the Privacy Act of 1974—which governs the collection, maintenance, use, and dissemination of personal information by Federal agencies.4 The principles also were the basis for many FTC and Commerce privacy recVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00061 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE
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5The framework includes a consumer privacy bill of rights and encourages Congress to provide FTC with enforcement authorities for the bill of rights. The White House, Consumer Data 

Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Innovation 

in the Global Digital Economy (Washington, D.C.: Feb. 23, 2012). 6Pub. L. No. 91–508, Tit. VI, 84 Stat. 1114, 1128 (1970) (codified as amended at 15 U.S.C. 

§§ 1681–1681x). 7See 15 U.S.C. § 1681. 8For the definition of ‘‘consumer reporting agency’’, see 15 U.S.C. § 1681a(f). For the definition 

of ‘‘consumer report’’, see 15 U.S.C. § 1681a(d). 9Pub. L. No. 106–102, 113 Stat. 1338 (1999) (codified as amended in scattered sections of 12 

and 15 U.S.C.). 10See 15 U.S.C. §§ 6801–6802. Subtitle A of Title V of the act contains the privacy provisions 

relating to the disclosure of nonpublic personal information. 15 U.S.C. §§ 6801–6809. 11 15 U.S.C. § 6802. A ‘‘financial institution’’ is any institution the business of which is engaging in financial activities as described in section 4(k) of the Bank Holding Company Act (12 

U.S.C. § 1843(k)). 15 U.S.C. § 6809(3)(a). 12Pub. L. No. 104–191, 110 Stat. 1936 (1996) (codified as amended in scattered sections of 

18, 26, 29, and 42 U.S.C.). 13 45 C.F.R. Parts 160, 164. 14For the definition of ‘‘marketing’’, including exceptions, see. 45 C.F.R. § 164.501. 15Pub. L. No. 105–277, Div. C, Tit. XIII, 112 Stat. 2681–728 (1998) (codified at 15 U.S.C. 

§§ 6501–6506). 16FTC issued regulations implementing COPPA, 16 C.F.R. Part 312. 17Pub. L. No. 99–508, 100 Stat. 1848 (1986) (codified as amended in scattered sections of 18 

U.S.C.). 

ommendations and for a framework for consumer data privacy the White House 

issued in 2012.5

Several Laws Apply in Specific Circumstances to Consumer Data That 

Resellers Hold 

No comprehensive Federal privacy law governs the collection, use, and sale of personal information by private-sector companies. More narrowly tailored laws govern 

the use, sharing, and protection of personal information—they apply for specific purposes, in certain situations, to certain sectors, or to certain types of entities. The 

primary laws include the following: 

Fair Credit Reporting Act (FCRA).6 FCRA protects the security and confidentiality of personal information collected or used to help make decisions about 

individuals’ eligibility for credit, insurance, or employment.7 It applies to ‘‘consumer reporting agencies’’ (such as credit bureaus) that provide ‘‘consumer reports.’’ 8

Gramm-Leach-Bliley Act (GLBA).9 GLBA protects nonpublic personal information that individuals provide to ‘‘financial institutions’’ or that such institutions 

maintain.10 GLBA sharing and disclosure restrictions apply to financial institutions or entities that receive nonpublic personal information from such a financial institutions.11 For example, a third party that receives nonpublic personal 

information from a financial institution to process consumers’ account transactions may not use the information or resell it for marketing purposes. 

Health Insurance Portability and Accountability Act (HIPAA).12 HIPAA establishes a set of national standards to protect certain health information. The 

HIPAA privacy rule governs the use and disclosure of an individual’s health information for purposes including marketing.13 With some exceptions, the rule 

requires an individual’s written authorization before a covered entity—a health 

care provider that transmits health information electronically in connection 

with covered transactions, health care clearinghouse, or health plan—may use 

or disclose the information for marketing.14 The act does not directly restrict 

the use, disclosure, or resale of protected health information by resellers or others not considered covered entities under the act. 

Children’s Online Privacy Protection Act (COPPA).15 COPPA and its implementing regulations apply to the collection of information—such as name, email, or location—that would allow someone to identify or contact a child under 

13.16 Covered website and online service operators must obtain verifiable parental consent before collecting such information. COPPA may not directly affect 

information resellers, but the covered entities are potential sources of information for resellers. 

Electronic Communications Privacy Act (ECPA).17 ECPA prohibits the interception and disclosure of electronic communications by third parties unless an exception applies (such as one party to the communication consenting to disclosure). For example, the act would prevent an Internet service provider from 

59 

18 15 U.S.C. § 45. Section 5 of the FTC Act, as originally enacted, only related to ‘‘unfair methods of competition.’’ The Wheeler-Lea Act, passed in 1938, expanded the Commission’s jurisdiction to include ‘‘unfair or deceptive acts or practices.’’ Wheeler-Lea Amendments of 1938, Pub. 

L. No. 75–447, 52 Stat. 111. 19Pub. L. No. 99–474, 100 Stat. 1213 (1986) (codified as amended at 18 U.S.C. § 1030). Courts 

have held that CFAA prohibits access to websites when that access exceeds the sites’ terms of 

use or end-user license agreements. See, e.g., Snap-On Bus. Solutions Inc. v. O’Neil & Assoc., 

Inc., 708 F.Supp. 2d 669 (N.D. Ohio 2010); Southwest Airlines Co. v. Farechase, Inc., 318 

F.Supp. 2d 435 (N.D. Tex. 2004); America Online, Inc. v. LCGM, Inc., 46 F.Supp. 2d 444 (E.D. 

Va. 1998). 20Pub. L. No. 104–104, 110 Stat. 56 (1996) (codified as amended in scattered sections of 15 

and 47 U.S.C.). 

selling the content of its customers’ e-mails to a reseller for marketing purposes, 

unless the customers had consented to disclosure. However, ECPA provides 

more limited protection for information considered to be ‘‘non-content,’’ such as 

a customer’s name and address. 

Federal Trade Commission Act (FTC Act), Section 5.18 The FTC Act prohibits 

unfair or deceptive acts or practices in or affecting commerce. Although the act 

does not explicitly grant FTC the specific authority to protect privacy, it has 

been interpreted to apply to deceptions or violations of written privacy policies. 

For example, if a retailer’s written privacy policy stated customers’ personal information would not be shared with resellers and the retailer later sold information to such parties, FTC could bring an enforcement action against the retailer 

for unfair and deceptive practices. 

As they relate to specific types of consumer services or records, other Federal privacy laws also may apply to information resellers’ practices and products. For instance, while not specifically a privacy law, the Computer Fraud and Abuse Act 

(CFAA) can restrict a third party from collecting personal information from a 

website when the collection would violate the site’s terms of service.19 The Telecommunications Act requires telecommunications carriers to protect the confidentiality of proprietary information of customers.20

Laws Have Limited Scope over Personal Data Used for Marketing 

Privacy protections under Federal law have been limited for consumer data used 

for marketing. The scope of protections is narrow in relation to individuals’ ability 

to access, control, and correct their personal data; collection methods and sources 

and types of information collected; and new technologies. 

Laws Provide Individuals Limited Ability to Access, Control, and Correct Their Personal Data 

No Federal statute that we examined generally requires resellers to allow individuals to review personal information (intended for marketing purposes), control its 

use, or correct it. The FIPPs (for collection limitation and openness) state that individuals should be able to know about and consent to the collection of their information, while the individual participation principle states they should have the right 

to access the information, request correction, and challenge the denial of those 

rights. 

No Federal statute provides consumers the right to learn what information is held 

about them and who holds it for marketing or look-up purposes. FCRA provides individuals with certain access rights, but only when information is used for credit 

eligibility purposes.. And GLBA’s provisions allowing consumers to opt out of having 

their personal information shared with third parties apply only in specific circumstances. Otherwise, individuals cannot require that their personal information 

not be collected, used, and shared. Also, no Federal law provides correction rights 

(the ability to have resellers and others correct or delete inaccurate, incomplete, or 

unverifiable information). 

Laws Largely Do Not Address Data Collection Methods, Sources, and Types 

Federal privacy laws are limited in addressing the methods by which, or the 

sources from which, resellers collect and aggregate personal information, or the 

types of information collected for marketing or look-up purposes. FIPPs (for data 

quality, purpose specification, and collection limitation) state that personal information should be relevant, limited to the purpose for which it was collected, and collected with the individual’s knowledge or consent. 

Federal laws generally do not govern the methods resellers may use to collect personal information. An example of such a method is ‘‘web scraping,’’ in which resellers, advertisers, and others use software to search the web for information about 

individuals and extract and download bulk information from websites with conVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00063 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE
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21Federal Trade Commission, Mobile Privacy Disclosures: Building Trust through Transparency (Washington, D.C.: February 2013). 

sumer information. Resellers or retailers also may collect information indirectly (by 

combining information from transactions). 

Current law generally allows resellers to collect personal information from sources 

including warranty registration cards, surveys, and online sources such as discussion boards, social media sites, blogs, and web browsing histories and searches. Current law does not require disclosure to consumers when their information is collected from these sources. 

The Federal laws that address the types of consumer information that can be collected and shared are not comprehensive. Under most circumstances, information 

that many people may consider very personal or sensitive can be collected, shared, 

and used for marketing. This can include information about physical and mental 

health, income and assets, political affiliations, and sexual habits and orientation. 

For health information, HIPAA provisions apply only to covered entities. 

Current Law Does Not Directly Address Some Privacy Issues New Technology Raises 

The current privacy framework does not fully address new technologies such as 

social media, web tracking, and mobile devices. In a 2013 report, FTC noted that 

mobile technologies present unique privacy challenges (for instance, mobile devices 

identify a user’s geographical location).21 As shown in figure 1, the original enactment of several Federal privacy laws predates these trends and technologies. 

61 

Source: GAO. 

Note: The most recent amendments to the Federal laws referenced in figure 2 are as follows: 

• Federal Trade Commission Act of 1914: last amended July 21, 2010 (Pub. L. 111–203). 

• Fair Credit Reporting Act of 1970: last amended Dec. 18, 2010 (Pub. L. No. 111–319). 

• Family Educational Rights and Privacy Act of 1974: last amended Jan. 14, 2013 (Pub. 

L. No. 112–278). 

• Electronic Communications Privacy Act of 1986: last amended Oct. 19, 2009 (Pub. L. No. 

111–79). 

• Video Privacy Protection Act of 1988: last amended Jan. 10, 2013 (Pub. L. No. 112–258). 

• Driver’s Privacy Protection Act of 1994: last amended Oct. 23, 2000 (Pub. L. No. 106–346). 

• Health Insurance Portability and Accountability Act of 1996: last amended Mar. 23, 2010 

(Pub. L. No. 111–148). 

• Children’s Online Privacy Protection Act of 1998: has not been amended. 

• Gramm-Leach-Bliley Act of 1999: last amended July 21, 2010 (Pub. L. No. 111–203). 

Because these laws were enacted to protect the privacy of information involving 

specific sectors rather than to address specific technologies, some have been interVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00065 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE

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62 

22Shannon Canty, Chris Jay Hoofnagle, et al., ‘‘Flash Cookies and Privacy’’ (Aug. 10, 2009), 

available at http://papers.ssrn.com/sol3/papers.cfm?abstractlid=1446862. 23 United States v. Google Inc., No. CV 12–04177–SI, 2012 WL 5833994 (N.D. Cal. Nov. 16, 

2012). 24FTC alleged that Epic Marketplace’s use of history-sniffing was deceptive because it collected data about sites outside of its network that consumers had visited, contrary to Epic’s privacy policy, which represented that it would collect information only about consumers’ visits to 

websites in its network. In the Matter of Epic Marketplace, Inc., and Epic Media Group, LLC, 

FTC File No. 112 3182, decision and order (Mar. 13, 2013). 25On July 25, 2013, Commerce released a draft of a voluntary code of conduct for mobile applications, including guidelines for notices to consumers about collection and sharing of information with third parties. See Department of Commerce, National Telecommunications and Information Administration, Short Form Notice Code of Conduct to Promote Transparency in Mobile 

App Practices, redline draft (July 25, 2013), available at http://www.ntia.doc.gov/files/ntia/ 

publications/julyl25lcodeldraft.pdf. 26FTC settled charges that a social networking service deceived consumers when it collected 

information from children under 13 through its mobile application in violation of COPPA. See 

United States v. Path, Inc., No. C13–0448 (N.D. Cal. Jan. 31, 2013). FTC also settled charges 

that a company compiled and sold criminal record reports through its mobile application and 

operated as a consumer reporting agency in violation of FCRA. See In the Matter of Filiquarian 

Publishing, LLC, FTC File No. 112 3195 (Apr. 30, 2013). 27For example, in addition to the alleged COPPA violation, Path allegedly deceived users by 

collecting personal information from their mobile address books without their knowledge and 

consent. See United States v. Path, Inc., No. C13–0448 (N.D. Cal. Jan. 31, 2013). 28 In 2011, the U.S. Court of Appeals for the Eighth Circuit held that a basic cellular telephone—used only to place calls and send text messages—was a computer for CFAA purposes. 

preted to apply to new technologies. For example, FTC has taken enforcement actions under COPPA and revised the statute’s implementing regulations to account 

for smartphones and mobile applications. 

Online Tracking 

No Federal privacy law explicitly addresses the full range of practices to track or 

collect data from consumers’ online activity. Cookies—text files placed on a computer by the website that the computer user visits—allow website operators to recall 

information such as user name and address, credit card number, and purchases in 

a shopping cart. Resellers can match information in cookies and their databases to 

augment consumer profiles. Third parties also can synchronize their cookie files 

with resellers’ files. Advertisers can use third-party cookies—placed on a computer 

by a domain other than the site being visited—to track visits to the websites on 

which they advertise. Consumers’ ability to prevent such tracking can be restricted. 

For example, flash cookies—cookies which do not expire at the end of a browsing 

session—cannot be erased.22

While current law does not explicitly address web tracking, FTC has taken enforcement actions related to web tracking under its authority to enforce the prohibition on unfair or deceptive acts. For example, in 2011, FTC settled charges with 

Google for $22.5 million after alleging that Google violated an earlier privacy settlement with FTC when it misrepresented to users of Apple’s Safari web browser that 

it would not track and serve targeted advertisements to Safari users.23 Google 

agreed to disable its advertising tracking cookies. 

Federal law also does not expressly prohibit ‘‘history sniffing,’’ which uses code on 

a webpage to record visitors’ browsing history. However, in 2012, FTC took an enforcement action against Epic Marketplace, a large online advertising network, for 

deceptively failing to disclose its use of history-sniffing technology.24 Epic Marketplace used the data it collected to target advertising. 

Mobile Technologies 

In relation to collection and use of consumer data for marketing, no Federal privacy laws that we identified specifically govern mobile applications and technologies. 

Mobile applications. No Federal law specifically governs mobile applications— 

software downloaded onto mobile devices for uses such as providing information 

and online banking and shopping.25 Application developers, mobile carriers, advertisers, and others may collect an individual’s information through services 

provided on a mobile device. However, FTC has taken enforcement action 

against companies for use of mobile applications that violate COPPA and 

FCRA.26 The agency also has taken action under the FTC Act.27 And CFAA, 

which bans unauthorized access to computers, has been found to apply to mobile phones.28

63 

The judicial decision did not address more advanced devices such as smartphones in the CFAA 

context. See U.S. v. Kramer, 631 F.3d 900 (8th Cir. 2011). 29 Risks included disclosure to third parties for unspecified uses, tracking of consumer behavior, and identity theft. See GAO, Mobile Device Location ID: Additional Federal Actions Could 

Help Protect Consumer Privacy, GAO–12–903 (Washington, D.C.: Sept. 11, 2012). A Federal 

Communications Commission report also noted privacy risks. See Federal Communications Commission, Location-Based Services: An Overview of Opportunities and Other Considerations 

(Washington, D.C.: May 2012). 30Federal Trade Commission, Paper, Plastic or Mobile? An FTC Workshop on Mobile Payments (Washington, D.C.: March 2013). 

Location tracking. No Federal privacy laws, except COPPA, expressly address 

location data, location-based technology, and consumer privacy. We and others 

have reported that the capability of mobile devices to provide consumer’s location engenders privacy risks, particularly if companies use or share location 

data without consumers’ knowledge.29 ECPA might not apply if location data 

were not deemed content and would not govern entities such as developers of 

location-based applications that are not covered by ECPA. But FTC could pursue enforcement action if a company’s collection or use of the information violated COPPA. 

Mobile payments. No Federal privacy laws expressly address mobile payments 

(for example, by smartphone). An FTC report noted that although mobile payment can be an easy way for individuals to pay for goods and services, privacy 

concerns have arisen because of the number of companies in the mobile payment marketplace and the large amount of detailed personal and purchase information collected and consolidated.30

Stakeholders Diverge on Adequacy of Legal Framework and Need for Legislation 

Stakeholder views diverge on whether significant gaps in the legal framework for 

privacy exist, whether more legislation is needed, or whether self-regulation can suffice. The marketing and information reseller industries generally have argued that 

the current framework of sector-specific laws and regulations has not left significant 

gaps in consumer privacy protections. Privacy advocates and others stated that the 

current privacy scheme leaves significant gaps. Industry and privacy advocates also 

disagreed on the need for more legislation or regulation and the efficacy of self-regulatory approaches to protect privacy. Industry representatives acknowledged the importance of consumer privacy protections, but argued that voluntary industry measures and self-regulation mitigated the need for additional legislation. Some privacy 

advocates and others argued that voluntary compliance or self-regulation was not 

sufficient to uniformly protect consumer privacy rights. 

Views Differ on Approaches to Privacy Law and Consumer Interests 

Debate also has focused on appropriate approaches for new privacy legislation or 

regulation. This debate can be framed around three sets of issues: a comprehensive 

versus sector-specific approach to privacy legislation; how to address consumers’ interests in accessing, controlling, and correcting their data; and the potential impact 

of new regulation on consumers and commerce. 

Comprehensive versus Sector-Specific Approaches 

Ongoing debate centers on what kind of legislative approach—sectoral or comprehensive—would best effect enhanced consumer privacy protections. Industry 

stakeholders have argued a comprehensive privacy law would amount to a one-sizefits-all approach and could be overly burdensome. Stakeholders also said that the 

current sector-specific system was flexible and well-suited to addressing any gaps. 

In contrast, some consumer and privacy groups and academic experts cited advantages to comprehensive privacy legislation such as filling gaps in existing privacy 

protections and providing comprehensive and consistent protections. Privacy advocates and some business representatives also argued that comprehensive legislation 

would benefit businesses internationally and help reduce compliance costs. 

While not recommending a comprehensive Federal privacy statute as such, in 

2010 Commerce’s Internet Policy Task Force recommended the adoption of a baseline commercial data privacy framework built on an expanded FIPPs. The 2012 

White House privacy framework called for enacting baseline legislation while preserving existing sector-specific laws. The Administration supported exempting companies from consumer data privacy legislation to the extent their activities were 

subject to existing data privacy laws. 

64 

31The White House, A Framework for Protecting Privacy (2012). 32Federal Trade Commission, Protecting Consumer Privacy in an Era of Rapid Change, pp. 

38–39. 33Federal Trade Commission, Protecting Consumer Privacy in an Era of Rapid Change, pp. 

38–39; and letter from Direct Marketing Association to members of Congress on August 13, 

2012, available at http://the-dma.org/news/August-13–2012–DMALetter.pdf. 34 According to the Digital Advertising Alliance, in 2012 more than 5.2 million unique users 

accessed the resources at www.aboutads.info, and nearly 1 million exercised a choice using the 

site’s opt-out mechanism. 

Views on How to Address Consumers’ Interests in Use and Control of Their Data 

Other debate on privacy protections has focused on the third-party market for and 

usage of consumer data, whether or how consumers can access and control such 

usage or correct data, and how or if limits should apply to web tracking. 

Use of Consumer Data 

Consumer and privacy advocates have noted that consumers often were not aware 

of, and had not always consented to, personal information being repurposed for marketing and other uses. Changes in the marketplace for consumer data include a vast 

increase in recent years in the number and types of companies that collect and 

share such data with third parties. The Administration noted that consumers have 

a right to expect that companies will collect, use, and disclose their information in 

ways consistent with the context in which the information was provided.31 FTC articulated a ‘‘context of the interaction’’ standard for determining when a practice required consumer choice.32

Representatives of information resellers, marketers, and other industries that use 

consumer data have argued that repurposing generally is not inappropriate or 

harmful. One reseller argued that personal information on unrestricted websites— 

such as blogs—becomes publicly available and can be used by a third party, without 

legal or ethical limitations on its use. 

Access and Correction 

Stakeholders’ views differed on the extent to which consumers should be able to 

access data held about them. FTC said that companies should provide reasonable 

access to consumer data they maintain, a position many privacy groups echoed. FTC 

called on information resellers that compile data for marketing purposes to explore 

creating a centralized website on which resellers would identify themselves, describe 

how they collect and use the data, and consumers’ access rights and choices. 

Debate also developed on consumers’ right to correct information held about them. 

Some privacy advocates and members of Congress have argued that consumers 

should have the right to correct inaccurate information. One advocate noted that 

data not covered by FCRA also can be used for fraud prevention and identity 

verification, and that inaccuracies in this context could harm a consumer. Another 

advocate noted that companies may base some individual product pricing on a consumer’s profile, so inaccurate data could affect the price offered. But FTC and the 

Direct Marketing Association said that special measures were not needed to ensure 

the accuracy of data maintained and used for marketing.33 The Administration expressed a similar view in its privacy framework. Some resellers also said that because they acquire information from many sources, giving consumers the opportunity to correct information would not be effective unless consumers also could 

have information corrected at the sources from which it had been drawn. 

Web Tracking 

Some of the most publicized debate on privacy and new technologies has centered 

on consumers’ ability to control tracking of their web activity. Areas of disagreement 

include the effectiveness of voluntary initiatives that allow consumers to exert some 

control over tracking and the use of information collected during tracking. For example, the Digital Advertising Alliance developed an icon to let web page users 

know that their visit was being tracked and their actions used to infer their interests and target future advertising. Users can click on the icon to learn more about 

behavioral advertising and control whether they receive such advertising and from 

which companies.34 Some privacy advocates have pointed to limitations to this 

mechanism (for example, the opt-out option only applies to companies in the Digital 

Advertising Alliance). 

Debate also has developed about the implementation of ‘‘do not track.’’ Under this 

approach, consumers would be able to choose whether to allow the collection and 

use of data about their online searching and browsing. FTC supported the concept 

65 

35Federal Trade Commission, Protecting Consumer Privacy in an Era of Rapid Change (2012) 

and Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers; preliminary staff report (Washington, D.C.: December 2010). 36 In the World Wide Web Consortium, member organizations and the public work together 

to develop web protocols and standards. The consortium’s Tracking Protection Working Group 

proposes recommendations and technologies to improve user privacy and control. See http:// 

w3.org/2011/tracking-protection/. 37Senate Committee on Commerce, Science, and Transportation, A Status Update on the Development of Voluntary Do-Not-Track Standards, 113th Cong., 1st sess., April 24, 2013; see testimony of Justin Brookman, Director, Consumer Privacy, Center for Democracy and Technology. 38For example, see Do-Not-Track Online Act of 2013, S. 418, 113th Cong. 39 Julia Angwin, ‘‘The Web’s New Gold Mine: Your Secrets,’’ Wall Street Journal, July 30, 

2010. 40Department of Commerce, Notice of Inquiry, Information Privacy and Innovation in the 

Internet Economy (Privacy and Innovation NOI), 75 Fed. Reg. 21226, Apr. 23, 2010, available 

at http://ntia.doc.gov/frnotices/2010/FRlPrivacyNOIl04232010.pdf. 41 European Union, Directive 95/46/EC of the European Parliament and of the Council on the 

Protection of Individuals with Regard to the Processing of Personal Data and the Free Movement 

of Such Data (Oct. 24, 1995). 42 However, companies participating in the U.S.-EU Safe Harbor Framework are deemed to 

provide adequate data protections and may transfer personal data from the European Union. 

Continued 

of a universal do-not-track mechanism in its 2010 and 2012 privacy reports.35 On 

the self-regulatory side, some Internet browsers, including Mozilla Firefox, have introduced do-not-track features. The World Wide Web Consortium has been developing a universal web protocol for do not track.36 But disagreements on different 

issues (such as scope and technological specifications) have delayed widespread 

adoption or standardization of do not track.37

Proposals in Congress and elsewhere would require FTC to promulgate regulations for a do-not-track mechanism.38 Proponents of such proposals noted that the 

use of third-party cookies greatly increased in recent years—for example, the Wall 

Street Journal identified more than 3,000 tracking files the top 50 websites placed 

on a test computer.39 Advocacy organizations argued that Internet users may not 

be fully aware of the extent of third-party tracking and that users should affirmatively consent to tracking. Some members of Congress raised concerns about flash 

cookies and whether the FTC Act’s prohibition of unfair or deceptive acts or practices would cover them. Representatives of the advertising and other industries have 

cautioned against many of the proposals. 

Views on Potential Impacts of New Regulation on Consumers and Commerce 

Representatives of the marketing and reseller industries argued that regulatory 

restrictions on using consumer data could reduce the benefits consumers get. Advertising representatives noted that targeted marketing and advertising helps underwrite applications and services available free to consumers. Some resellers said that 

targeted behavioral advertising gives consumers information relevant to their specific interests, needs, or preferences. However, some privacy advocates believe that 

consumer benefits have been overstated. Some advocates also raised concerns that 

the profiling and scoring techniques used to deliver specific advertisements to specific consumers might have discriminatory effects because they present information, 

sales, or opportunities only to consumers with certain characteristics. 

Stakeholder views also diverged on the potential economic effects of strengthened 

privacy regulations. Industry representatives said that new restrictions on the use 

of consumer information could inhibit innovation and increase compliance costs for 

businesses. Privacy and consumer groups said that the industry’s claims that increased privacy protections would be too burdensome and stifle innovation have not 

been accompanied by convincing evidence. And in public comments solicited by Commerce in 2010 on information privacy and innovation in the Internet economy, online businesses and advertisers noted the importance of respecting customers’ privacy if they wanted to retain their business or encourage individuals to adopt new 

devices and services.40

Views vary on the economic effects of greater harmonization of U.S. and foreign 

privacy rules. Commerce’s Internet Policy Task Force noted that a significant number of comments they received concerned difficulties and costs in complying with foreign data protection rules and regulations. For example, the European Union’s 1995 

Data Protection Directive states that personal information of European Union citizens may not be transmitted to nations not deemed to have ‘‘adequate’’ data protection laws.41 The United States does not have an adequacy finding from the European Commission.42

66 

FTC has the authority to enforce the substantive privacy requirements of the U.S.-EU Safe Harbor Framework. 43Department of Commerce, Internet Policy Task Force, Commercial Data Privacy and Innovation in the Internet Economy: A Dynamic Policy Framework (Washington, D.C.: 2010). 

The task force recommended the U.S. government work toward mutual recognition of other commercial data privacy frameworks.43 Many commenters also advocated for greater harmonization of privacy rules. In contrast, some industry observers warned against enacting a stricter privacy regime like the European Union’s. 

A reseller representative said moving to a stricter regime would hinder commerce 

and innovation. 

New technologies have enormously changed the amount of personal information 

private companies collect and how they use it. But our current privacy framework 

does not fully address these changes. Laws protecting privacy interests are tailored 

to specific sectors and uses. And, consumers have little control over how their information is collected, used, and shared with third parties for marketing purposes. As 

a result, current privacy law is not always aligned with the Fair Information Practice Principles, which Commerce and others have said should serve as the foundation for commercial data privacy. Thus, the privacy framework warrants reconsideration in relation to consumer interests, new technologies, and other issues. In our 

September report, we suggested that Congress consider strengthening it and review 

issues such as the adequacy of consumers’ ability to access, correct, and control their 

personal information; and privacy controls related to new technologies. The challenge will be providing appropriate protections without unduly inhibiting the benefits to consumers, commerce, and innovation that data sharing can accord. 

This concludes my statement for the record. 

Senator THUNE. I will be asking our witnesses how data broker 

practices for marketing purposes may impact consumers, both positively and negatively. I am also interested in hearing from our witnesses how the industry can work to balance the privacy concerns 

of individuals with the information needs of businesses and our 

economy. 

Finally, Mr. Chairman, while I have expressed my thanks to all 

of our witnesses being here today, I do want to add a special note 

of thanks to Tony Hadley from Experian. This inquiry began with 

letters sent to nine companies, and over time it has also included 

letters to several consumer-facing websites. Having only one of 

those companies testify is a good way to keep the number of witness manageable in light of the busy Senate schedule. 

Mr. Hadley, I am sure that many of the other companies are also 

grateful for your willingness to testify and help advance our understanding—— 

[Laughter.] 

Senator THUNE.—of the data broker industry. I know I certainly 

am. 

So I want to thank you again, Mr. Chairman, for having this 

hearing, and I do look forward to hearing from our witnesses. 

The CHAIRMAN. Thank you, Senator Thune, very much. 

We have—well, I will just do one by one—Jessica Rich. Ms. Rich 

is the Director of the Bureau of Consumer Protection at the Federal Trade Commission. And I will go down the line. 

Could you give your testimony, please? 

STATEMENT OF JESSICA RICH, DIRECTOR, BUREAU OF 

CONSUMER PROTECTION, FEDERAL TRADE COMMISSION 

Ms. RICH. Chairman Rockefeller, Ranking Member Thune, and 

members of the Committee—— 

The CHAIRMAN. You have to push a little button. 

67 

Ms. RICH. That would be a good start. 

The CHAIRMAN. It is called ‘‘technology.’’ 

Ms. RICH. Yes. 

[Laughter.] 

Ms. RICH. I assure you I know something about technology. 

I am Jessica Rich, director of the Bureau of Consumer Protection 

at the Federal Trade Commission. And I really appreciate this opportunity to present the Commission’s testimony on data brokers. 

This is a highly opportune time to examine the practices of data 

brokers, as technological developments have allowed for the dramatic increase in the collection and use of consumers’ information. 

Data brokers collect consumers’ personal information from a wide 

variety of sources and resell it for a variety of purposes without 

most consumers ever knowing of their existence, much less the variety of practices in which they engage. And many of these practices, as you noted, fall outside of the scope of existing laws. 

I know this committee is well aware of the lack of transparency 

of data broker practices. Chairman Rockefeller, we commend you 

for your leadership on this issue and stand ready to work with the 

Committee and with Congress on ways to improve the transparency of data broker practices. The report you released today is 

a key initiative in this effort, as is the study you requested from 

GAO. 

At the FTC, our work on data broker practices goes back to the 

1970s. For decades, policymakers have expressed concerns about 

the transparency of companies that buy and sell consumer data. Indeed, the existence of companies selling consumer data for credit 

and other eligibility determinations, invisibly and behind the 

scenes, led to the enactment in 1970 of the Fair Credit Reporting 

Act. 

Since then, the Commission has been active in examining the 

practices of data brokers. We have used three primary tools in this 

effort. 

First, we bring enforcement actions when company practices violate the law. Perhaps our most well-known data broker case involved ChoicePoint, in which we obtained $10 million in civil penalties and $5 million in redress for consumers. We alleged that 

ChoicePoint implemented lax privacy and security procedures, resulting in sensitive consumer report information ending up in the 

hands of known identity thieves. 

More recently, we entered into a consent decree with online data 

broker Spokeo. According to our complaint, Spokeo collected personal information from hundreds of online and offline sources, including social networks, and combined that data into detailed personal profiles. We allege that Spokeo marketed these profiles for 

use by human resource departments in hiring, which made it a 

consumer reporting agency subject to the Fair Credit Reporting 

Act, but that it failed to abide by the FCRA’s accuracy and privacy 

requirements. The order contains strong injunctive relief and an 

$800,000 civil penalty. 

Second, the Commission conducts research and issues reports addressing data broker issues. For example, our 2012 privacy report 

made best practices and legislative recommendations for consumer 

privacy, including specific recommendations regarding data broVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00071 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\95838.TXT JACKIE
68 

1This written statement presents the views of the Federal Trade Commission. My oral statements and responses to questions are my own and do not necessarily reflect the views of the 

Commission or any Commissioner. 

kers. Among other things, the report reiterated a longstanding 

Commission recommendation that data brokers provide consumers 

with access to the data they maintain and, depending on how the 

data is used, the ability to correct it. 

More recently, in order to shine a light on the industry, we 

issued orders requiring nine data brokers to provide us with information regarding how they collect and use consumer data. The 

Commission is close to completing a report based on this information and expects to release it in the coming months. 

And in the spring of next year, we plan to host a series of privacy 

workshops, including a seminar on what is called ‘‘alternative scoring products’’ offered by data brokers—that is, products that companies use to predict consumer behavior and shape how they market to particular consumers. 

Our final tool is educating businesses and consumers on privacy 

issues in the practices of data brokers. For example, we recently 

sent letters to multiple data brokers that provide tenant and background screening services, warning them about their duty to comply with the Fair Credit Reporting Act. And for consumers, we recently produced a video on data brokers and have published frequent blog posts and updates on issues related to the data broker 

industry. 

In closing, as the collection and use of consumer data continues 

to explode, we share the Committee’s commitment to continue to 

examine data brokers, and we stand ready to work with the Committee on this critical issue. 

Thank you. 

[The prepared statement of Ms. Rich follows:] 

PREPARED STATEMENT OF THE FEDERAL TRADE COMMISSION

I. Introduction 

Chairman Rockefeller, Ranking Member Thune, and members of the Committee, 

I am Jessica Rich, Director of the Bureau of Consumer Protection of the Federal 

Trade Commission (‘‘FTC’’ or ‘‘Commission’’).1 I appreciate the opportunity to 

present the Commission’s testimony on data brokers. 

Data brokers collect and aggregate consumers’ personal information from a wide 

range of sources and resell it for an array of purposes, such as marketing, verifying 

an individual’s identity, and preventing financial fraud. Because data brokers generally never interact directly with consumers, consumers are typically unaware of 

their existence, much less the variety of ways they collect, analyze, and sell consumer data. 

This Committee, by investigating the privacy practices of data brokers, has helped 

call attention to the lack of transparency surrounding data broker privacy practices. 

We look forward to reviewing the Committee’s report on its examination of the data 

broker industry. We commend Chairman Rockefeller’s leadership on this issue and 

stand ready to work with this Committee and Congress on ways to improve the 

transparency of data broker practices. As the Committee is aware, the Commission 

is developing its own report on the data broker industry (discussed further below), 

which the Commission expects to release in the coming months. 

This testimony begins by describing the Commission’s longstanding work in this 

area. It then lays out our strategy for addressing the privacy practices of the data 

broker industry through enforcement, research and reports, and business and consumer education. 

69 

2 15 U.S.C. § 1681 et seq. 

3See, e.g., FTC Workshop, The Information Marketplace: Merging & Exchanging Consumer 

Data (Mar. 13, 2001), available at http://www.ftc.gov/bcp/workshops/infomktplace/index 

.shtml; Prepared Statement of the FTC, Identity Theft: Recent Developments Involving the Security of Sensitive Consumer Information: Hearing Before the S. Comm. on Banking, Housing, and 

Urban Affairs, 109th Cong. (Mar. 10, 2005), available at http://www.ftc.gov/public-statements/ 

2005/03/prepared-statement-federal-trade-commission-identity-theft-recent; see also FTC Workshop, Information Flows: The Costs and Benefits to Consumers and Businesses of the Collection 

and Use of Consumer Information (June 18, 2003), available at http://www.ftc.gov/news-events/ 

events-calendar/2003/06/information-flows-costs-and-benefits-related-collection-and-use. 4See FTC, Individual Reference Services, A Report to Congress (1997), available at http:// 

www.ftc.gov/reports/individual-reference-services-report-congress. 5This scrutiny included an FTC investigation that resulted in the FTC’s largest FCRA civil 

penalty to date. See United States v. ChoicePoint, Inc., No. 1:06–cv–00198 (N.D. Ga. Feb. 15, 2006) (stipulated final order imposing $10 million fine and $5 million in consumer redress), 

available at http://www.ftc.gov/sites/default/files/documents/cases/2006/01/stipfinaljudge 

ment.pdf. 6FTC, Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers (Mar. 2012), available at http://ftc.gov/os/2012/03/120326privacy 

report.pdf. Commissioner Wright’s term as Commissioner began in January 2013 and he was 

not at the Commission when the Privacy Report was issued. While he may not necessarily endorse all the views in that Report, he agrees with the substance of this testimony. 7 Id. at 65. 8 Id. at 69. 9 Id. 

II. Background on FTC Initiatives Concerning Data Broker Privacy 

Practices 

Concerns about the privacy practices of companies that buy and sell consumer 

data are not new. Indeed, in 1970, the existence of companies selling consumer data 

with little transparency for credit and other eligibility determinations led Congress 

to enact the Fair Credit Reporting Act (FCRA)2, which it gave the Commission authority to enforce. 

In the late 1990s, the Commission began to examine the privacy practices of data 

brokers that fall outside the FCRA.3 Notably, in 1997, the Commission held a workshop to examine database services used to locate, identify, or verify the identity of 

individuals, referred to at the time as ‘‘individual reference services.’’ The workshop 

prompted industry members to form the self-regulatory Individual Reference Services Group (IRSG).4 The Commission subsequently issued a report on the workshop 

and the IRSG. The report commended the progress made by the industry’s self-regulatory programs, but one of the report’s conclusions was that the industry’s efforts 

did not adequately address the lack of transparency of data broker practices. Although industry ultimately terminated the IRSG, a series of public breaches—including one involving ChoicePoint—led to renewed scrutiny of the practices of data 

brokers.5

Most recently, in its 2012 report Protecting Consumer Privacy in an Era of Rapid 

Change: Recommendations for Businesses and Consumers (Privacy Report),6 the 

Commission specifically addressed the privacy practices of data brokers. The Commission described three different categories of data brokers: (1) entities subject to 

the FCRA; (2) entities that maintain data for marketing purposes; and (3) nonFCRA covered entities that maintain data for non-marketing purposes that fall outside of the FCRA, such as to detect fraud or locate people.7 The report noted that, 

while the FCRA gives consumers a variety of rights with regard to companies that 

sell data for credit, employment, and insurance purposes, data brokers within the 

other two categories operate without much transparency. 

Building on the agency’s prior work, the Commission’s Privacy Report made recommendations to improve the transparency of the practices of data brokers and to 

give consumers greater control over how their information is used. Among other 

things, the Report proposed that data brokers provide consumers with reasonable 

access to the data they maintain. The Report also noted that the Commission had 

long supported legislation that would give access rights to consumers for information held by data brokers.8 The Report stated that the Commission continues to support legislation in this area to improve the transparency of industry practices.9

III. The Commission’s Ongoing Initiatives Regarding Data Brokers 

The Commission’s ongoing initiatives to address the privacy practices of the data 

broker industry build on this body of prior work. The Commission is pursuing a 

three-pronged strategy to ensure consumer interests are protected in the data 

broker context. First, the Commission takes aggressive enforcement action to ensure 

that data brokers comply with the FCRA where it applies. Second, as data broker 

business models expand beyond traditional credit reporting, the FTC continues to 

70 

10The FCRA provides basic consumer protections when consumer reporting data is used to 

make eligibility determinations for credit, insurance, employment and similar purposes. 11 United States v. Spokeo, Inc., No. CV12–05001 (C.D. Cal. June 12, 2012), available at 

http://www.ftc.gov/enforcement/cases-and-proceedings/cases/2012/06/spokeo-inc-united-statesamerica-federal-trade; see also Press Release, FTC, Spokeo to Pay $800,000 to Settle FTC 

Charges Company Allegedly Marketed Information to Employers and Recruiters in Violation of 

FCRA (June 12, 2012), available at http://www.ftc.gov/news-events/press-releases/2012/06/ 

spokeo-pay-800000-settle-ftc-charges-company-allegedly-marketed. 12Decision and Order, Filiquarian Publishing, LLC, FTC File No. 112–3195 (May 1, 2013), 

available at http://www.ftc.gov/enforcement/cases-and-proceedings/cases/2013/05/filiquarianpublishing-llc-choice-level-llc-and; see also Press Release, FTC, FTC Approves Final Order Settling Charges Against Marketers of Criminal Background Screening Reports (May 1, 2013), 

available at http://www.ftc.gov/news-events/press-releases/2013/05/ftc-approves-final-ordersettling-charges-against-marketers. 13 U.S. v. Certegy Check Servs., Inc., No. 1:13–cv–01247 (D.D.C. Aug. 15, 2013), available at 

http://www.ftc.gov/enforcement/cases-and-proceedings/cases/2013/08/certegy-check-servicesinc; ; see also Press Release, FTC, Certegy Check Services to Pay $3.5 Million for Alleged Violations of the Fair Credit Reporting Act and Furnisher Rule (Aug. 15, 2013), available at http:// 

www.ftc.gov/news-events/press-releases/2013/08/certegy-check-services-pay-35-million-allegedviolations-fair. 

conduct research and issue reports examining the practices of the data broker industry. Third, the Commission educates businesses about their legal responsibilities, especially small data brokers that may be unaware of their legal obligations, and consumers regarding how their data is disseminated. These three initiatives are discussed below. 

A. Enforcement 

The Commission maintains an aggressive FCRA enforcement program. To date, 

it has brought almost 100 cases and obtained in excess of $30 million in civil penalties. FCRA enforcement is a vital priority for the agency, particularly as companies that are not traditional credit reporting agencies venture into territory covered 

by the FCRA.10

For example, last year the Commission entered into a consent decree with online 

data broker Spokeo to resolve allegations that the company violated the FCRA.11

As set forth in the Commission’s complaint, Spokeo assembled personal information 

from hundreds of online and offline data sources, including social networks, and 

merged that data to create detailed personal profiles, including name, address, age 

range, hobbies, ethnicity, and religion. Spokeo marketed these profiles for use by 

human resources departments in hiring decisions. The FTC alleged that Spokeo, 

which marketed profiles for employment purposes, was a consumer reporting agency 

subject to the FCRA. The Commission charged Spokeo with violating the FCRA by, 

among other things, failing to (1) take reasonable steps to ensure the accuracy of 

information; and (2) tell its clients about their obligations under the FCRA, including the requirement to send adverse action notices to people denied employment on 

the basis of information obtained from Spokeo. The order contained strong injunctive relief and an $800,000 civil penalty. 

The Commission also recently took action against a mobile application developer 

that compiled and sold criminal record reports without complying with the FCRA.12

The app developer, Filiquarian, claimed that consumers could use its mobile apps 

to access hundreds of thousands of criminal records and conduct searches on potential employees. The FTC charged that Filiquarian failed to take reasonable steps to 

ensure that the information it sold was accurate and would be used solely for permissible purposes, as required by the FCRA. In addition, Filiquarian failed to inform users of its reports of their obligations under the FCRA, including the requirement to notify consumers if an adverse action was taken against them based on a 

report. In both the Spokeo and Filiquarian cases, the companies’ terms of service 

included disclaimers stating that the information they provided should not be used 

for FCRA purposes. Despite these disclaimers, the companies specifically advertised 

that their reports could be used for employment purposes. 

Most recently, the Commission entered into a consent decree with Certegy Check 

Services, one of the Nation’s largest check authorization service companies.13

Certegy compiles consumers’ personal information and uses it to help retail merchants determine whether to accept consumers’ checks. The Commission’s complaint 

alleged that, among other things, when a merchant denied a consumer’s check, and 

the consumer contacted Certegy to dispute the denial, the company failed to follow 

proper dispute procedures, as required by the FCRA. As a result, Certegy’s denials 

may have been in error, and consumers may not have been able to pay for essential 

71 

14Protecting Consumer Privacy in an Era of Rapid Change, supra note 6, at 68–70. 15Press Release, FTC, Spring Privacy Series: Alternative Scoring Products (Mar. 19, 2014), 

available at http://www.ftc.gov/news-events/events-calendar/2014/03/spring-privacy-series-alternative-scoring-products. 16Press Release, FTC, FTC Warns Data Brokers That Provide Tenant Rental Histories They 

May Be Subject to Fair Credit Reporting Act (Apr. 3, 2013), available at http://www.ftc.gov/ 

opa/2013/04/tenant.shtm; Press Release, FTC, FTC Warns Marketers that Mobile Apps May 

Violate Fair Credit Reporting Act (Feb. 7, 2012), available at http://www.ftc.gov/opa/2012/02/ 

mobileapps.shtm. 17The Commission made no determination as to whether the companies were violating the 

FCRA, but encouraged them to review their apps and their policies and procedures to ensure 

they comply with the Act. 18Press Release, FTC, FTC Warns Data Broker Operations of Possible Privacy Violations 

(May 7, 2013), available at http://www.ftc.gov/opa/2013/05/databroker.shtm. 

goods and services. Certegy agreed to pay $3.5 million, the agency’s second largest 

FCRA fine, to resolve the Commission’s allegations. 

B. Research and Reports 

The Commission is devoting significant resources to research and reports addressing the privacy practices of data brokers. As described above, the Commission’s Privacy Report discussed the data broker industry specifically and recommended steps 

data brokers should take to improve the transparency of data broker practices and 

give consumers greater control over their information.14

To undertake a more detailed examination of the data broker industry, the Commission issued orders requiring nine data brokers to provide the agency with information regarding how they collect and use consumer data. The orders, issued pursuant to the Commission’s authority under Section 6(b) of the FTC Act, mandated production of detailed information regarding company practices, including the nature 

and sources of consumer data the companies collect, how they use, maintain, and 

disseminate the information, and the extent to which the data brokers allow consumers to access and correct their information or to opt out of having their personal 

information sold. These orders were directed to companies providing three basic 

non-FCRA services—marketing services, risk mitigation services, including identity 

verification and fraud detection, and people search or look-up services. The Commission is expects to release a report on this examination of the data broker industry 

in the coming months. 

We also continue to examine emerging practices in the data broker industry. Just 

this month, we announced a series of seminars for early 2014 that will address a 

number of consumer privacy issues, including alternative scoring products offered 

by data brokers. Many data brokers offer companies scores to predict trends and the 

behavior of their customers. Companies are using predictive scores for a variety of 

purposes, ranging from identity verification and fraud prevention to marketing and 

advertising. Consumers are largely unaware of these scores and have little to no access to the underlying data from which they are derived. The program will explore 

a number of issues, including what scores are currently available, how companies 

are using them, how accurate the scores and underlying data are, privacy concerns 

surrounding the use of predictive scoring, how consumers can benefit from use of 

these scores, and what sort of consumer protections should exist for them.15

C. Education 

In addition to its enforcement and policy work on data broker issues, the agency 

also focuses on educating businesses and consumers about these issues. An important method for educating businesses is to publicize Commission complaints and orders and issue public letters warning companies of legal requirements and/or potential violations. In this vein, the Commission sent staff warning letters to a number 

of data brokers that provided tenant-screening services, and to marketers of six mobile apps that provide employment background screening services.16 The FTC 

warned the companies and app developers that, if they have reason to believe the 

reports they provide are being used for employment screening, housing, credit, or 

other similar purposes, they must comply with the FCRA.17

More recently, Commission staff conducted an undercover effort to determine if 

data brokers that disclaimed FCRA liability were willing to sell information for 

credit, insurance, employment, or housing decisions. As a result of this ‘‘test shopping’’ operation, Commission staff found ten data brokers who appeared to offer data 

for these purposes. Commission staff then sent warning letters to these companies, 

advising them that their practices could violate the FCRA.18

72 

19See generally http://business.ftc.gov/blog. 20FTC, Sharing Information: A Day in Your Life, available at http://www.consumer.ftc.gov/ 

media/video-0022-sharing-information-day-your-life. 

The FTC also hosts a Business Center blog,19 which frequently includes consumer 

privacy and data security topics; currently, approximately 3,500 attorneys and business executives subscribe to these e-mail blog updates. The Business Center blog 

consistently features the Commission’s enforcement actions and warning letters. 

Finally, the FTC has developed materials designed to educate consumers about 

the ways in which their data may be disseminated to companies with which they 

do not interact. For example, the FTC produced a video called Sharing Information: 

A Day in Your Life, that describes how everyday activities by consumers—shopping 

in retail stores with loyalty cards, buying good online, and using social networking 

services—can lead to wide dissemination of personal information.20

IV. Conclusion 

These enforcement, policy, and education efforts demonstrate the Commission’s 

continued commitment to understanding and addressing consumer privacy issues 

posed by the data broker industry. We appreciate the leadership of Chairman 

Rockefeller and this Committee on these issues and look forward to continuing to 

work with Congress, industry, and other critical stakeholders on these issues in the 

future. 

The CHAIRMAN. Thank you very much, Ms. Rich. 

Pam Dixon. Ms. Dixon is the Executive Director at the World 

Privacy Forum. 

You are on. 

STATEMENT OF PAM DIXON, EXECUTIVE DIRECTOR, 

WORLD PRIVACY FORUM 

Ms. DIXON. Chairman Rockefeller, members of the Committee, 

thank you for the opportunity to share what I have learned about 

the data broker industry today. I appreciate it very much. 

As a moderate in the privacy debate and in the privacy world, 

I have come to a troubling conclusion: The data broker industry, 

as it is today, does not have constraints and does not have shame. 

It will sell any information about any person, regardless of sensitivity, for 7.9 cents a name, which is the price of a list of rape sufferers which was recently sold. 

Lists of rape sufferers, victims of domestic violence, police officers’ home addresses, people who suffer from genetic illnesses, complete with names, home addresses, ethnicity, gender, and many 

other factors—this is what is being sold and circulated today. It is 

a far cry from visiting a website and seeing an ad. What it is is 

the sale of the personally identifiable information and highly sensitive information of Americans. 

So, Senators, I would like to make three points. 

First, scoring. There are now pseudo scores which are comprised 

of factors that are non-financial or, I should say, non-credit-reportbased. These pseudo credit scores are used in lieu of actual credit 

scores because they completely circumvent the Fair Credit Reporting Act. So a business or an employer or an insurer can purchase 

these scores and use them with no ill consequence or any consequence at all. This needs to change. 

Second, health. There are lists of millions of people that are categorized by the diseases that they have, ranging from cancer to 

bedwetting, Alzheimer’s—terrible diseases, some of them benign, 

some of them relating to mental illness. There are lists of millions 

73 

of people and what prescription drugs they take. And these lists 

exist entirely outside of HIPAA. 

The CHAIRMAN. Outside of what? 

Ms. DIXON. HIPAA. 

The CHAIRMAN. OK. 

Ms. DIXON. The—— 

The CHAIRMAN. I understand. 

Ms. DIXON. Any kind of Federal—yes—health protection. Unless 

the data is held by a provider or, you know, a covered entity under 

HIPAA, forget it, HIPAA doesn’t apply. 

This industry that is selling these lists—there has been a lot of 

mention made of marketing purposes for these lists. These lists are 

being sold without constraint. We don’t know if employers are buying them, if insurers are buying them. We don’t know who is buying them. But the lists are being sold for apparently billions of dollars, which suggests to me that we need to find out who is buying 

these lists. 

In terms of solutions, my third and final point, we need to expand the Fair Credit Reporting Act so that when there are consumer scores that are pseudo credit scores that this is brought 

under the Fair Credit Reporting Act so that consumers can exercise 

the same rights they would have if a credit score had been pulled. 

If the information is statistically as accurate and has the same effect as a credit score, then why isn’t it regulated under the Fair 

Credit Reporting Act? This should be a bright line here, and I don’t 

think that that is too terribly difficult to draw. 

There needs to be, and actually there is an urgent need for, a national data broker requirement for an opt-out. We favor an opt-out 

that is highly granular so that consumers don’t always have to take 

the nuclear option and get entirely off of every list. We favor consumers having the ability to make their own choices. Maybe a consumer wants her name and phone number on a list but nothing 

else, certainly nothing about her weight, certainly nothing about 

the number of children she has, or maybe she does, but the point 

is consumers need to know when they are on a list and need to 

make choices about what appears on those lists. 

We need to reexamine HIPAA and decide if health information 

that is not held by healthcare providers deservers healthcare protections in privacy. I believe they do. 

This is going to be the beginning of an important public dialog 

that is going to be incredibly important for all of us to engage in. 

Because if we have an industry that has not curtailed the sale of 

names of anyone with highly sensitive information for 7.9 cents a 

name, then we haven’t done enough. 

Thank you for this opportunity, and I look forward to your questions. 

[The prepared statement of Ms. Dixon follows:] 

PREPARED STATEMENT OF PAM DIXON, EXECUTIVE DIRECTOR, 

WORLD PRIVACY FORUM

Chairman Rockefeller and Members of the Committee, thank you for the opportunity to testify today about data brokers, an industry that is often hidden from 

public view, and the impact of data brokers on consumers’ lives. My name is Pam 

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1For more information and to read many of the research studies and publications, see http:// 

www.worldprivacyforum.org. 

Dixon, and I am the founder and Executive Director of the World Privacy Forum.1

The World Privacy Forum is a 501(c)(3) non-partisan public interest research group 

based in California. We focus on conducting in-depth research on emerging and contemporary privacy issues as well as on consumer education. 

I have been conducting privacy-related research for more than since 1998, first 

as a Research Fellow at the Denver University School of Law’s Privacy Foundation 

where I researched privacy in the workplace and employment environment, as well 

as technology-related privacy issues such as online privacy. While a Fellow, I wrote 

the first longitudinal research study benchmarking data flows in employment online 

and offline, and how those flows impacted consumers. 

After founding the World Privacy Forum, I wrote numerous privacy studies and 

commented on numerous regulatory proposals impacting privacy as well as creating 

useful, practical education materials for consumers on a variety of privacy topics. 

A few months ago, we published a report on data brokers and the Federal Government, Data Brokers and the Government, which examined current law and practices 

in regards to the eligibility use of data brokers in particular. I have published many 

additional studies. Previously, in 2005 I discovered previously undocumented consumer harms related to identity theft in the medical sector. I coined a termed for 

this activity: medical identity theft. In 2006 I published a groundbreaking report introducing and documenting the topic of medical identity theft, and the report remains the definitive work in the area.1 In 2010 I also published the first report on 

digital and retail privacy, The One Way Mirror Society: Privacy Implications of Digital Signage Networks. I have also written several well-known reports on self-regulation, and in 2012–2013, was a lead drafter in the NTIA MultiStakeholder Process 

for Mobile App Short Form Notices. 

Beyond my research work, I have published widely, including a reference book on 

privacy, Online Privacy, and seven books on technology issues with Random House, 

Peterson’s and other large publishers, as well as more than one hundred articles in 

newspapers, journals, and magazines. 

I appreciate the dedication and work of Senator Rockefeller in bringing muchneeded attention to the issue of data brokers, which prior to his attention, was languishing on legislative backburners. 

Introduction & Summary 

What do a retired librarian in Wisconsin in the early stages of Alzheimer’s, a police officer, and a mother in Texas have in common? The answer is that all were 

victims of consumer data brokers. Data brokers collect, compile, buy and sell personally identifiable information about who we are, what we do, and much of our ‘‘digital 

exhaust.’’ 

We are their business models. The police officer was ‘‘uncovered’’ by a data broker 

who revealed his family information online, jeopardizing his safety. The mother was 

a victim of domestic violence who was deeply concerned about people finder websites 

that published and sold her home address online. The librarian lost her life savings 

and retirement because a data broker put her on an eager elderly buyer and frequent donor list. She was deluged with predatory offers. 

These people—and 320 million others in the United States—are not able to escape 

from the activities of data brokers. Our research shows that only a small percentage 

of known consumer data brokers offer a voluntary opt out. These opt outs can be 

incomplete, extremely difficult, and must typically be done one-by-one, site-by-site. 

Often, third parties are not allowed to opt individual consumers out of data brokers. 

This state of affairs exists because no legal framework requires data broker to 

offer opt out or suppression of consumer data. Few people know that data brokers 

exist, and beyond that, few know what they do. There are about 4,000 data brokers. 

Despite the large and growing size of the industry, until this Committee started its 

work, this entire industry largely escaped public scrutiny. 

Privacy laws apply to credit bureaus and health care providers, but data broker 

activity generally falls outside these laws. Even a knowledgeable consumer lacks the 

tools to exercise any control over his or her data held by a data broker. It doesn’t 

matter that the data is about the consumer. The data broker has all the rights, and 

the consumer has none. 

Consumers have no effective rights because there is no legal framework that requires data brokers to offer consumers an opt out or any other rights. Privacy laws 

apply to credit bureaus and health care providers, but data broker activity generally 

falls outside these laws. Even a knowledgeable consumer lacks the tools to exercise 

any control over his or her data held by a data broker. It doesn’t matter that the 

75 

data is about the consumer. The data broker has all the rights, and the consumer 

has none. 

In my testimony, I will discuss consumer data brokers, businesses that traffic in 

consumer data. The data broker industry is complex, and I can only focus on a few 

aspects of it. 

There are consumer list brokers that sell lists of individually identifiable consumers grouped by characteristics. To our knowledge, it is not practically possible 

for an individual to find out if he or she is on these lists. If a consumer learns that 

he or she is on a list, there is usually no way to get off the list. Some exceptions 

exist, but the rule is that the lists are circulated far from consumers’ eyes. 

Lists reveal information that would surprise most people. Data brokers sell lists 

of people suffering from mental health diseases, cancer, HIV/AIDS, and hundreds 

of other illnesses. Data brokers sell lists of people who live in or near trailer parks 

so that these undesirable consumers can be targeted for suppression. Data brokers 

sell lists of people who are late on payments, often to those who make predatory 

offers to those in financial trouble. Data brokers sell lists of people who are impulse 

buyers or ‘‘eager senior buyers.’’ All in all, there are millions of lists. 

In addition to list brokers, there are people finder services that sell consumer demographic information online. The hundreds of ‘‘people finder’’ websites online are 

also part of the data broker industry. Statistically, few of these sites give individuals 

a meaningful opportunity to have their information removed from their databases. 

A handful do offer a partial or complete opt out or suppression, but to exercise the 

opt out, consumers have to first find the site, then go through what can be an incredibly frustrating series of hoops. Scanning drivers’ licenses, sending the opt-out 

through postal mail, and sometimes paying as much as $1,000.00 to opt out. A consumer who successfully negotiates an opt-out at one data broker faces the challenge 

of doing the same thing at dozens or hundreds of other data brokers. There is always the risk that a name removed today will be added back tomorrow. 

I will also discuss consumer scores, a growing area of data broker activity. Consumer scores are not well-known yet, but their influence on consumers is profound. 

One important example is the modeled consumer credit score. The modeled consumer credit score consists entirely of non-credit elements. Why? Because this allows the consumer data broker industry to avoid giving consumers the rights that 

the Fair Credit Reporting Act provides. 

I will offer some solutions focused on addressing the problems identified in my 

testimony. The solutions I propose are practical and possible. The solutions are designed to bring fairness and rights to consumers. The data broker industry has not 

shown restraint. Nothing is out of bounds. No list is too obnoxious to sell. Data brokers sell lists that allow for the use of racial, ethnic and other factors that would 

be illegal or unacceptable in other circumstances. These lists and scores are used 

everyday to make decisions about how consumers can participate in the economic 

marketplace. Their information determines who gets in and who gets shut out. All 

of this must change. I urge you to take action. 

The Structure of the Data Broker Industry and Why it Matters 

The data broker industry is complex, layered and multi-faceted, and it is evolving 

rapidly. The industry cannot readily be described as just consumer information 

being sold on flat lists. There is much, much more than that. 

A way to start approaching an understanding is to look at some key aspects of 

the industry. 

Size: The data broker industry, by its own estimation, numbers in the neighborhood of 3,500 to 4,000 companies. Most data brokers engage in multiple activities and have a range of core expertise. 

Scope: Data brokers range in scope from multi-national corporations with revenues in the billions to small sole proprietors operating locally. Some data brokers operate offshore. 

Shape of the long tail: This industry has a relatively small number of very large 

name brand companies, and many more small to mid-size companies. The tail 

of this industry is very long, and the end of the tail works its way down from 

large companies to small affiliates selling data online. 

Activities: These include list brokering, data analytics, predictive analytics and 

modeling, scoring, CRM, online, offline, APIs, cross channel, mailing preparation, campaigns, and database cleansing. 

Data flows: Some data brokers host their own data and are significant purchasers of original data. Acxiom is an example of this kind of company. Some 

primarily analyze data and come up with scoring and Return on Investments 

proofs. Datalogix is an example of this kind of company. Some sell or resell conVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00079 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE
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2 Information Resellers: Consumer Privacy Framework Needs to Reflect Changes in Technology 

and the Marketplace, http://www.gao.gov/products/GAO–13–663. Sept. 25, 2013. 3DEFINING MOMENTS REACTIVE BABY BOOMERS Data Card, http://datacardhub.ad 

rearubin.com/market?page=research/datacard&id=255914. Last accessed Dec. 17, 2013. 4 Adrea Rubin, Action Network Transaction Database, http://datacardhub.adrearubin.com/ 

market?page=research/datacard&id=257898, last accessed Dec. 15, 2013. 

sumer information online. Intelius is an example of this kind of company. There 

are many other models in addition. Some data moves from online to offline and 

back; some through social media and back. The point is that the business models and data flows are complex, use many sources, and differ between types of 

data brokers. 

Affiliate Storms: One common model results in the flow of information from the 

largest name-brand companies to the smaller companies, who then turn around 

and resell the data to a third tier of ‘‘affiliates’’ who then market the information themselves, or to another downstream affiliate. The term I use for this is 

‘‘affiliate storm.’’ A consumer at the end of all of the data reselling has difficulty 

finding the original compiler and seller of the data. 

Regulation: The 2013 GAO report on data resellers outlined the lack of regulatory oversight regarding data brokers.2 There are additional concerns that 

some existing regulations are being circumvented in some cases. 

My comments today address the consumer-focused aspects of data brokers. Some 

activities of data brokers do not affect consumers in a negative or unfair way. Some 

list cleansing or compliance activities to bring the data broker in line with the Do 

Not Call list are unobjectionable. My testimony is about the other consequences of 

the data broker business today. 

Sources for Data Broker Data 

The sources for data broker data have become more complex as the industry has 

grown, and as the information systems have become more digitized. Consumers 

sometimes have a choice about whether they give data; other times, they do not. 

Even if a consumer paid mainly cash and lived very quietly, using shredders for 

their mail and records and keeping their SSN to themselves, the likelihood that the 

consumer could totally avoid landing on a data broker list is quite small. Most people in the U.S. are in many data bases and on many lists. 

Some of the most common sources of consumer data include: (marketing, not credit data) 

• Retailers and merchants via Cooperative Databases and Transactional data 

sales & customer lists 

• Financial sector non-credit information (PayDay loan, etc.) 

• MultiChannel direct response 

• Survey data, especially online 

• Catalog/phone order/Online order 

• Warranty card registrations 

• Internet sweepstakes 

• Kiosks 

• Social media interactions (dependent on data broker interactions/agreements) 

• Loyalty card data (retailers) 

• Public record information 

• Website interactions, including specialty or knowledge-based websites 

• Lifestyle information: Fitness, health, wellness centers, etc. 

• Non-profit organizations’ member or donor lists 

• Subscriptions (online or offline content) 

Following are some source examples from data broker cards, these examples are 

not surprising or out of the ordinary. 

On a Baby Boomers data card, Adrea Rubin gave this source data: 

Source: Multichannel Direct Response, Survey Data, and Public Record Information 3

On a data card for a Transaction Database, the company listed the source as: 

Source: 79 percent catalog/phone order/Online, 21 percent retail.4

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5Warranty IT Seniors, Adrea Rubin, http://datacardhub.adrearubin.com/market?page= 

research/datacard&id=123434, last accessed Dec. 15, 2013. 6http://www.kbmg.com/privacy-policy/. 

On a data card describing extreme mail order buyers, the source for gender, age, 

income, number of purchases, and number of credit cards was cited as 

Source: Multi-source, consolidated from a variety of sources, overlaid with coop/transactional data[1] 

A data card listing seniors listed the source as warrantee cards. 

Source: Warrantee card registrations 5

Of the sources, a disturbing source is retail purchases both online and off. Cooperative databases allow retailers to append copious data about consumers to retail 

transaction files. This is the basis of the Pineda vs. Williams Sonoma case in California which Williams Sonoma took a consumer’s e-mail and added home address 

information. Below is an example of the use of retail transactional/cooperative databases, this one from KBM Group.6

Later in this testimony, I include this company as an exemplar of good opt out 

practices. 

Sensitive Information and Lists That Should Not Exist 

One of the key characteristics of modern data brokers is a lack of restraint. The 

degree to which no piece of data is sacred is evident in the reams of sensitive consumer data compiled, scored, circulated, and sold. 

I do not oppose the selling of lists entirely. There is a reasonable center to be 

found. I agree that some lists are probably always going to exist that one or another 

person deems sensitive. Selling lists of doctors, nurses, teachers, and so forth are 

not among my favorite business models. But I understand the need for these lists 

and how they can be used in an unobjectionable way. I think of these lists as the 

center of the bell curve. These lists are of professional people. 

However, some lists should not exist at all. This is where I urge Congress to take 

action. Highly sensitive data are the frayed and ugly ends of the bell curve of lists, 

far from the center. This is where lawmakers can work to remove unsafe, unfair, 

and overall just deplorable lists from circulation. There is no good policy reason why 

unsafe or unfair lists should exist. 


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I give you some examples: police officers home addresses, rape sufferers, domestic 

violence shelters, genetic disease sufferers, among others, below: 

• A list of police officers at home addresses. This list can threaten the safety of 

police officers and their families. 


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• A list of rape sufferers. This is an unjustifiable outrage that sacrifices a rape 

victim’s privacy for 7.9 cents per name. 


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• A list of domestic violence shelters. Existing laws allow domestic violence shelters to keep their location secret so that abusers cannot find their victims. The 

commercial sale of lists of these shelters is unjustifiable. 


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• A list of genetic disease sufferers. This list identifies people suffering from genetic diseases. This information will apply to these people—and their progeny— 

for their lifetime. Congress and the States have passed laws to protect the privacy of genetic information, but these laws do not stop data brokers from selling 

genetic information to anyone for any purpose. 


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• A list of seniors who are currently suffering from dementia. These unfortunate 

people are often targeted for highly predatory offers. A list of caregivers would 

not have the same potential for deleterious consequences. 


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• A list of HIV/AIDs sufferers. 


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• A list of people with addictive behavior, alcohol and drugs. Alcohol and drug 

treatment information about patients is the subject of extra protections under 

existing law, but no law stops data brokers from profiting by selling the information. 


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• A massive list of people identified by disease and prescription taken. Diseases 

include everything from A to Z, from cancer to mental illness, to bedwetting to 

gambling and much more. 


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These lists speak for themselves. Can we agree that some lists should not be circulated? Can we agree that the people named and pinpointed and targeted by these 

lists should be protected from the harm that can come from simply the inclusion 

on the list? I hope this is the case. 

I also would put derogatory credit lists on the firing line for if not removal, then 

special treatment. These lists abound, 

• Hispanic payday loan responders 


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• Derogatory credit consumers. These millions of consumers fall into a low credit 

category. 


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7DMDatabases, Suppression, http://dmdatabases.com/data-processing/suppression, last 

accessed Dec. 17, 2013. Screen shot available. 8http://www.claritas.com/MyBestSegments/Default.jsp. 

9http://www.datamangroup.net/PycleFinancialMarkets.php. 

In the Solutions section of this testimony I discussion ways that this negative list 

situation can be improved. It is important to note that the lists are just the obvious 

outgrowth of other data broker activity, such as scoring. 

Geography is Destiny: Trailer Parks and Zip+4 

Where a person lives counts. A lot. Unfortunately, or fortunately, depending on 

where you live, geography is marketing destiny. And marketing destiny can now affect what opportunities come your way by virtue of savings, discounts, or receiving 

financial offers. 

For example, people who either live in a trailer park or within a certain radius, 

usually a couple of miles of a trailer park, are often candidates for list suppression. 

They will not receive opportunities that their neighbors do solely because of their 

type of shelter. Or conversely, people who are in a trailer park may be specifically 

targeted for ads for low-income products or services. Is this trailer park redlining? 

DMDatabases offers, for example, a suppression list that includes trailer parks as 

an option, among others: 

OTHER SUPPRESSION OPTIONS 

NURSING HOMES 

TRAILER PARKS 

MILITARY BASES 

COLLEGE DORMORTORIES 

BANKRUPTCIES, TAX LIENS, JUDGEMENTS 7

It can be reasonable and fair or a local business to use Zip+4 to target a geographical area nearby. This makes a lot of sense. But I am not persuaded that it 

is fair to use detailed census tract data and Zip+4 to unfairly exclude people who 

may be living in or near the edge of poverty. 

Inferences and Categorization 

Data brokers categorize consumers into tightly defined boxes sourced by retail 

transactions, number of credit cards, ethnicity, marital status, gender, education, 

and many other factors, including neighborhood. There are a number of products 

sold by data brokers that accomplish this. One product in this category is Personix, 

sold by Acxiom. There are 70 Personix Clusters, each one identifying a type of consumer. Another product is Prizm, sold by Claritas.8 ‘‘P$ycle’’ by Dataman Group 9

is another product. However, I do not know of a single company that allows consumers to view the clusters they are put in. I do not know of a single data broker 

that will allow consumers to permanently opt out of the cluster definitions attached 

to them. 

At Acxiom’s It’s About The Data Portal, entering various zipcodes, salaries, and 

characteristics such as presence of child, marriage, and so forth allows one to explore the clusters. 

Here are two sample Acxiom clusters: 

89 

These clusters come attached to average ages and proximal information to guide 

marketers. The clusters are purchased by other data brokers and are used to overlay other data they already have. In many ways, the clusters shape the ads we see 

online, the deals we get in the mail, and in some cases, unwanted targeting both 

at the high and low end of the clusters. 

Take for example the following data card, which is described as Low End Credit 

Prospects. The source for the data is multi-source, and includes Acxiom data. The 

data card specifically identifies low-end credit prospects by their inclusion in the 

Acxiom Personixs clusters. In this case, these consumers were not described by 


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10 Adrea Rubin, Activity Tracker Low End Credit Prospects Data Card, Card ID 310015, 

http://datacardhub.adrearubin.com/market?page=research/datacard&id=310015 last accessed 

Dec. 15, 2013. 

being assigned a modeled credit score, rather, the cluster does the work of characterization. The category profiles are then combined with recent transactions, which 

in turn landed these consumers on this data broker list.10

What is most objectionable is that many products like Acxiom’s exist without consumers having any rights with respect to the data about themselves that is being 

compiled, bought, and sold. Errors may significantly alter the cluster a person is in, 

therefore altering the quality and type of offers a consumer receives. Life looks very 

different for cluster 1 and cluster 70. 

Consumers need more rights over the use of their personal information by data 

brokers. 

Modern Eligibility 

Eligibility has expanded and, with it, the uses of marketing data for eligibility 

purposes and for suppression purposes. In the traditional credit world, the FCRA 

still regulates the use of credit in strictly-defined eligibility situations, such as employment and insurance. The Equal Credit Opportunity Act also places limits on 

data use. So does the Health Insurance Portability and Accountability Act’s (HIPAA) 

health privacy rule. 

Modern eligibility has evaded, avoided, and overrun these laws, creating an unfair 

situation for consumers. When health data is held by a covered entity, HIPAA protections and rights apply. However, the exact same data, used for purposes outside 

of strictly-defined FCRA, ECOA or HIPAA limits and when not held by a health 

care provider, escape the bounds of regulation. The definition of eligibility needs to 

be expanded to encompass how data is now used. Consumers need more rights with 

respect to these activities: 

• Authentication: using public and behavioral data to authenticate consumers to 

use a service. 

• Anti-fraud: using transactional and behavioral data to determine whether fraud 

is occurring. 


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11Selling Consumers Not Lists: The New World of Digital Decision-Making and the Role of 

the Fair Credit Reporting Act, Ed Mierzwinski and Jeff Chester. November, 2013. 

• Identity verification: Running quasi-background checks to verify aspects of a 

consumer’s identity. 

• Lifestyle: Background checks for dating websites, for schools, for clubs. 

• Offers or suppression based on proxy credit scores: data broker-generated financial offers based on non-credit information, but just as accurate as a traditional 

credit score. Or the inverse: people are excluded from a list based on this information, but without associated FCRA or ECOA rights. 

• Offers or suppressions based on medical data: Consumer health information 

that has escaped from the boundaries of HIPAA—a significant amount—needs 

new rules that data brokers must follow. Health-related analytics that have an 

impact on consumer’s health care prices, health care, credit, or employment 

need controls To protect consumers. Certain lists should not exist, and certain 

data should not be used in lists, in analytics, or anywhere. Even lists that data 

brokers deem non-sensitive such as lifestyle lists identifying smokers or other 

patterns need controls. 

Consumers who fail authentication tests, ID verification, or get identified as a 

fraud risk will show up with different scores, will wind up on different consumer 

data broker lists, and may have difficulty conducting their daily business. Consumers who are painted as fraudsters may find themselves locked out of their own 

bank, credit cards, and even phones. Consumers who are identified as having very 

low or derogatory credit by non-traditional analysis and scoring may find themselves deluged with predatory offers. Consumers who are marked by a data broker 

as having cancer, previous trauma, a chronic disease, including genetic diseases, 

and even lifestyle markers, can have that data sold to the wrong party and find 

themselves on the short end of the health care stick and deeply stigmatized in many 

areas. 

Circumventing the FCRA 

While my testimony is not focused on the FCRA, it is important to state for the 

public record that many data brokers are engaging in behaviors that circumvent of 

the FCRA. I leave it to the Committee to decide if these activities are already illegal 

or if they should be brought within the FCRA and regulated in the same way as 

traditional credit records. 

Proxy credit scores relate to circumventing the FCRA.11 There is another issue 

related to circumventing the FCRA. Many of the websites selling consumer background check data and other data state in a disclaimer that they are not a consumer 

reporting agency and therefore are not regulated under the FCRA. They adjure their 

customers to not violate the terms. The restrictions are not meaningful, and we suspect the violations of terms are routine. 

There need to be meaningful checks and balances to keep improper uses from occurring. Given the sheer numbers of affiliate websites selling consumer data, this 

will require some affiliate oversight and reform. We found some affiliates without 

a privacy policy, much less an opt out. 

From http://www.peoplesearchnow.com/default.aspx: 

Just because there is a paragraph stating that a website is not operating as a consumer reporting agency doesn’t make it so. We strongly suspect that the disclaimed 

is offered with a wink, safe in the knowledge that no regulatory agency will be able 

to look at hundreds of small sites for violations of the law. 

Data Broker Opt Out: The Grim Choices Consumers Face 

Consumers face bad options and scant choice when it comes to data broker opt 

out. Leaving aside rights conferred under the FCRA for strict FCRA-defined eligibility purposes for the moment, consumers are in fact left largely to fend for themselves with few tools and no clear rights. Some opt outs exist, but the landscape 

is difficult—so much so that it is improbable that consumers can wend their way 

through the opt out process successfully 

How many allow opt out? 

The World Privacy Forum compiled a list of 352 consumer-focused data broker 

sites and lists. Our list is available at http://www.worldprivacyforum.org/2013/12/ 


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12Panel comments by Dr. John Deighton, National Press Club, The Value of Data: Consequences for Insight, Innovation and Efficiency in the U.S. Economy, A Symposium Hosted by 

DMA’s Data-Driven Marketing Institute, October 29, 2013. Dr. Deighton was commenting on his 

sampling for the study, The Value of Data: Consequences for Insight, Innovation and Efficiency 

in the U.S. Economy, John Deighton and Peter Johnson, DDMI, 2013. 

data-brokers-opt-out/. A study of the data broker industry conducted by Dr. John 

Deighton for the Direct Marketing Association in 2013 found that the universe of 

data brokers was approximately 3,500.12 Our data broker list, then, comprises at 

ten-percent rough sample of this universe. Included on the list are various people 

finder websites, data brokers that this Committee or the FTC has sent letters of 

inquiry to, consumer list brokers, and others. Of 352, 128 offered a data opt out. 

Some of those were full opt outs, some partial or unclear, some of them cost as much 

as $1,799.00, and one opt out promised that the site reserved the right to ‘‘publish 

the request’’ if someone decided to opt out. 

Opting out of Data Broker Scores and Lists 

To remove a consumer’s name and information from all data broker lists appears 

to be an almost impossible task right now. If a mailing list is held by a DMA member, the DMA opt out can be effective. However, not every data broker is a DMA 

member, which poses an immediate problem. For scores, there is no known score 

opt out. After a consumer is assigned a score by a data broker, a consumer will find 

it nearly impossible to find that score or to opt-out of its use to describe or characterize the consumer. 

In our research, we have found one exemplar company that is allowing an opt out 

of their databases and lists, KBM Group. A screen shot of the relevant portion of 

the policy is below; note that the policy allows for internal database opt out as well 

as linking to the DMA opt out. The policy is located at http://www.kbmg.com/privacy-policy/. This is a best practice, and is seldom seen. 

Suppression vs opt out 

It is important to note that when consumers opt out of data broker websites or 

lists, most often what is happening is that their information is being suppressed. 

The information remains, but it is removed from circulation. Delete is not a word 

that is used very often in data broker opt out. 


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For consumers who want to get off of data brokers marketing lists, the primary 

mechanism for removal is to use the DMA Choice opt-out mechanism. This will put 

the consumer on a suppression list, which means the data brokers will still have 

the consumer information, but no further sales or marketing will occur within a 

given time frame via the lists that allow opt out or suppression. 

When data brokers allow for a DMA Choice opt out to influence all of their list 

and brokering activity, this is a good thing. But this is not nearly as common as 

it needs to be. Only some lists adhere to the DMA Choice program. One significant 

problem is that not all data brokers are DMA members, and thus escape the selfregulatory program. For those that are DMA members, we do not know how effective the DMA Choice program is. 

Policy Issues in Current Opt Out/Suppression Practices 

Of data brokers that allow opt out, additional policy issues include the following: 

• Incomplete: Most opt outs are incomplete, and often require consumers to have 

a safety reason for the opt out. 

• Suppression not deletion. Many opt outs are suppression-based. This may be difficult to change. 

• No Third Parties: Consumers are usually required to ask for the opt out directly 

on their own. Requests through third parties are not allowed. This makes opt 

out an impossible proposition for consumers, who have to go to each individual 

site to effectuate the opt outs that are available to them. It is clear that the 

policy deliberately seeks to make it as hard as possible for consumers to exercise the ability to opt-out. 

• No Guarantee: An opt out is not guaranteed, no matter why the consumer is 

conducting the opt out. Thus, the opt out may not work or may only be effective 

for a short period of time. 

• Fees: Some data brokers charge fees ranging from annoying (less than $30) to 

exorbitant (in excess of $1,000). 

• Hunting for the opt out: Finding the opt outs on many consumer data broker 

sites is an exercise in extreme patience and persistence. Opt outs are seldom 

indicated by a prominent opt out button labeled as such. While some data brokers do play nicely with consumers and provide this, fair play is the exception, 

not the rule. Typically, opt outs are buried deep within a privacy policy, terms 

of use, or FAQ. 

• Opt out requirements non-standardized: Opt out requirements non-standardized: 

A bewildering array of choices face the person who wants to opt out of data 

broker lists. Some opt outs are fair. DMA Choice is a reasonable opt out. But 

many are not reasonable or fair. Some require a privacy-concerned consumer to 

send a scanned copy of a driver’s license or to jump through other hoops. We 

would be reluctant to recommend that a consumer share a copy of a driver’s 

license. Many consumers do not have a driver’s license or other governmentissued form of identification, and these consumers may find it impossible to opt 

out. 

• Marketing use of opt -out information: No regulation stops data brokers from 

selling or otherwise using the information given in an opt out application. 

• Negotiating the opt out: There is no controlling legal standard for data broker 

opt out. As a result, consumers have to dig through complex privacy policies and 

language and figure out each opt out. 

• Partial Opt Outs Only: Some data brokers allow for partial opt outs, meaning 

that it is available only if there is a safety issue, or if an individual is a member 

of law enforcement. However, there are concerns even with this. There are no 

rules that say that information about the request to opt out will not be sold or 

shared. 

• No opt out: Many data brokers do not allow any opt out. Consumers are left 

with no recourse. 

Examples of challenging opt outs 

Here is an example of a privacy policy with an opt out notice, this is from a consumer-facing data broker site called SortedbyName.com. Note the last sentence, 

where consumers who opt out may be treated punitively for doing so (emphasis in 

yellow is mine).: 

• This webmaster reviews stats, including IP addresses of site visitors from time 

to time. 

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13http://sortedbyname.com/privacy.html, last accessed Dec. 17, 2013. Screen shot available. 14http://waatp.com/faq.html. Last accessed Dec 17, 2013. Screen shot available. 

• Third party vendors, including Google, use cookies and web beacons to serve ads 

based on a user’s prior visits to the website. 

• Google’s use of the DART cookie enables it and its partners to serve ads to 

users based on their visit to the site and/or other sites on the Internet. 

• Users may opt out of the use of the DART cookie by visiting the advertising 

opt-out page. (You can opt out of a third-party vendor’s use of cookies by visiting 

the Network Advertising Initiative opt-out page.) 

• With the Firefox browser, use Ctrl+Shift+P for private browsing. Use Tools—Options—Privacy to set preferences. Use Shift+Ctrl+Delete to clear your history so 

remote servers cannot access it. 

• By sending a request for removal of names from the site, you give us permission By sending a request for removal of names from the site, you give us permission

to publish the request, including your e-mail address and all headers.13

Here is an example of a complicated opt out, this at from waatp.com: 

How do I remove or update my data on waatp.com? waatp.com investigates for 

live data reached by public on a regular basis. Because this information is not 

contented on our hosting, we cannot give any guarantees these data will be removed until the change has been occurred at the source of the data. To update 

or remove this information, we advise: Our site will provide the certain source 

for the information the applier would have changed or removed. Approval that 

applier is the individual specified in the Public Profile is an obligatory condition, therefore we may ask that appliers faxes or e-mails it: 

1—a written application asking for the database source or a change application; 

2—a screenshot of a page, with marked information that you ask to change or 

to search in the source; 

3—a legal proof of ID like State/Federal ID card that points your name, full address, date of birth (you can remove your personal photo an/or ID#); 

4—any pseudonyms; 

5—ex-addresses, including str.name, town, zip. 

You should fax this information to 800 861 9713 (please attach an e-mail so 

that we are able to contact you regarding any questions) or e-mail to ProfileRemove/at/waatp.com.com. Changes might take up to 6 weeks to come into effect and are only constant if the info has been previously edited or removed at 

the original source. Without a constant change at the original source, the process of deletion of any info stored in a Public Profile is NOT guaranteed.14

An example of the No third Party policy can be found at People Smart, http:// 

www.peoplesmart.com: 

The Scoring of Americans 

Americans face a future that is increasingly being shaped in significant ways by 

their consumer scores. A consumer score provides a way of evaluating an individual 

or a household. The best-known consumer scoring activity is credit scoring. Credit 

scores date back to the 1950s, and replaced human judgment about credit granting 

by relying on standardized criteria. While most people are familiar with credit scoring, consumer scoring encompasses a broader category of activities that uses scores 

to assess consumers for one or more purposes. 

The World Privacy Forum offers consumer scoring as a generic term for these 

scoring methods. A consumer score derives from an algorithm that typically employs 

objective criteria. The score relies on demographic, health, consumption, transactional data, marketing, credit, or other personal characteristics. Companies and 

governments use the resulting score to make a decision about an individual or 

household. 

By itself, consumer scoring is not necessarily good or bad. Scoring orders a population along a mathematically defined scale. However, scoring has the prospect of 

being used to affect individuals in significant ways that may not be fair. If a score 

becomes the way that consumers are treated, then the results may not be acceptable 

to the American public. The quality and relevance of the data used, the transVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00098 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE

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15The Direct Marketing Association’s publicly searchable Vendor Database contained 377 

companies stating an expertise specifically in scoring as of Dec. 15, 2013. Some examples of companies listed include Datalogix, Analytics IQ, FICO, iKnowtion, and others. 16 In 1995 Freddie Mac and Fannie Mae endorsed the use of credit scores as part of the mortgage underwriting process. This had a substantial impact on the use of credit scores in the mortgage loan industry. See for example Kenneth Harney, The Nation’s Housing Lenders might rely 

more on credit scores, The Patriot Ledger, July 21 1995. 17See for example, comments of Peter L. McCorkell, Senior Counsel to Wells Fargo, to the 

Federal Trade Commission, August 16, 2004 in response to FACT Act Scores Study. 18 As of December 2004, the Fair Credit Reporting Act as modified by the Fair and Accurate 

Credit Transactions Act, or FACTA, ended score secrecy formally, and required consumer reporting agencies to provide consumers with more extensive credit score information, upon request. 

Also made available to the public was the context of the score (its numeric range), the date the 

score was created, some of the key factors that adversely affected the score, and some other 

items. 

parency of the methodology, and the reasonableness of the application are the major 

factors that determine the fairness of any scoring activity. These issues are likely 

to be the central focus on the policy debate about consumer scoring. 

Consumer scoring is already more widespread than most people realize. A significant segment of the data broker industry already focuses on scoring and predictive 

analytics, and as such, is intricately interwoven into the scoring business.15 Known 

consumer scoring activities include assessments and predictions relating to insurance, bankruptcy, identity, fraud, consumption, health, propensity to purchase, ‘‘consumer value estimation,’’ and more. A dozen categories of consumer scoring have 

been identified so far, each containing numerous scores. There may be hundreds or 

thousands of consumer scores already in use. The Federal Government uses scoring 

for some purposes, an activity beyond the scope of this testimony but something that 

may be worthy of more attention by the Congress. It might be useful, for example, 

to ask the Government Accountability Office to identify all of the consumer scoring 

used by Federal agencies. 

The use of consumer scoring is expanding rapidly because scores provide an easy 

analytics shorthand for measuring consumer behavior, risk, and potential for future 

success or spending. Companies and government will use scores to make more decisions about a consumer’s access to markets, price for goods and services, ability to 

travel, and other social and economic opportunities. Schools will use scores beyond 

academic measurement scores to determine the viability of candidates. 

Policy issues around consumer scoring 

Secrecy 

Most consumer scores today are secret—consumers cannot see most scores even 

if they know about them. Beyond the numeric value of the scores themselves, a complete lack of transparency surrounds consumer scores. Citing proprietary claims, the 

factors that make up consumer scores are secret. The procedures and algorithms are 

secret. Often, even the full numeric range and context are secret. 

Credit scores were unknown to most consumers through the 50s, 60s, 70s, and 

80s. Trickles of a score that was not disclosed to consumers but that could be used 

to deny a person credit began to leak out slowly to some policymakers, particularly 

around the time ECOA passed. In May 1990, the Federal Trade Commission wrote 

commentary indicating that risk scores (credit scores) did not have to be made available to consumers. But when scoring began to be used for mortgage lending in the 

mid 90s,16 many consumers finally began hearing about a ‘‘credit score,’’ most of 

them for the first time, and mostly when they were being turned down for a loan.17

A slow roar over the secrecy and opacity of the credit score began to build. 

By the late 90s, the secrecy of credit scores and the fact that people could not see 

the underlying methodology or factors that went into the score or the range of the 

score to determine how the number should be interpreted was a full-blown policy 

issue. Beginning in 2000, a rapid-fire series of events—particularly the passage of 

legislation in California that required disclosure of credit scores—eventually dismantled credit score secrecy and non-disclosure. Now, credit scores must be disclosed to consumers, and the context, range, and key factors are now known.18

Credit scores are no longer secret, and this was and still is the right policy decision. Why are other scores secret, when they are being used for important decisions 

about consumers? Why are other score factors and numeric ranges secret, when the 

risk of marketing data comprising the score of a factor used in modern eligibility 

practices is very high? 

There should be no secret scores, and no hidden factors. 

96 

19 AnalyticsIQ, http://analytics-iq.com/download/Aspects.pdf, last accessed Dec. 16, 2013. 20One exception to this is ID Analytics’ Identity Score, which consumers are able to see. 21For more information, see http://www.consumer.ftc.gov/articles/0152-how-credit-scores-affect-price-credit-and-insurance. 22 A significant lawsuit on this issue is FTC v. Transunion which is definitive. From the press 

release: ‘‘The Federal Trade Commission has ordered the Trans Union Corporation to stop selling consumer reports in the form of target marketing lists to marketers who lack an authorized 

purpose for receiving them under the Fair Credit Reporting Act (‘‘FCRA’’). In a unanimous opinion authored by Commissioner Mozelle W. Thompson, the FTC determined that ‘‘Trans Union’s 

target marketing lists are . . . consumer reports under the FCRA’’ and concluded that Trans 

Union is violating the FCRA by selling this information to target marketers who lack one of 

the ‘‘permissible purposes’’ enumerated under the Act. The Commission’s decision applies to a 

number of Trans Union’s target marketing list products including its Master File/Selects products, its modeled products and its TransLink/reverse append products.’’ http://www.ftc.gov/ 

news-events/press-releases/2000/03/trans-unions-sale-personal-credit-information-violates-fair. 

Full case: http://www.ftc.gov/enforcement/cases-and-proceedings/cases/2000/03/trans-unioncorporation-matter. 

Unfairness 

Of significant concern regarding scoring are the factors that go into the creation 

of a score. A single score is often created from the admixture of more than 600 to 

1,000 individual factors. These factors can include race, religion, age, gender, household income, zip code, presence of medical conditions, zip code + 4, transactional 

data from retailers, and hundreds more. Therefore, one individual score can contain 

hidden factors that range from non-sensitive to quite sensitive. A score that is designed to assess or assign consumer value to a business could also include factors 

that would be entirely unacceptable or that, in the context of either the Equal Credit Opportunity Act (ECOA) or the Fair Credit Reporting Act, would be flatly illegal. 

In a description of its sets of scores that can be purchased, one company described 

how it creates its scores: 

Aspects Life Choices system 

Our Database at the Core 

Our proprietary set of data that allows us to produce powerful scored solutions. 

It is created from over 100 sources, updated quarterly, and contains 1,500 proprietary demographic, psychographic, attitudinal, econometric and summarized 

credit attributes. 

Clear Benefits to Users 

• Can be used to enhance any list • Applied at the Zip+4 level 

• Data can be custom modeled 19

This particular company, like most companies selling consumer scores, does not 

publish its 100 sources nor its 1,500 attributes that it is using to develop the score 

for consumers’ perusal, nor does it summarize even the categories of information 

used for consumers. It is unlikely that consumers can purchase or see these scores 

for themselves,20 and like other consumer scores, this score is opaque. If ECOA factors are present, no one but the company employees would know. 

Notably, the ECOA requires that credit scoring systems may not use race, sex, 

marital status, religion, or national origin as factors comprising the score. The law 

provides the opportunity for creditors to use age, however, also requires that seniors 

are treated equally.21 Marital status is commonly used as a consumer score factor, 

as are other factors either directly or inferentially connected to factors that would 

be protected under ECOA but are not in broader consumer scores, even if those 

scores are being used for other eligibility decisions. 

Lack of Rights in Consumer Scoring 

After a consumer has been scored, the factors (behaviors, characteristics, etc.) that 

went into the score do not typically disappear. After the score have been recorded 

into a data broker’s host database, there is not a way for consumers to remove 

themselves from this activity. A discussion of how this impacts proxy credit scores 

is below. 

Exemplar: Modeled Credit Scores 

The privilege of marketing information based on credit report data comes with the 

requirement that consumers can opt out of that marketing. Marketing targeted to 

credit reports is strictly limited to credit and insurance.22 But analytics are at such 

a sophisticated level now that accurate ‘‘modeled credit scores’’ are being created and 

used as a proxy for traditional credit scores. These modeled scores are made of consumer information drawn from beyond the traditional credit bureau score to create 

97 

23 Ann McDonald, High Points for Credit Scoring: With generic scores becoming antiquated, 

credit-scoring providers are focusing on new offerings. Collections and Credit Risk, April 1 2006, 

46 Vol. 10, No.4. 24LC Thomas, RW Oliver, DJ Hand, A Survey of Issues in Consumer Credit Modeling Research, The Journal of the Operational Research Society, Sept. 2005, Vol. 56, Iss. 9. 25 Cell Phone Turndowns Mailing List, NextMark List ID #188161. http://lists.nextmark.com/ 

market?page=order/online/datacard&id=188161, last accessed Dec. 12, 2013. 26http://dmdatabases.com/databases/consumer-mailing-lists/consumer-lists-by-credit-score. 

More information about the DMDatabases modeled credit score is at http://dmdatabases.com/ 

databases/specialty-lists/modeled-credit-score-direct-mail-e-mail-list. 27 Experian ChoiceScore, http://www.experian.com/marketing-services/data-digest-choicescore 

.html. 28http://datacardhub.adrearubin.com/market?page=research/datacard&id=268601. 

an entirely new score. Because these scores contain no direct credit information, 

they are seen by some as outside of either ECOA or the FCRA. Therefore, information closely mimicking credit data is now being used for broad marketing purposes, 

and there is no requirement for opt out. 

A good modeled credit score predicts financial risk comparable to the traditional 

credit score. Fair Isaac’s Expansion Score draws consumer information from non-traditional sources, that is, sources other than the big three credit bureaus. Although 

Fair Isaac does not disclose its data sources except directly to the individual consumer being scored, industry publications state that Fair Isaac is using deposit account records and pay-day loan cashing as predictive factors in its Expansion 

Score.23 The Expansion Score is regulated, so consumers who have an Expansion 

Score are entitled to knowing certain information about that score, including the 

factors. Fair Isaac is playing by the rules, but data broker data cards indicate that 

not all companies (or data brokers) are when it comes to inferred credit data or 

scores. Companies can now build score cards with very little or even no data by taking 

advantage of the new generic credit bureau scores to create a baseline of information. In these cases, the score card is typically monitored and evaluated closely to 

see if it is viable.24 In this way, the equivalent of consumer credit scores that would 

be otherwise regulated under the FCRA end up being used for all sorts of purposes 

that would not be allowed had they been traditional credit scores. The end score 

could be something like a churn score, or customer loyalty score. In other situations, 

behavioral clues allow people to be targeted just as precisely as if their scores were 

known. 

People, for example, who have a low Beacon score (an Equifax credit score) and 

are subsequently turned down for the purchase of a phone, show up on a data 

broker mailing list called ‘‘Cell Phone Turndowns.’’ 25 The data card says: ‘‘These 

consumers are ready and eager to receive offers and opportunities in the following 

categories: secured and sub-prime credit, Internet, legal and financial service, health 

insurance offers, home equity loans, money making opportunities, and pre-approved 

credit with a catalog purchase.’’ The Beacon score is not given—it does not need to 

be in order for data brokers to infer the credit score of these individuals. If a generalized credit score is known with certainty, as it is in this case, then why is it OK 

to then sell this information without limiting the data to FCRA constraints? 

The use of the modeled credit score is well understood by data brokers. 

DMDatabases wrote this on its website, discussing its modeled credit score: 

IMPORTANT NOTE: IMPORTANT NOTE: The Fair Credit Reporting Act (FCRA) does NOT allow 

the release of actual credit data to any party that lacks a permissible purpose, 

such as the evaluation of an application for a loan, credit, service, or employment. Before requesting information on a credit score mailing list or credit score 

e-mail list, make sure your offer is in compliance with FCRA guidelines. For 

details on FCRA compliance requirements—CLICK HERE. 

GOOD NEWS/BAD NEWS: GOOD NEWS/BAD NEWS: The bad news is that 90+ percent of offers do not 

meet the strict FCRA compliance requirements for using actual credit score 

data. The good news is that marketers have a very effective alternative . . . 

The Premier Modeled Credit Score Database.-CLICK HERE and read more.26

Experian sells ChoiceScore, a financial risk score built entirely of non-credit factors.27 Experian explains in its description of the score that it is created from consumer demographic, behavioral, and geo-demographic information. One data broker 

selling a list of consumers who had been segmented by the ChoiceScore said this 

in its data card description, which can be seen in the screen shot below:28

ChoiceScore by Experian UnderBanked and Emerging Consumers 

ChoiceScore helps marketers identify and effectively target under-banked and 

emerging consumers. Using the most comprehensive array of non-credit data availVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00101 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE
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29 CHOICESCORE BY EXPERIAN UNDER BANKED AND EMERGING CONSUMERS, 

http://datacardhub.adrearubin.com/market?page=research/datacard&id=268601. 30 According to the data broker’s data card, two entities purchased this data: Achievecard, and 

Figi’s Incorporated. Figi’s Incorporated appears to be a food gift retailer. (http://www 

.fbsgifts.com/about.html#figis). 

able from Experian. A financial risk score (indicating the potential risk of future 

nonpayment) provides marketers with an additional tool for more precise targeting.29 The data card also indicated that the ChoiceScore could be used to suppress some consumers from getting information. 

Based on Experian’s website, it appears that the ChoiceScore is apparently not 

available for sale to consumers. The score appears to be available for non-FCRA 

uses.30 What factors go into these and other scores? How is ChoiceScore used in eligibility decisions? The score’s factors are not defined, so it is difficult to know what 

kind of marketing data is included, if at all, in the score. It is also difficult if not 

impossible to determine how or if or when the score is being used in modern eligibility decisions. 


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Are credit factors bundled into any base scores? Are credit factors used for noncredit marketing? Are any ECOA factors in the scores? How are credit and ECOA 

factors weighted in the algorithms? We do not know. 

Modern data analytics have made child’s play of mimicking traditional credit 

scores and unearthing people who are in various credit score brackets. Congress 

acted to protect the use of this information with good reason. The change in technologies that give us new modeled scores of great accuracy does not change the underlying principles that still need to be at work here: fairness, accuracy, transparency, and some reasonable limits in use. 

My question is this: if a modeled credit score is as good as a traditional credit 

score, shouldn’t it come under the FCRA? I believe the answer to this is yes. Congress needs to draw a bright line around this issue in particular and ensure that 

for fairness reasons it does not get entrenched any further. I predict that when consumers learn of data broker activity in the scoring area, they will not be happy. 

Exemplar: Heath Scores 

Another category to consider is the area of health. Health scores are now in circulation, which brings concerns, not the least of which is that consumers care deeply 

about their health privacy and decisions made about them regarding their health, 

insurance policy pricing, and prescription pricing. The same questions raised above 

about transparency, secrecy, factors, and use are relevant here. Other questions 

come into play as well. For example: can employers purchase health scores? Are 

health scores shared with debt collectors? Of note in the area of health and in other 

areas is the issue that companies increasingly either 

Frailty Scores 

Regarding the Frailty Score, in 2011, a rather spectacular medical data breach 

revealed that a company called Accretive was collecting detailed and sensitive 

health information about hospital patients in Minnesota via contract with those hospitals, and then using that data to develop scores. A lawsuit revealed the extent of 

the information gathering by this company. The company was collecting the following information and developing the following scores: 

• Patient’s full name 

• Gender 

• Number of dependents 

• Date of birth 

• Social Security number 

• Clinic and doctor 

• A numeric score to predict the ‘‘complexity’’ of the patient 

• A numeric score to predict the probability of an inpatient hospital stay 

• The dollar amount ‘‘allowed’’ to the provider 

• Whether the patient is in ‘‘frail condition’’ 

• Number of ‘‘chronic conditions’’ the patient has 

• Fields to denote whether the patient has: 

» Macular degeneration 

» Bipolar disorder 

» Depression 

» Diabetes 

» Glaucoma 

» HIV 

» Metabolism disorder 

» Hypertension 

» Hypothyroidism 

» Immune suppression disorder 

» Ischemic heart disease 

» Osteoporosis 

» Parkinson’s Disease 

» Asthma 

» Arthritis 

» Schizophrenia 

100 

31 United States District Court, District of Minnesta. State of Minnesota vs. Accetive Health, 

Inc. 32 Jeremy M. Simon, New medical FICO score sparks controversy, questions, Yahoo Finance, 

July 28, 2011. http://finance.yahoo.com/news/New-medical-FICO-score-sparks-creditcards-1400 

615100.html?x=0. 

» Seizure disorder 

» Renal failure 

» Low back pain 

The screenshot below is a screenshot of a patient’s data that had been revealed 

in the breach, redacted for the lawsuit. 

One of the complaints in the lawsuit was that patients had no knowledge of this 

scoring activity. 

‘‘Upon information and belief, the hospitals’ patient admission and medical authorization forms do not identify Accretive by name or disclose the scope and 

breadth of information that is shared with it. Upon information and belief, patients are not aware that Accretive is developing analytical scores to rate the 

complexity of their medical condition, the likelihood they will be admitted to a 

hospital, their ‘‘frailty,’’ or the likelihood that they will be able to pay for services, among other things.’’ 31

This was a complex case that illustrates the complex nature of what constitutes 

data broker activities. The company, Accretive, wore many hats, from debt collector 

to data analytics. Data analytics such as complex scoring is one form of data broker 

activity. However, Accretive in this case did not fit the traditional mold of data 

broker as list seller. No outsider can tell if the company is internally violating restrictions in existing law. 

FICO’s Medication Adherence Score 

FICO’s Medication Adherence Score was launched in June, 2011, According to 

FICO, it is using variables from the marketing world: ‘‘. . . those variables include 

age, gender, family size and asset information—such as the likelihood of car ownership—data also used by direct marketing companies. FICO says that with only a 

patient’s name and address, it can pull the remainder of the necessary information 

from publicly available sources.’’ 32 FICO states that the score is used to determine 

reminder mailings for consumers. It is unknown if the uses for the score have expanded since its introduction. Historically, prescription reminder activity has been 

controversial. Those chosen for reminders have not always not been very happy 


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101 

33Weld v. CVS Pharmacy Inc., No. CIV. A. 98–0897, 1999 WL 1565175 (Mass. Super. Nov. 19, 

1999), aff’d, Weld v. Glaxo Wellcome, Inc., 746 N.E.2d 522 (Mass. 2001). 

about it.33 We suspect that prescription reminders are sent only to patients who 

have high-quality health plans and then only for high-priced, patent-protected 

drugs. That may be the type of information included in a score. 

General Conclusions about Consumer Scoring and Data Brokers 

I have mentioned above that the data business is changing and is becoming much 

more sophisticated. Consumer scores are a significant contributor to the change. 

Consumer scoring has substantial potential to become a major policy issue as scores 

with unknown factors and unknown uses and unknown legal constraints move into 

broader and broader use. 

Secrecy, fairness of the factors, accuracy of the models, the inclusion of sensitive 

information—these are some of the key issues that must be handled. It is exquisitely unlikely that self-regulation will solve the dilemmas consumer scoring introduces. However, the path for what could constitute fair regulation in this area is 

already established via the history of the credit score. 

Solutions 

To bring fairness, accuracy, and transparency to consumers regarding data broker 

activities, a multi-prong approach which addresses multiple aspects of the problems 

needs to be pursued. 

National data broker list 

The Federal Trade Commission or the Consumer Finance Protection Bureau 

should require the industry to maintain a current list of all data brokers, with full 

identification, description, and contact information. If industry cannot provide the 

needed transparency, the agencies should create the list on their own. 

National consumer data broker opt out requirement 

There is an urgent need for a national consumer data broker opt-out requirement. 

Consumers should be able to opt out at a central portal. Data brokers should be 

allowed to download the list of those who have opted out. Data brokers would then 

be responsible for scrubbing their lists. 

The opt out needs to be standardized, and could operate like Prescreen Opt Out. 

Consumers would opt out at a central portal, consumer data brokers would be able 

to download the list of those who had opted out, then data brokers would be responsible for using this dated list to scrub their lists. 

National opt out standards: 

• No use of opt out data for marketing purposes 

• Standardized language around opt out 

• Prominent placement on home page of a button or link that says opt out 

• Notice to consumers that an opt-out request has been received and acted upon 

• Due process rights for consumers denied an opt out 

• Consequences for data brokers that do not comply 

• Opt outs for all without cost or prerequisites and with simple procedures 

Reform and oversight of affiliate marketing of consumers’ personally identifiable 

data. Affiliate marketing of consumer information creates very significant challenges for consumers. The businesses selling the data should exercise appropriate 

and reasonable oversight. 

List brokers who are selling PII of consumers must allow consumers to see the lists 

they are on and opt out. If a consumer is on a list, why can’t the consumer be made 

aware of that? The list could be incorrect, and could have consequences if sold to 

an insurer or employer. 

The sale of lists that endanger lives or safety or wellness should be stopped. There 

are lists all of us should be able to agree should not exist. The lines can be drawn 

by regulatory agencies after consulting with consumers and industry 

No secret consumer scores, no unfair factors. There should full publication of data 

elements (but not weights) used in consumer scores, and all data elements used 

must be reasonable. 

The expansion of the FCRA to include modern eligibility options. Eligiblity uses 

of data have expanded. The law may need to be expanded so that proxy credit scoring or modeled credit scoring clearly fall under the law. There should also be limits 

on the use of sensitive information in scoring and on the sale of health data in all 

contexts. In addition, data brokers should be subject to strict disposal requirements 

102 

and time limits for all data held. Fair Information Practices should be applied to 

consumer data broker practices and lists. 

Better Enforcement: Civil and in some cases criminal penalties when there is a 

breach of the law. Private rights of action for aggrieved consumers should be allowed, togegther with effective enforcement and oversight by the FTC and CFPB. 

Conclusion 

I agree that the data broker industry is complex, as is our digital world, as are 

the lives of all of us who live in this world. But that is no excuse for avoiding the 

necessary discussions that will need to take place between all stakeholders. 

In this testimony, I have said many things. It can be summed up in this way: 

Individuals should have the right to stop harmful collection and categorization 

activity and to force the permanent and immediate expungement of all data 

that is factually incorrect, data that arrives at an incorrect conclusion about 

them, or data that influences decisions about a consumer in a negative way. 

This was the idea behind the Fair Credit Reporting Act of 1974. It was a good 

idea then, and the fundamental values remain the same today. 

Thank you for your attention to these matters. I welcome your questions, and will 

be happy to provide further research or input. 

The CHAIRMAN. Thank you, Ms. Dixon. And you are exactly right; 

this is the beginning of a dialog. And we need to probe deeply, 

without fear of consequence, and then we need to do something 

about it. That will be a judgment that we will have to make, but 

you have already suggested a change in HIPAA, which is, you 

know, it used to be very sacred and still is but not in all cases. So 

I thank you for your testimony. 

Professor Joseph Turow. Now, Dr. Turow is the Associate Dean 

for Graduate Studies, the Annenberg School for Communications at 

the University of Pennsylvania. 

STATEMENT OF JOSEPH TUROW, ROBERT LEWIS SHAYON 

PROFESSOR OF COMMUNICATION, ASSOCIATE DEAN FOR 

GRADUATE STUDIES, ANNENBERG SCHOOL FOR 

COMMUNICATION, UNIVERSITY OF PENNSYLVANIA 

Mr. TUROW. Thank you, Chairman Rockefeller, members of the 

Committee. 

In a bit of a different tack, I would like to address two key questions about data brokers and their collection of information about 

Americans for marketing purposes. 

First, if we take sensitive topics like health and employment out 

of the equation, what possible harm can come from using people’s 

data for marketing purposes? After all, what we are talking about 

is simply targeting for product advertising. 

Second, haven’t data brokers and their lists been around for over 

a century? And if so, what makes them today any different from 

the past? 

Let’s start with the history question. It is true that marketers 

compiled and bought lists of prospects way back into the 19th century. These lists became more detailed in the 20th century. But the 

differences between the lists of even 35 years ago and those of 

today is extreme. The biggest distinction is the amount of information brokers have now and how they deal with it. 

Lists of the old days were pretty static. The numbers of data 

points companies had about us was rather small. It was difficult 

to interconnect pieces of data, and the data didn’t change all that 

quickly. Today, data brokers can collect huge amounts of information about tens of millions, even hundreds of millions of people. 

103 

They update that information frequently. And they use high-speed 

computers and advanced statistics to draw conclusions in ways previous generations of data brokers could hardly imagine. 

Consider Acxiom’s recent data catalog. It contains 41 pages of information about individual Americans that Acxiom sells to marketers. That information ranges from the amount of money people 

make to the kinds of vacations they take, to the number of friends 

they have on social media, to the value of neighborhoods they live 

in, to diseases they have an interest in, to how tall they are, to 

whether they gamble, to their media uses and much more. Axiom 

sells any number of these items about individuals, as well as packages of these data, tailored to marketers from different industries. 

In addition, through its Acxiom Operating System, the data 

broker has created a kind of universal cookie to find and follow 

people across desktops, laptops, mobile phones, and tablets, as well 

as to collect yet more information about them from these media. 

Like Acxiom, other data brokers continually run programs that 

connect our dots for marketers and then attach them to other ideas 

the marketers have about us. The brokers often bring together 

pieces of information that people did not expect would be merged 

when they disclosed them separately to various online and offline 

entities. The results are buckets of descriptions and interpretations, stories of our lives, our economic value, and our potential 

that we don’t know exist and may not agree with. 

The consequences of their use in marketing can be profound and 

disturbing. For example, merchants can charge you more than others for products based on features they tag you with that you don’t 

even know you have shared. Say a data broker’s knowledge you 

regularly buy antacids blends into a complex algorithm to predict 

that you are inclined to accept higher prices for recreation than 

most people. That is great news to travel companies searching online for those types of people. 

Using apps and personalized coupons, physical and virtual stores 

can change their prices based on what they know about you. Data 

brokers can add information about your lifetime value to retailers’ 

understanding of you from receipts. The results can dictate the 

kinds of items you see at discount and how much that discount will 

be. 

Negative data broker signals about you can mean having to wait 

longer than others for customer service, being rejected as a valued 

customer, and being offered coupons for non-nutritious foods. 

Based on predictions of your engagement with the digital or addressable ads, media firms can change the news and entertainment 

offerings you receive compared to news and entertainment offerings 

your neighbor or coworkers get. The result: you systematically see 

different worlds from your friends or work colleagues because of 

the stories brokers tell about you. 

Now, many of these examples already are taking place. All of 

them are quite plausible. Data brokers trumpet that they often 

make the individuals they sell to marketers for ads anonymous so 

there is no problem. But anonymity of this sort is not reassuring. 

If I am followed online and offline by buckets of data that tell particular stories about me, it doesn’t matter if my name is Joe Turow 

or 2588704. 

104 

Anonymously and with our full personal information, data brokers are encouraging a world of data-driven social discrimination 

that is becoming widespread precisely because it comes with all 

sorts of advertising. 

Surveys I have conducted since 1999 consistently suggest Americans worry about what firms learn and think about them. Poignantly, I have heard people say they will change their activities or 

how they talk about themselves online to be treated better by marketers. The difficulty, of course, is that it is often impossible to 

know whether and how that is going to work. 

We are only at the beginning of a data-driven century. Data brokers will be central to how we think of ourselves and lead our lives. 

For the sake of democratic ideals and relationships, let’s limit what 

and how much data brokers can collect and share until, as a society, we know how to create regimes of data respect, where people 

have control over the most important elements of their identity. 

Thank you. 

[The prepared statement of Mr. Turow follows:] 

PREPARED STATEMENT OF JOSEPH TUROW, ROBERT LEWIS SHAYON PROFESSOR OF

COMMUNICATION, ANNENBERG SCHOOL FOR COMMUNICATION, UNIVERSITY OF

PENNSYLVANIA

I would like to address two key questions about data brokers and their collection 

of information about Americans for marketing purposes: 

First, haven’t data brokers and their lists been around for over a century and if 

so what makes today any different from the past? Second, if we take sensitive topics 

like health treatments and employment issues out of the equation—which many 

agree should be done—what possible harm can come by using people’s data for marketing purposes? After all, what we’re talking about is simply targeting for product 

advertising. 

Let’s start with the history question. It is true that marketers compiled and 

bought lists of prospects way back into the 19th century. These lists became more 

detailed into the 20th century. But the difference between list of even 35 years ago 

and those of today is extreme. The biggest distinction is the amount of information 

brokers have and how they deal with it. Lists of the old days were pretty static. 

The numbers of data points companies had about us was rather small, it was difficult to interconnect pieces of data, and the data did not change all that quickly. 

Today’s data brokers can collect huge amounts of information about tens of millions, 

even hundreds of millions, of people. They update that information frequently, and 

they use high-speed computers and advanced statistics to draw conclusions in ways 

previous generation of data brokers could hardly imagine. 

Consider Acxiom’s recent data catalog, which was available online until the company abruptly took it off a number of months ago. It contains 41 pages of information about individual Americans that Acxiom sells to marketers. That information 

ranges from the amount of money the people make, to the kinds of vacations they 

take, to the number of friends they have on social media, to the value of the neighborhoods they live in, to diseases they have an interest in, to how tall they are, to 

whether they gamble, to their media usage, and much more. Axiom sells any number of these items about individuals as well as packages of these data tailored to 

marketers from different industries. In addition, through its Axiom Operating System the data broker has created a kind of universal cookie to find and follow people 

across desktops, laptops, mobile phones, and tablets as well as to collect yet more 

information about them from these media. 

Like Acxiom, other data brokers continually run programs that connect our dots 

for marketers—and then attach them to other ideas the marketers have about us. 

The brokers often bring together pieces of information that people did not expect 

would be merged when they disclosed them separately to various online and offline 

entities. The results are buckets of descriptions and interpretations—stories—of our 

lives, our economic value, and our potential that we don’t know exist and may not 

agree with. The consequences of their use in marketing can be profound and disturbing. For example: 

105 

• Merchants can charge you more than others for products based on features they 

tag you with that you don’t even know you’ve shared. Say a data broker’s 

knowledge you regularly buy antacids blends into a complex algorithm to predict that you are inclined to accept higher prices for recreation than most people. That’s great news to travel companies searching online for those types of 

people. 

• Using apps and personalized coupons, physical and virtual stores can change 

their prices based on what they know about you. Data brokers can add information about your ‘‘lifetime value’’ to retailers’ understanding of you from receipts. 

The result can dictate the kinds of items you will see at discount and how much 

that discount will be. 

• Negative data broker signals about you can mean having to wait longer than 

others for customer service, being rejected as a valued customer, and being offered coupons for non-nutritious foods. 

• Based on predictions of your ‘‘engagement’’ with the digital or ‘‘addressable’’ 

ads, media firms can change the news and entertainment offerings that you receive compared to the news and entertainment neighbors or coworkers get. The 

result: you systematically see different worlds from your friends or work colleagues because of the stories brokers tell about you. 

Many of these examples are already taking place. All of them are quite plausible. 

Data brokers trumpet that they often make the individuals they sell marketers for 

ads anonymous, so there is no problem. But anonymity of this sort is not reassuring. 

If I am followed online and offline by buckets of data that tell particular stories 

about me, it doesn’t matter if my name is Joe Turow or 2588704. Anonymously and 

with our full personal information, data brokers are encouraging a world of datadriven social discrimination that is becoming widespread precisely because it comes 

with all sorts of advertising. Surveys I have conducted since 1999 consistently suggest Americans worry about what firms learn and think of them. Poignantly, I have 

heard people say they will change their activities or how they talk about themselves 

online to be treated better by marketers. The difficulty, of course, is that it’s often 

impossible to know what will work. 

We’re only at the beginning of a data-driven century. Data-brokers will be central 

to how we think of ourselves and lead our lives. For the sake of democratic ideals 

and relationships, let’s limit what and how much data brokers can collect and share 

until as a society we know how to create regime of data respect where people have 

control over the most important elements of their identity. 

The CHAIRMAN. Thank you very much. 

Mr. Hadley, Tony Hadley, is Experian’s Senior Vice President of 

Government Affairs and Public Policy. 

Please. We welcome you. 

STATEMENT OF TONY HADLEY, SENIOR VICE PRESIDENT OF 

GOVERNMENT AFFAIRS AND PUBLIC POLICY, EXPERIAN 

Mr. HADLEY. Thank you, and good afternoon, Chairman Rockefeller and members of the Committee. My name is Tony Hadley, 

and I am Experian’s Vice President of Government Affairs and 

Public Policy. 

Experian is a leading provider of data and information services 

that bring significant value to consumers and the economy. We 

welcome the Committee’s interest and dialog in the marketing data 

industry and this opportunity to describe how Experian collects 

and uses data. 

I have submitted a fuller statement, but I am going to summarize just a couple points. 

First, Experian truly believes that responsible information-sharing significantly enhances economic productivity in the United 

States and provides many benefits to consumers. Economists have 

called the manner in which U.S. companies collect and share consumer information among affiliated companies and third parties 

106 

the secret ingredient to our productivity, innovation, and ability to 

compete in the global marketplace. 

Experian shares data to help make consumers and small-business lending more efficient. We share to help facilitate access to 

fair and affordable credit; to help protect consumers from fraud, including identity theft; to help consumers gain greater financial literacy; and to help companies reach consumers with timely and relevant communications and marketing offers. Marketing data, in 

particular, brings lowers prices and greater convenience to consumers by strengthening competition. 

Nonprofit organizations and government agencies also depend 

upon consumer data to efficiently serve the needs of people and 

citizens. And just as important, Experian’s data allows small companies, including many in the state of West Virginia and the other 

states around the nation, to compete with larger companies who 

maintain very sizable customer data bases. So Experian provides 

small businesses with the same data sets that their larger competitors have so that they can compete and grow their companies. 

A significant point I would like to make also is that the operations of Experian Marketing Services and the data it collects and 

uses and shares is completely separate from Experian’s operations 

as a consumer credit bureau. No eligibility determinations relating 

to credit, insurance, employment, housing, or any other decision 

under the FCRA is ever made with Experian marketing data. 

Experian has in place strict policies as well as technological, management, and procedural controls to ensure there is complete separation. 

Experian shares data responsibly by carefully safeguarding compliance with all privacy and consumer protection laws and industry 

self-regulatory standards. We even promote new industry self-regulatory standards and best business practices. 

The Committee has also sought specific information about our 

clients and our data sources. Experian provides marketing data to 

a wide variety of client organizations in the private, government, 

and nonprofit sectors that market to consumers through multiple 

channels, both online and offline. The largest sectors we serve are 

retail, media, and financial services, but our products are used by 

nearly all sectors of the economy. 

Experian uses include the sources for specific products in which 

the Committee has expressed interest. Most of our data comes from 

public records and publicly available information such as ZIP-codelevel census information, local property records, and telephone directories. Added to this, many people voluntarily provide data to 

Experian by filling out surveys and questionnaires. 

These multiple sources of data are aggregated at the household 

level, then analyzed and modeled to predict household preferences 

and propensities. Such methods result in a group of consumers receiving messages and advertising that they are more likely interested in responding to. When all is said and done, we help marketers make the best guess about what messages and marketing solicitations a group of consumers may be most interested in responding 

to. 

Finally, I want to emphasize that Experian has made every effort 

to be forthcoming and cooperative throughout the inquiry launched 

107 

by the Committee this year. We have spent considerable time and 

resources to ensure that the information and documents we have 

provided are helpful to the Committee’s work in understanding the 

marketplace. To date, Experian has provided the Committee with 

eight submissions, totaling over 3,000 pages. And we believe this 

provides a full description of our products, services, and consumer 

protections. 

We are here today as the only corporate representative in that 

spirit of cooperation to help the Committee better understand our 

role in data services and the role we play in the economy and the 

lives of consumers. 

We thank you for your attention and for inviting us to appear 

here, and we look forward to continuing to work with you. And I 

will answer any questions the Committee might have. Thank you. 

[The prepared statement of Mr. Hadley follows:] 

PREPARED STATEMENT OF TONY HADLEY, SENIOR VICE PRESIDENT OF GOVERNMENT

AFFAIRS AND PUBLIC POLICY, EXPERIAN

Good afternoon, Chairman Rockefeller, Ranking Member Thune, and members of 

the Committee. My name is Tony Hadley and I am Experian’s Senior Vice President 

of Government Affairs and Public Policy. Experian is a leading provider of data and 

information services that bring significant benefits to individual consumers, the 

economy and society as a whole. We welcome the Committee’s interest in the marketing data industry and this opportunity to describe to the Committee how 

Experian obtains and uses data. I would like to raise a few key points at the outset 

of my testimony today. 

First, Experian believes responsible information sharing significantly enhances 

economic productivity in the United States and provides many benefits to consumers. Economists have called the manner in which U.S. companies collect and 

share consumer information among affiliated entities and third parties the ‘‘secret 

ingredient’’ to our productivity, innovation and ability to compete in the global marketplace. One needs only to look at data-intensive industries like telecommunications, information technology, online services, financial services, retail and health 

care to see this innovation at work. Indeed, Experian data products and services are 

central to countless transactions within these vital business sectors. 

Experian also shares data to help make consumer and small business lending 

more efficient; to help facilitate access to fair and affordable credit; to help protect 

consumers from fraud, including identity theft; to help facilitate greater financial 

literacy among consumers; and to help companies reach consumers with timely and 

relevant communications and marketing offers. 

A second significant point I would like to make is that the operations of Experian 

Marketing Services and the data that it collects, uses and shares are completely 

separate from Experian’s operations as a consumer credit bureau. No eligibility determinations relating to credit, insurance, employment, housing or other decisions 

covered by the Fair Credit Reporting Act are made with Experian marketing data. 

Experian has in place strict policies, as well as technological and procedural controls, to ensure this complete separation. 

At the Committee’s request, and in recognition that credit data differs from marketing data, Experian’s responses to the Committee’s inquiry have focused on our 

operations involving data for marketing purposes. That is what I will speak to for 

the remainder of my testimony. 

Marketing data, in particular, brings lower prices and greater convenience to consumers by strengthening competition. Both large and small businesses rely on data 

to make their marketing efforts more efficient and to identify new customers. Nonprofit organizations and government agencies also depend upon consumer data to 

efficiently serve the needs of people and citizens and to enable e-government. For 

the Internet, this has meant providing more and improved content to consumers. 

Consumers also benefit from receiving relevant advertising offers that they are more 

likely to value and use. Marketing data is a critical driver behind the growth and 

efficiency of e-commerce. 

Importantly, Experian’s data allows small companies, including many in the state 

of West Virginia and throughout the country, to compete with larger companies that 

maintain sizeable customer data assets of their own. Experian Marketing Services 

108 

helps small businesses to successfully identify new customers, thereby establishing 

and fueling successful businesses. 

Experian shares data responsibly—by carefully safeguarding compliance with all 

privacy and consumer protection laws and industry self-regulatory standards, advancing and observing industry best practices, and establishing and monitoring adherence to our own corporate policies and practices. These ‘‘best practices’’ help balance the benefits to consumers that result from information sharing while responding to legitimate concerns consumers may have about how information about them 

is collected, shared, used and protected. 

Marketing data differs in important ways from consumer credit data. Experian’s 

marketing data is drawn primarily from public records and other publicly available 

sources and includes data that is ‘‘modeled’’ or predicted rather than actual, raw 

data from consumers. In addition, we strive for the highest standards of data quality. It is also important to recognize that the only negative consequence to consumers of inaccurate marketing information would be the possibility of 

uninteresting advertising and marketing. For this and other reasons, the Federal 

Trade Commission has recommended that it is not necessary to require consumer 

disclosure and correction for consumer data used only for marketing purposes. 

As described in our materials provided to the Committee, Experian has a robust 

internal compliance program designed to ensure that marketing data is only used 

for marketing purposes. Experian’s marketing data assets are regulated under many 

different authorities such as Section 5 of the Federal Trade Commission Act, the 

Controlling the Assault of Non-Solicited Pornography and Advertising (CAN–SPAM) 

Act, the National Do Not Call Registry, the Children’s Online Privacy Protection Act 

(COPPA), and comparable state laws and regulations. The Direct Marketing Association’s Guidelines for Ethical Business Practice provide an additional foundation 

for our compliance approach to marketing data. Further, Experian’s global corporate 

information values—balance, accuracy, security, integrity and communication—formally guide our data collection and use practices. Our global information values 

align with the fair information practices and principles embraced by the FTC and 

other international organizations, including the OECD, the European Union and 

APEC. 

Finally, I want to emphasize that Experian has made every effort to be forthcoming and cooperative throughout the inquiry launched by the Committee over a 

year ago. We have consistently been assured that this inquiry aims to build a general understanding within the Committee of the marketing data ecosystem. We have 

also been active in policy dialogues promoting effective data security and privacy 

principles for all data. We have spent considerable time and resources to ensure 

that the information and documents we have provided are helpful to the Committee’s work in understanding the marketplace. To date, Experian has provided the 

Committee with eight submissions totaling over three thousand pages, which we believe should provide a full description of our products, services and consumer protections. We have also met with the offices of the Senators on the Committee to describe our practices and respond to any questions about our company, products and 

services. We are here today, in the spirit of cooperation, to help the Committee better understand the role our data services play in the economy and in the lives of 

consumers. 

The Committee has also sought specific information about our clients and our 

data sources, so I would like to provide a few details about the categories and nature of each. As I just mentioned, Experian has already provided a great deal of information and internal documents, some of which we regard as competitively sensitive, to explain the types and categories of clients we serve. 

These include client organizations in the private, government and non-profit sectors that communicate and market to consumers through multiple channels including direct mail, catalog, telephone, e-mail, mobile, Internet display ads, social 

media, highway billboards, newspapers and other publications. The largest sectors 

we serve are retail, media and financial services. We also provide marketing services to clients involved in automotive, professional services, telecommunications, 

consumer goods, healthcare, travel, insurance, utilities, education and politics. In 

total, Experian’s data and services are used by all sectors of the economy. 

We have also provided to the Committee details on the categories of data sources 

we use, including the sources for specific products in which the Committee has expressed interest. As I previously stated, a good deal of our data comes from public 

records and publicly available information such as ZIP-code level Census information that does not identify specific individuals, local property records, and telephone 

and similar directories. Added to this, many people voluntarily provide data to 

Experian by filling out surveys and questionnaires, both online and offline, which 

contain clear disclosures of the fact that information that the individual provides 

109 

will be used for marketing purposes. Some selected business partners also provide 

Experian consumer information after they have gained appropriate consent from the 

consumer or have de-identified or modeled customer data at the ZIP-code level. 

These multiple sources of data are often aggregated at the household level, then 

analyzed and modeled to predict household preferences and propensities. The analysis is aimed largely at helping marketers understand key segmentation factors 

such as approximate age, gender, education level, family size and estimated family 

income. Marketers can then use these key demographic segments and propensity 

models in combination with their own customer data to tailor relevant messages to 

existing or potential customers. Such age-old methods result in a group of consumers receiving messages and advertising that they are more likely interested in 

and will respond to—benefiting the consumer and the business. When all is said and 

done, we help marketers make the ‘‘best guess’’ about what messages and marketing 

solicitations a group of consumer may be most interested in responding to at the 

time they are interested. 

Finally, Experian has shared materials on our range of marketing products and 

services, on how we assure the quality and integrity of our data, and on numerous 

other topics. In particular, we have informed the Committee about the robust privacy framework that Experian has in place to ensure that regulated data is used 

only for permissible purposes, while marketing data is used only for marketing purposes. To maintain this strict division, Experian uses a combination of measures 

such as dedicated compliance teams, employee training, and contractual restrictions 

including audit rights. With respect to marketing products in particular, Experian’s 

compliance team uses auditing steps such as mail piece review and list ‘‘seeding’’ 

to monitor how data is used by clients. 

We have also shared with the Committee information about the consumer protections we provide for marketing data, including offering consumers transparency 

about our practices through privacy statements and the option to suppress the use 

of their data for various types of marketing solicitations. 

Thank you for your attention, and for inviting me to appear before the Committee. 

I look forward to answering any questions the Committee may have. 

The CHAIRMAN. Thank you, Mr. Hadley, very much. 

I want to get this right: Jerry Cerasale. Did I do it right? 

Mr. CERASALE. You did it correctly. Thank you. I appreciate it. 

The CHAIRMAN. I am thrilled. 


1218POST1.eps
110 

You are the Senior Vice President of Government Affairs for the 

Direct Marketing Association, DMA. We welcome your testimony. 

STATEMENT OF JERRY CERASALE, SENIOR VICE PRESIDENT 

OF GOVERNMENT AFFAIRS, DIRECT MARKETING ASSOCATION 

Mr. CERASALE. Thank you. Senator Rockefeller, members of the 

Committee, DMA appreciates the opportunity to be here today and 

to talk about this important subject. 

On a personal note, I want to say that I have testified before this 

committee many times, I have testified before other committees before Congress, and today, on my last day of work before I retire, 

I want to thank Congress for the opportunities they have given me 

to participate in dialog here before the Congress. And I appreciate 

it. 

Senator Rockefeller, I will not be here when you retire at the end 

of this Congress, so I want to say personally we thank you for your 

service to the United States. 

Now back to why I am here today, talking about data. Data—— 

The CHAIRMAN. Are we allowed to ask you questions, or is 

your—— 

[Laughter.] 

Mr. CERASALE. Yes, you can ask questions. Sadly, they know 

where to find me to get the questions to me. They say I am a phone 

call away, and I have promised that they can call me. I didn’t 

promise I would answer the phone, but that is beside the point. 

[Laughter.] 

Mr. CERASALE. Anyway, data. Every consumer-facing business in 

the United States uses data today. It is important, it drives our 

economy, it is driving our current recovery. And it is very, very important to us and to our members. 

And in that light, DMA has created the Data-Driven Marketing 

Institute, and it has commissioned a study to take a look at the 

value of data and the uses of data in the American economy. And 

we used a professor from Harvard Business School and a professor 

from Columbia University, and they conducted this value-of-data 

study and found that data is worth $156 billion a year to the American economy, 675,000 jobs, and 70 percent of that influence is related to sharing of data by companies. 

But even more importantly, this data-sharing helps small businesses. It helps break down the barriers to entry so small businesses can come in and compete with the big boys. And it keeps 

them, once they get a foothold, it keeps them on a level playing 

field. 

But this is not new. This has been happening for a long time. I 

will give you a couple of examples. L.L. Bean started with a list 

of nonresident Maine hunters, and that is how that started. The 

Discover card, which is one of the first credit cards that was a reward credit card, began with a list of Sears credit holders. Without 

those lists, those companies wouldn’t have started, those benefits 

from those two companies would not have been realized. So it is 

important. 

It is personal information that is used. And the United States 

has some strong privacy laws: Fair Credit Reporting Act, Children’s 

Online Privacy Protection Act, CAN–SPAM, HIPAA, GLB, Data 

111 

Pass, and so forth. And those laws are complemented by self-regulation by the industry. 

And I can speak only for DMA here. DMA has a peer ethics committee that meets monthly, handles complaints from consumers 

and other businesses that are brought to it against members and 

non-members. Most of them comply with our guidelines. Those that 

don’t, we publicize them on the webpage. If there is a violation of 

law, we turn it over to the state AGs, to the Federal Trade Commission, to the Postal Inspection Service, to law enforcement. 

And as we have looked at this, the Federal Trade Commission 

has said that they support this complementary effort by self-regulation, and we want to continue that. And we continually at DMA update these guidelines so that they are alive and meet today’s realworld efforts. 

One of the things that we can talk about, however, that all of 

this is, in fact, working. The American consumers are voting with 

their pocketbooks and their feet, and e-commerce is growing, growing multiple times the rest of the economy, because they have trust 

in this process. And think about it; they need trust. They are purchasing something without having it on hand and paying for it before they receive it. They need to have that trust. And this economy, this data-driven economy is, in fact, working. 

Think about the great American success story, and I mean really 

great American success story, Amazon. On Cyber Monday, it sold 

300 items per second. That shows that Americans have confidence 

in this. Their needs as American consumers are being met in this 

data-driven economy. 

There are clearly concerns. There are concerns about what is 

happening. You have heard them; it is in the report and others. We 

have heard them today. We should focus on the improper use of 

data and figure out how to prevent the improper use of data. 

But one of the things we can’t do is pull away and stop responsible uses of data that are driving this economy. That is something 

that we have to be very careful of as part of this dialog we are having today. The American economy, small businesses, American 

workers, and American consumers rely on and benefit from responsible data use. And America leads the world in that category, and 

we hope to keep it that way. 

Thank you very much for this opportunity. I look forward to answering any of your questions. 

[The prepared statement of Mr. Cerasale follows:] 

PREPARED STATEMENT OF JERRY CERASALE, SENIOR VICE PRESIDENT OF

GOVERNMENT AFFAIRS, DIRECT MARKETING ASSOCIATION

I. Introduction 

Chairman Rockefeller, Ranking Member Thune, and members of the Committee, 

good afternoon and thank you for the opportunity to testify before you today. 

My name is Jerry Cerasale. I am the Senior Vice President of Government Affairs 

for the Direct Marketing Association (‘‘DMA’’), the world’s largest trade association 

dedicated to advancing and protecting responsible data-driven marketing. Today, I 

am pleased to testify on behalf of the DMA and to discuss with the Committee the 

important role that marketing data and database compilers play in aiding consumers and fueling the United States economy. 

Founded in 1917, the DMA (www.thedma.org) represents thousands of companies 

and nonprofit organizations that use and support data-driven marketing practices 

and techniques. On behalf of its member companies, the DMA advocates industry 

112 

1Deighton and Johnson, The Value of Data: Consequences for Insight, Innovation & Efficiency 

in the U.S. Economy (2013), available at http://ddminstitute.thedma.org/#valueofdata (hereinafter ‘‘The Value of Data’’). 2The Value of Data at 74. 3The Value of Data at 21. 4The Value of Data at 53–54. 5The Value of Data at 78. 

standards for responsible marketing; promotes relevance as the key to reaching consumers with desirable offers; and provides cutting-edge research, education, and 

networking opportunities to improve results throughout the end-to-end direct marketing process. 

My testimony today will describe the value that marketing data has across the 

U.S. economy and affords to consumers. I will also explain how marketing data is 

collected and how DMA members, including data compilers, responsibly use and 

share this data to serve consumers. Lastly, I will explain how DMA and its member 

companies are subject to our longstanding and enforceable self-regulatory framework, the DMA Guidelines for Ethical Business Practice (‘‘DMA Guidelines’’). 

II. The Value of Data 

Responsible collection and sharing of marketing data is critical to today’s information economy. When data is used to fuel data-driven marketing, these practices provide many benefits for job growth, entrepreneurship and innovation, as well as to 

individual consumers. 

A. The Value of Data to the U.S. Economy and American Workforce 

A recent study entitled, The Value of Data: Consequences for Insight, Innovation 

& Efficiency in the U.S. Economy (‘‘Value of Data’’), quantifies the critical role that 

the use and sharing of marketing data plays in fueling economic growth.1 Commissioned by DMA’s Data-Driven Marketing Institute and conducted independently by 

Professors John Deighton of Harvard Business School and Peter Johnson of Columbia University, the study revealed that the Data Driven Marketing Economy 

(‘‘DDME’’) generated $156 billion in revenue to the United States economy and 

fueled more than 675,000 jobs in 2012 alone. Further, the study found that an additional 1,038,000 people owe their employment to these DDME jobs.2 The study estimated that 70 percent of the value of the DDME—$110 billion in revenue and 

475,000 jobs nationwide—depends on the ability of firms to share data across the 

DDME. If this ability to share data were curtailed, those jobs and revenue would 

be impacted and the U.S. economy would be much less efficient. 

The DDME is a uniquely American creation, and today data-driven marketing is 

an important U.S. export. Just as the United States led the world when Montgomery Ward developed the first mail order catalog in 1872, and created digital 

market-making media by commercializing the Internet browser in the 1990s, today 

the United States is at the forefront of data-driven market growth. The Value of 

Data study found that the United States leads the world in data science applied to 

the marketplace, with DDME firms deriving up to 15 percent of their revenue overseas, while employing nearly all of their workers inside the United States.3

The Value of Data study also found that database compilers are an important 

piece of the DDME. For instance, list services and database marketing input providers added $7 billion and 31,000 jobs to the United States economy.4 They were 

able to do this by combining data that they receive from various sources to create 

marketing opportunities. Database compilers derive most of their economic effect 

from their ability to share this data with marketers that, in turn, can provide consumers with more relevant advertisements. 

B. The Value of Data to Entrepreneurship and Innovation 

The use of data inspires new technological designs and fosters entrepreneurship 

in the process. According to the Value of Data study, the bridge between an idea 

and its implementation at scale is considerably shorter in an information economy 

than in an industrial economy.5

The DDME, and the services offered by database compilers, are essential to the 

success of start-up companies and other small businesses. The Value of Data study 

found that the sharing of data across the DDME enables small and innovative businesses to compete effectively with big players, launching innovative offerings using 

data. Data gives all companies, and especially small businesses, the ability to effectively match products to customers both online and offline, thereby lowering barriers to market entry for specialized or niche offerings that previously could not 

have succeeded. 

113 

6The Value of Data at 75. 

C. The Value of Data to Individual Consumers and Companies 

Consumers demand personalization, and enterprises that know their customers 

better can also serve them better. Data-driven marketing is about discerning what 

customers want and need and engineering the company to provide it. Consumers 

benefit from companies’ responsible collection and analysis of user data by receiving 

timely and relevant offerings through the marketplace and products designed to 

meet their needs. In this way, consumers enjoy a more informed and effective shopping experience, which saves them both time and money. 

According to the Value of Data study, the efficiency that data brings to the practice of marketing also bears directly on consumer welfare. Marketing absorbs a significant percentage of manufacturer revenues, meaning that marketing costs can increase the price that consumers pay for food and household products by up to $25 

in every $100 spent. When marketing is informed by data, it is more efficient and 

some of this value flows back to consumers in the form of lower prices.6

In short, the flow of data throughout the DDME is creating consumer-driven companies. Data sharing promotes competition and entrepreneurship. In the process, 

jobs are created across the United States and consumers are exposed to an array 

of new products and services that would be unavailable or unknown to them absent 

data-driven marketing. 

III. The Responsible Collection and Use of Consumer Data 

Marketing data comes through a variety of sources. It is analyzed by marketers 

to make predictions about likely consumer preferences to guide marketing campaigns. 

A. Marketing Data Collected Directly from Consumers 

A common source of marketing data is data obtained by businesses from direct 

interaction with customers. When a customer purchases goods in a local store or 

shops online, data about that purchase is gathered by the marketer. Marketers use 

data from other sources, including information from public records and other publicly-available sources, such as U.S. Census data. Marketing data may also include 

self-reported information that consumers choose to provide through surveys. Marketing data does not include the types of information that create a risk of identity 

theft or fraud to consumers, such as financial account numbers or social security 

numbers. 

B. Responsible Uses of Marketing Data 

Marketers use marketing data to understand their existing customers better or 

to identify prospective new customers, in order to predict what types of offers are 

most likely to be valued by them. For example, a local hardware store would want 

to send a coupon for a discount on a lawnmower to a new home buyer with a lawn 

and a different coupon for paint to a condominium buyer. Data will help this small 

business to be more efficient in its advertising and provide more value to consumers. 

Marketers may also use data to make other decisions related to their businesses, 

such as what products to develop and offer in the future or where to locate new retail outlets. 

Data used for marketing is also ‘‘modeled’’ or inferred information that represents 

a statistical prediction about consumers and does not necessarily reflect the actual 

characteristics of one consumer or household. For example, based on public property 

records and U.S. Census data that is aggregated at the Zip Code or census tract 

level, database compilers may estimate the average age of a dwelling in a certain 

ZIP code. Marketers, such as a local roofing company, can then use this information 

to make offers that are more likely to be valuable to households in that ZIP code. 

C. Marketing Data is Not Used for Eligibility Purposes 

It is important to note that there is a difference between using data for marketing 

purposes and using data for eligibility purposes. The use of data for eligibility decisions related to credit, insurance, and employment is regulated by the Fair Credit 

Reporting Act (‘‘FCRA’’). The FCRA requires companies that make such decisions 

to offer consumers certain disclosures about, and access to, the data used to make 

those decisions. 

In contrast, the use of data for marketing purposes is not used to make decisions 

that impact whether a consumer can obtain credit. The Federal Trade Commission 

(‘‘FTC’’) agrees that entities that maintain data for marketing purposes do not need 

to provide consumers with individualized access to marketing data, unlike consumer 

114 

7Protecting Consumer Privacy at 65–66. 8See Digital Advertising Alliance’s Self-Regulatory Principles for Multi-Site Data (2011), available at http://www.aboutads.info/resource/download/Multi-Site-Data-Principles.pdf. 

report data.7 Instead of determining a consumer’s ability to receive a loan or get 

a job, the use data for marketing purposes determines which coupon or advertisement he or she receives. The FCRA recognizes the difference in these uses, which 

is why marketing is not included in the types of activity that require increased levels of disclosure and access. 

In addition, some policymakers have raised concerns that data collected for advertising purposes could be used as a basis for employment, credit, health care treatment, or insurance eligibility decisions. In fact, these are hypothetical concerns that 

do not reflect actual business practices. Nevertheless, industry has stepped forward 

to address these concerns by expanding its codes of conduct to clarify and ensure 

that such practices are prohibited and will never occur.8 This prohibition will help 

to ensure that consumers’ browsing histories will not be used against them when 

applying for a mortgage, job, or insurance, or when seeking health care. 

IV. The Value of Self-Regulation in the Data-Driven Marketing Economy 

The DMA and its members are firmly committed to advancing responsible data 

practices across the DDME. Our members deeply value consumer trust and understand that responsible data practices are critical to building and maintaining customer relationships. To that end, the DMA believes that self-regulation and education are important components for addressing consumer privacy while ensuring 

that data flows continue to benefit consumers and the economy. 

A. The DMA Guidelines for Ethical Business Practice 

The DMA has a longstanding and enforceable self-regulatory framework. The 

DMA, working with its members, implements and enforces a set of best practices 

known as the Guidelines for Ethical Business Practice (‘‘DMA Guidelines’’). The 

DMA Guidelines, which have been in place for more than four decades and are a 

condition of membership in the DMA, provide DMA member companies with standards for responsible marketing practices by explaining how companies should provide transparency, choices, and other protections to consumers. The DMA regularly 

updates its guidelines to adapt to new technologies and marketing practices. 

There are more than 50 code sections in the DMA Guidelines that regulate marketing data practices. I would like to focus on a few key examples relevant to the 

subject of this hearing, and to database compilers in particular. 

1. Transparency 

Transparency around data practices is a core principle of the DMA Guidelines. 

For example, privacy policies are the primary way that companies provide consumers with information about their data practices. These polices typically provide 

consumers with detailed information regarding what data is collected, how it is 

used, and the choices that may be available to consumers. The DMA Guidelines require that these policies be made accessible via online and offline channels, and be 

easy to read and understand. The DMA Guidelines also require members to periodically keep existing customers aware of the nature of the use of their data, and how 

that use may have changed. 

2. Choice 

DMA members have long offered consumers the ability to opt out of marketing. 

The DMA Guidelines require data-driven marketers to honor within 30 days any request by a consumer to opt out of any use or sharing of their data for marketing 

purposes. 

In addition to the choices available from individual member companies, the DMA 

offers a centralized choice tool for consumers at DMAchoice.org. This service allows 

consumers to opt out of direct mailings and to refine what categories of mail they 

receive. Also at this website, consumers can remove their e-mail address from national mailing lists. Through these programs, the DMA provides consumers with an 

easy way to make informed choices about the marketing they wish to receive. 

The DMA’s commitment to consumer choice also extends to online interest-based 

advertising. The DMA Guidelines require third party data collectors to provide consumers with the ability to exercise choice with respect to the collection, use and 

transfer of information for online interest-based advertising purposes. This choice 

must be provided online and made available to consumers as specified in the DMA 

Guidelines. 

115 

9Direct Marketing Association, DMA Guidelines for Ethical Business Practice at Article 36, 

available at http://thedma.org/compliance/. 10Direct Marketing Association, DMA Annual Ethics Compliance Report 2012–2013 (2013), 

available at http://thedma.org/compliance/. 

3. Access 

Consistent with the FTC’s views on individualized access to marketing databases, 

the DMA Guidelines do not require members to allow consumers to access individual records within marketing databases. The DMA agrees with the FTC that the 

costs of providing such access would outweigh the consumer benefits. The DMA is 

also concerned that in order to allow consumers the ability to access and correct 

data, marketers would have to collect and store additional personally identifying 

data needed to authenticate consumers prior to access. In addition, as noted, much 

marketing data is actually modeled or predicted data that would not be meaningful 

to consumers. The DMA therefore believes that its current guidelines around transparency and choice strike the correct balance between consumer control and marketing needs to encourage the continued growth and success of the DDME. 

4. Guidelines Specific to Database Compliers 

The DMA Guidelines include a section outlining specific requirements for database compilers that assemble and share personally identifiable information about 

consumers but do not have direct relationships with those consumers.9 For example, 

these compilers must, when requested by a consumer, suppress that consumer’s 

data from marketing databases. They must also disclose the nature and sources of 

a consumer’s data upon request, and they must allow their marketing customers to 

divulge the compiler as the source of their marketing data. The database compiler 

must additionally monitor the use of their databases to assure compliance with the 

law and the DMA Guidelines. A database compiler that discovers a violation of the 

law or the DMA Guidelines may not ‘‘turn a blind eye’’ but should stop providing 

data to that customer and either require compliance and/or refer the matter to the 

DMA or law enforcement. 

B. Enforcement 

The DMA has a long history of proactive and robust enforcement. The DMA 

Guidelines have been applied to hundreds of direct marketing cases concerning deception, unfair business practices, personal information protection, and other ethics 

issues. The DMA enforces compliance with the DMA Guidelines upon both DMA 

member and nonmember organizations across the DDME. In addition, companies 

that represent to the public that they are DMA members but fail to comply with 

the DMA Guidelines may be liable for deceptive advertising under Section 5 of the 

FTC Act and comparable state laws. 

The DMA receives matters for review in a number of ways: from consumers, member companies, non-members, and consumer protection agencies. Complaints referred to the DMA’s Ethics Operating Committee are reviewed against the DMA 

Guidelines and if a potential violation is found to exist, the company will be contacted, investigated, and advised on how it can come into full compliance. Most companies work with the Ethics Operating Committee voluntarily to cease or change 

the questioned practice. 

However, if a member company does not cooperate and the Ethics Operating Committee believes there are ongoing violations of the DMA Guidelines, it can recommend that action be taken by the Board of Directors and can make case results 

public. For example, in the period spanning February 2012 through June 2013, the 

DMA Corporate & Social Responsibility Committee reviewed 55 cases and 12 of 

these were made public. Additional Board actions could include public censure, suspension or expulsion from DMA membership. The DMA also refers cases to Federal 

and state law enforcement authorities for review when appropriate. 

C. Business and Consumer Education 

To help educate marketing professionals, regulators, and other interested parties 

about the DMA Guidelines, the DMA regularly issues a case report that summarizes 

questioned direct marketing promotions and how enforcement cases were administered.10 The DMA also provides member education regarding the DMA Guidelines 

through webinars, in-person seminars, and regular written communications to members. 

In addition to educating member companies about their responsibilities under the 

DMA Guidelines, the DMA frequently offers conferences, webinars, courses, seminars, and written materials to keep companies up to date about new legal and policy 

116 

developments. These efforts help companies, especially small businesses, to comply 

with the host of restrictions that govern data-driven marketing. 

Finally, the DMA commits resources to educating consumers directly about marketing practices and the choices available to consumers. A section of our website is 

dedicated to ‘‘Consumer Help’’ and provides consumers with access to the centralized DMAChoice.org tool for managing their direct mail and e-mail preferences as 

well as a wealth of information about how marketing works. 

The Value of Data has helped us to quantify what marketers have long known— 

the use and sharing of data for marketing provides tremendous benefits for the U.S. 

economy and the American workforce, for small and large businesses, and for individual consumers and society as a whole. 

Thank you again for inviting me to testify today, and I look forward to answering 

questions from the Committee. 

The CHAIRMAN. Thank you very much, sir. 

I will start out the questioning, and then we will do it according 

to order of arrival. 

Mr. Hadley, one of the products that your company sells to marketers is called ‘‘ChoiceScore.’’ This product targets what you call 

‘‘underbanked’’ consumers. Let me read your description of the 

underbanked consumers: new legal immigrants, recent graduates, 

widows, those with a generation bias against the use of credit, followers of religions that historically have discouraged credit, and 

consumers with transitory lifestyles, such as military folks. 

Mr. Hadley, the populations in this group are very vulnerable to 

financial scams. We have experienced that in this committee because we have done hearings about that, particularly near military 

bases, where people take—you know, these are relatively young 

people, they are overseas, they are back for a while, and they are 

very vulnerable because they need cash, and people could come in 

and really clean their clocks, and do, and we have the testimony 

to prove that. 

Last month in this committee, we held a hearing about companies that target fraudulent financial products to our military 

servicemembers. And military personnel are unfortunately vulnerable to scams because of their financial inexperience and their 

steady paychecks. 

So, Mr. Hadley, why does your company single out and sell lists 

of economically vulnerable groups like immigrants, widows, and 

military personnel? 

That is a very important question to me, because if you set the 

probable response to whom your questions are aimed, your marketing is aimed at, you can fairly well predict the type of product 

they are going to get. I mean, you will be offering them a nicer vacation, a less nice vacation, et cetera. But when you put people in 

categories and they are vulnerable, that is not called the L.L. Bean 

model. 

So I would like you to respond to that question. 

Mr. HADLEY. Thank you, Senator. 

We would be very concerned if lenders were using that information for scamming purposes too. And we have processes and procedures in place to ensure that nobody gains access to that score for 

that purpose. Now—— 

The CHAIRMAN. And how does that work? 

Mr. HADLEY. We have an onboarding system by which we take 

on a client that gets our information to know who they are. And 

we also have a mail-piece review process to know what they are 

117 

going to offer the consumer. And if it is anything that looks discriminatory or predatory, we will not provide our list to them. 

Now—— 

The CHAIRMAN. And this is your self-regulation? 

Mr. HADLEY. This is our self-regulation under DMA standards. 

So if we were to violate that, we would be in violation of our selfregulatory standards as well as our contractual standards with our 

clients. 

Now, what is important here is that there are somewhere between 45 million and 50 million Americans who are outside the 

mainstream of the credit markets in the United States. These are 

underbanked, underserved consumers who financial institutions 

cannot reach through credit scoring and credit report. They don’t 

have financial identities or a big enough or even the presence of 

a credit file in order to bring them into the mainstream of financial 

markets. 

But that doesn’t mean that they don’t need access to financial 

services. So banks use this data to try to reach out to consumers 

who they can help to empower them, not to scam them. We don’t 

want to do business with financial institutions who are trying to 

scam people, only to empower them. 

And this is their best way to find those individuals who are outside the mainstream—immigrants; new to credit, like recent college 

graduates, exactly what we are talking about here—to give them 

an offer, an invitation to apply, so that then they can make an eligibility determination regarding that application under the Fair 

Credit Reporting Act. 

But this is marketing literature, not eligibility determination. 

The CHAIRMAN. Who—— 

Mr. HADLEY. Did I add to that for you? 

The CHAIRMAN. Not entirely. Can you tell me, which are the companies that buy this ChoiceScore product from you? We have asked 

you that. 

Mr. HADLEY. Yes, they would be banks and financial institutions 

and members of the financial community. 

The CHAIRMAN. That is what is called a general answer. 

Mr. HADLEY. Yes. I can’t tell you who our clients are. That is a 

proprietary list of ours. It is like our secret ingredient; the ones 

who would want that most are our competitors. 

And our counsel has informed me that they don’t believe that our 

ability to give that to you can be shielded from disclosure through 

the rules of the Senate. If we thought they could be—for example, 

under a law enforcement action, where it could be shielded and 

protected from FOIA or other disclosures, we could do that, but not 

under the rules of the Senate. And we are very sorry about that, 

but we just simply can’t do that. Our counsel won’t let us. 

The CHAIRMAN. Oh. Well, there are a lot of counsels out there 

looking for work. 

[Laughter.] 

The CHAIRMAN. My point is that—you have to keep up with your 

competitors, and my point to you would be I am not necessarily approving of what your competitors are doing. I mean, maybe you 

want to keep up with them, but maybe they are doing exactly what 

you are doing but on a larger scale. And—— 

118 

Mr. HADLEY. We don’t want to keep up with most of our competitors. 

The CHAIRMAN.—a lot of those other companies, incidentally, 

gave us the precise information which I want from you. 

Mr. HADLEY. I would hope that the focus of the Committee and 

FTC and others interested in these types of uses of data would 

focus on those data brokers, because it is not Experian that is 

doing that. We wouldn’t have that within our business model. 

The CHAIRMAN. All right. Can you please provide the names of 

the companies that buy lists of economically vulnerable consumers 

from Experian? 

Mr. HADLEY. I can tell you the types of categories. And there is 

a really good story—— 

The CHAIRMAN. But don’t you understand how that doesn’t work 

up here? 

Mr. HADLEY. Yes. 

The CHAIRMAN. The types of categories? 

Mr. HADLEY. But let me tell you—— 

The CHAIRMAN. It is very hard to pass the Tax Code with—— 

Mr. HADLEY. Yes, let me tell you who buys them, and I can name 

a few because they are public, right? 

Our Mosaic segmentation system, it reflects the entirety of the 

economic range of our economy. We don’t leave out low-income individuals. They exist within the economy and need products and 

services, too. But the most frequent users of that segmentation, the 

economically disadvantaged, Senator, are typically government 

agencies and public policymakers who are trying to get a view into 

them so that they can deliver them messages and marketing materials about public services they are eligible for. 

Among the users of those are the West Virginia Department of 

Health and Human Services, the Massachusetts Department of 

Health and Human Services, the New Jersey Department of Health 

and Human Services. They want to reach those people, let them 

know what benefits they are eligible for so that they can come and 

get them. They also use this data to update address lists for their 

clients. 

The CHAIRMAN. You will admit, won’t you, that if a state HHS, 

so to speak, will use that information, that is quite a different kettle of fish from a for-profit, bottom-line-oriented company? 

Mr. HADLEY. And we would put the departments of HHS through 

the same review of who they are and what they want that information for, because we wouldn’t want them to use our information to 

disadvantage those consumers, only to empower them. So they 

would go through the same review. 

The CHAIRMAN. All right. My time has expired. And you happily 

engaged in an interesting process; you selectively named some of 

your clients. If you can selectively do it, you can broadly do it. 

Mr. HADLEY. Those are a matter of public record. 

The CHAIRMAN. Well, that is the point. 

Mr. HADLEY. Right. 

The CHAIRMAN. What should be a matter of public record is what 

you do. This is an oversight committee. This is a serious subject. 

We have the feeling people are getting scammed or screwed by this 

feeling. It is up to you to talk us out of that. 

119 

Mr. HADLEY. But not by Experian. And I can assure you, Mr. 

Rockefeller, the Experian executives are watching this right now 

and they are hearing what you are saying. We respect your point 

of view. 

The CHAIRMAN. You think they are all glued to their TV sets? 

Mr. HADLEY. No, to their monitors—— 

The CHAIRMAN. Oh, OK. 

Mr. HADLEY.—right? And so we want to be responsive to you, seriously. And so we look forward to the dialog. 

The CHAIRMAN. All right. Well, anyway, my time has expired. 

And Senator Booker—it is going to be Senator Booker, then Senator Johnson, then Senator Blumenthal, then Senator Markey. 

That is just so I can hold everybody here. 

STATEMENT OF HON. CORY BOOKER, 

U.S. SENATOR FROM NEW JERSEY 

Senator BOOKER. Good afternoon, and thank you very much for 

your rich testimony. 

You know, the Internet now—the ability for big data to be used 

is actually a service to many consumers. It serves me every time 

I go online, every time I am shopping. 

And I love the fact that I can use this little device and things 

will be pushed to me that are very valuable. And that is how datasharing helps to fuel our economy, is a service to customers. There 

are so many great advantages of it. 

I do have worries on the back end of that, which I think my 

chairman, Senator Rockefeller, is making a point, and those are the 

concerns of consumers. 

And so, just one quick question about, you know, what frustrates 

me when I am—you know, that I know my browser history, these 

cookies are on my computer that are sort of tracking and tracing 

what I am doing, and I understand the upside and the benefit of 

it, but that is a little problematic to me. 

Could you—Mr. Cerasale? 

Mr. CERASALE. Sure, Senator Booker. 

There is a group that DMA is part of and started, the Digital Advertising Alliance, on the online—following where people are. And 

we have created an icon and a process to allow consumers to opt 

out, totally or selectively, for any cookies that are used to track 

their surfing, their browsing activity, across unaffiliated websites. 

And that icon is a little triangle with an—— 

Senator BOOKER. So you are saying—I am sorry to interrupt you, 

just because I have so little time. 

Mr. CERASALE. No problem. 

Senator BOOKER. So you are saying that the industry is trying 

to self-regulate—— 

Mr. CERASALE. Yes. 

Senator BOOKER.—and find a way because you recognize that 

this is a problem. 

Mr. CERASALE. Yes. And approximately a little over a million 

people have opted out. Over 10 million people have gone to the 

website—— 

Senator BOOKER. I am a pretty tech-savvy, X-Gen guy; I never 

heard of this. So—— 

120 

Mr. CERASALE. OK. 

Senator BOOKER.—that is problematic to me, just because I am 

very engaged in the world of tech. So I didn’t know there was even 

an opt-out function. And I am concerned about my—so the industry 

is trying to correct what they know is a problem, true? 

Mr. CERASALE. Right, to give consumers a choice, absolutely. 

Senator BOOKER. OK. 

So, Ms. Rich, I am just curious, there is so much positive here. 

I mean, the opportunity for big data to enrich our lives gets me excited about what the future is. And so these businesses, in some 

ways, have a wonderful public purpose. But I do worry about the 

darker side in the way that my Chairman is discussing. 

And I really want to know—it is not as simple as saying more 

transparency or—it is difficult to create a regulatory framework 

that is nimble. I mean, this is such a changing environment. 

So, really, I just want to know for you, like, how are you planning on using your 6(b) authority under the FTC Act to study and 

stay abreast of this industry and see if there are needs or opportunities, like in this one, where the industry is not correcting or selfregulating, where we can get them to the point where we are balancing all of these incredible positives of big data with the obvious 

downsides? 

Ms. RICH. We think about this every day, balancing the positive 

but also protecting consumers. In this case, though, I think the 

first step is pretty simple, as there is really very little transparency 

about data brokers. And providing that transparency is pretty 

basic. It is not a technological issue. 

In more complex circumstances, the way we balance is we engage 

in a constant learning process. We do workshops, we are always 

learning about industry, we meet with consumer groups, we meet 

with business groups. And we also, in everything we do, we are always trying to develop flexible standards. We are thinking about, 

you know, what about 20 years from now especially in the orders 

we get, will this last, will this be able to grow with innovation? And 

we make a lot of effort in that regard. 

But I do want to bring it back to—you know, we have some basic 

steps here to bring about some transparency that shouldn’t undermine the data-driven economy. And, in fact, there is nothing in 

that study that DMA did that addresses how privacy would undermine the data-driven economy. 

Senator BOOKER. Right. And because so much of what I am doing 

for free on the Internet is made free because folks are shooting ads 

at me that are targeted to my interests or needs or what have you. 

But you are saying that there is just a tremendous larger degree 

of transparency that needs to be given to the public. 

Ms. RICH. And we think that transparency—and we were talking 

about this a few minutes ago—is completely consistent with the 

growing economy. I mean, consumers are increasingly demanding 

more information about how their data is being used. When you 

give them information, they often develop more trust in the businesses they are engaging with. And we think it is in both consumers’ interests and businesses’ interests to provide more information. 

121 

Senator BOOKER. I would love to hear what Mr. Hadley or Mr. 

Cerasale have, if they have any resistance to that increased transparency, but I am trying to stay on the good side of the Chairman. 

I am the new kid on the block. So I will yield. 

The CHAIRMAN. Senator Booker, you are always on the good side 

of the Chairman so you can charge right ahead, but you have 

blown that opportunity. 

[Laughter.] 

The CHAIRMAN. And so we are going to go to Senator Johnson, 

to be followed by Senator Blumenthal, Senator Markey, and the invincible Senator McCaskill. 

Senator MCCASKILL. Did you say invisible? 

The CHAIRMAN. Invincible. 

STATEMENT OF HON. RON JOHNSON, 

U.S. SENATOR FROM WISCONSIN 

Senator JOHNSON. Invincible. 

Well, thank you, Mr. Chairman. 

By the way, this is an excellent discussion, this is a very good 

hearing. I appreciate Senator Booker’s good questioning. I kind of 

want to pick up where he left off, talking a little bit about transparency, because it is a great term. 

I want to know exactly what the FTC wants to do in terms of, 

what is your fix? What is transparency to you? 

Ms. RICH. Well, in this context, what we have recommended is 

that data brokers allow consumers access to the kind of information that they maintain about consumers. 

Senator JOHNSON. How? 

Ms. RICH. Either through some sort of centralized—what we recommended in a privacy report we did last year was either 

through—possibly through some centralized website where consumers can go. DMA has something like that for opt-out. DAA has 

developed a centralized website for online tracking. And so we have 

recommended that for data brokers. 

Senator JOHNSON. So what would be on this centralized information thing? What would be on there? 

Ms. RICH. The names of data brokers, and then you would be 

able to find out what kind of information they collect, and you 

would be able to potentially opt out of the use of their data. 

Senator JOHNSON. Mr. Hadley, can you tell me what that sounds 

like to you and what problems the industry would have with that 

and how restrictive that would be? 

Mr. HADLEY. Well, first, we want to be responsive and be more 

transparent, although we, too, are trying to figure out what that 

means in a meaningful way to consumers. 

Regarding an opt-out website, here is the problem as I see it: I 

don’t know how to define ‘‘data broker.’’ I have never seen a definition of ‘‘data broker’’ that wouldn’t sweep in tens of thousands of 

companies, because everyone exchanges data and shares data and 

sells data within the Internet ecosystem. That is how the business 

model of the Internet is. 

So would we have a website with an entire industry on it? And 

how would that really be meaningful to a consumer if you throw 

that many companies up? Of course Experian would be on that, but 

122 

so would 10,000 other companies. That is not a meaningful way of 

providing transparency. 

Instead, what we are trying to explore is how can we make the 

exchange and sharing of information responsibly more meaningful 

to consumers. And we think one of the steps could be working with 

the users of data brokers—— 

Senator JOHNSON. OK. Well, let me stop you, because I have limited time. 

With mailing lists, for example, you get a one-time use. And I 

was trying to follow what you are talking about, because it sounds 

like you have a system where you are making sure that this material is not misused, because that is the real problem. The violation 

is the misuse, the improper use of the information. 

For every time you sell data, is that restricted to a one-time use 

that you already have determined is not a misuse? 

Mr. HADLEY. It is—— 

Senator JOHNSON. Or do you sell the data and they can use it 

for years? 

Mr. HADLEY. No. It is sold pursuant to a contract, in some cases 

one time, in some cases as a license over numerous times. But we 

always have audit procedures in all of those situations to know 

how they are using that data and what they are using it for. And 

it is strictly limited to marketing purposes. 

Senator JOHNSON. The information, you are saying it is, you 

know, from public records, sometimes surveys. But is it also from 

those cookies, and are you also getting it from all the other Internet applications? And do you have agreements with different people 

that gather all these cookies? I mean, is it a much larger datagathering than what we were kind of talking about earlier? 

Mr. HADLEY. We do collect information online in that realm, but 

it is all aggregated, anonymized data. There is no personally identifiable information attached to it. 

So, for example, we might be able to know what type of consumer 

is visiting X website versus another website so that we can share 

that in competitive intelligence for the industry. So Macy’s might 

want to know what Nordstrom shoppers look like, in the aggregate, 

de-identified, so they can compete against one another and vice 

versa. 

Senator JOHNSON. Mr. Cerasale, again, as Senator Booker talked 

about, there are incredible benefits by people using the Internet, 

and of course we always take a look at, do you agree to use this 

website? And I would say most people just say, yes, I want to use 

this website, hit ‘‘agree’’; they don’t really read the, what, 300 

pages of all the information saying, hey, we are going to share this 

information. If you want to use this phenomenal, free application, 

you are subjecting yourself to a certain lack of privacy. 

How do you get—is there any way of getting around that? 

Mr. CERASALE. There is. I think that icon I was expressing to 

Senator Booker is an easy—it says ‘‘AdChoices,’’ and I can click on 

it; it tells you about what is happening of following your web 

browsing across websites. And then there is a link right to 

AboutAds.info, a website where you can opt out. That type of—is 

how we are looking at it. 

123 

We have worked with NTIA in looking at mobile apps and the 

small screen, and how do you let people know what type of information you are collecting. So we need quick links from—— 

Senator JOHNSON. So, like, on a do-not-call list, can it be one 

time and you are covered? Or is this application after application 

after application? 

Mr. CERASALE. On the DAA, it is one time and you are covered, 

and it probably affects about 96 percent of the targeted ads and so 

forth. That many people have signed up for it, so it is pretty close. 

Senator JOHNSON. And that icon is located where? 

Mr. CERASALE. That icon is usually located right around the ad 

that is targeted. And we have contracts with Canada, with EU. We 

are working on Australia, starting with Latin America, to try to 

make that icon worldwide. 

Senator JOHNSON. OK. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. And that was good questioning. 

Senator Blumenthal? 

STATEMENT OF HON. RICHARD BLUMENTHAL, 

U.S. SENATOR FROM CONNECTICUT 

Senator BLUMENTHAL. Thank you, Mr. Chairman. And thank you 

for having this hearing. Thank you for pursuing this profoundly 

important issue with such far-ranging consequences for both good 

and ill in our society. 

And thank you to the staff for this truly remarkable study. For 

anyone who doubts how to define a data broker, I recommend the 

report, ‘‘A Review of the Data Broker Industry: Collection, Use, and 

Sale of Consumer Data for Marketing Purposes.’’ There is now an 

industry involved in this very far-reaching and far-ranging collection, use, and marketing of data. 

And one of the ironies is that almost every day in the headlines 

and in the news we read about what the NSA is doing in the collection and use of data about citizens in this country who are protected by the Fourth Amendment. One of our justices once defined 

the right of privacy as the right to be left alone. Obviously, consumers do not have that same right against this industry because 

it is not the government. And yet their privacy interests may be 

just as much at risk and abused as they are by the government. 

And that is really what brings us here today, not only the vast 

potential for good but also the downsides and the dark side and the 

danger of the collection and use. 

And I, quite honestly, did not expect anybody to come here today 

and say, we are using this data to exploit people. You know, I am 

not the naive. But I think you need to recognize that others could 

use it for that purpose. And all you need to do is turn to page 24 

of this report and see the categories that are sometimes used for 

marketing purposes. 

And let me give you two very concrete examples of why I think 

that people ought not to be compelled to surrender personal privacy 

as the price of admission for the use of the Internet. And that is 

really what we are talking about, the sacrifice of privacy as the 

price of admission to the Internet. 

124 

In December 2012, the Wall Street Journal ran a story entitled, 

‘‘Websites Vary Prices, Deals Based on Users’ Information.’’ And it 

stated, in part, quoting, ‘‘Websites are adopting techniques to glean 

information about visitors to their sites in real-time and then deliver different versions of the web to different people. Prices 

change, products get swapped, wording is modified, and there is little way for the typical website user to spot it when it happens.’’ 

So if you prefer Hilton hotels over Marriott hotels and the wrong 

company gets its hands on that information, you could be charged 

more for staying at one hotel or another than a person just walking 

in off the street. 

Now, I assume, Mr. Hadley, that you would join me in feeling 

that such marketing practices and pricing practices would be offensive and should be made illegal, perhaps. 

Mr. HADLEY. I would agree with you that that shouldn’t be happening. And Experian is not involved in dynamic—— 

Senator BLUMENTHAL. I am not asking you about Experian. I am 

not expecting that you will tell us that Experian is involved in 

these kinds of—— 

Mr. HADLEY. But dynamic pricing does exist. All you have to do 

is look at the hotel and airline industry, and they have variable 

pricing. 

We don’t provide products and services to allow them to undertake that dynamic pricing. That is their choice, because they are 

marketing their product or service. 

Senator BLUMENTHAL. Do you think it is fair to the consumer? 

Mr. HADLEY. I wouldn’t want it to happen to me, but I know that 

it does. If I go to Las Vegas and there is a—— 

Senator BLUMENTHAL. Well, the fact that it does is why we are 

here today, right? 

Mr. HADLEY. I am not sure that it is illegal. It is just a factor 

of—— 

Senator BLUMENTHAL. Let me ask you, Mr. Cerasale—— 

Mr. HADLEY.—the economics, right? 

Senator BLUMENTHAL. I am not asking you for your legal opinion. 

Mr. Cerasale, what do you think about that practice? 

Mr. CERASALE. Dynamic pricing and changes in pricing are there 

all the time, and you have—frequent flyers get different prices. 

Grocery stores, people who have the card have different prices. It 

is part of where we are today. 

I think if it is discriminatory and so forth, you look at it. It goes 

back to what I said. You want to look at use, not the data itself 

or the collection of it, but use. If there is an improper use—— 

Senator BLUMENTHAL. Well, you would agree with me that discriminatory pricing that charges people more because they are regarded as more vulnerable, and without their knowing it, would be, 

at best, unethical? 

Mr. CERASALE. Yes—I—yes. And I believe there are laws—— 

Senator BLUMENTHAL. Let me ask you another question. 

Mr. CERASALE.—on that, as well. 

Senator BLUMENTHAL. And I am rushed for time. I am going to 

use my last 4 seconds to ask you a question—— 

Mr. CERASALE. Sure. 

125 

Senator BLUMENTHAL.—about a second area where I think discrimination, the prospect of discrimination and exploitation is 

raised. And that is in terms of job postings and screening of job applicants. 

I don’t need to tell anybody in this building about the devastating impact of long-term unemployment in this country. And I 

have joined Senator Warren in a bill that would prohibit the use 

of credit scores of job seekers in a discriminatory way during the 

hiring process. 

Let me ask you whether an employer could buy information from 

your company, Mr. Hadley, for example, and use it to target job 

postings in a way that discriminates against certain job applicants, 

using the information that might be obtainable from your company. 

Mr. HADLEY. Marketing data cannot be used for employment 

screening and job eligibility. That is a case under the Fair Credit 

Reporting Act. So they would have to obtain a credit report, and 

all of the consumer rights would accrue to that marketing—— 

Senator BLUMENTHAL. Well, let me ask you, what would prevent 

an employer from asking for information from your company and 

then, on its own, using it in a discriminatory way? 

Mr. HADLEY. We would know who that company is and why they 

were asking us for marketing information. 

Senator BLUMENTHAL. And you would—— 

Mr. HADLEY. And we would know what—— 

Senator BLUMENTHAL.—refuse to sell to them? 

Mr. HADLEY.—they were going to use it for, and we would forbid 

them in our contract with them from using it for any purpose 

under the Fair Credit Reporting Act, including employment purposes. 

Senator BLUMENTHAL. If it is a violation of the Fair Credit Reporting Act. What if they said to you it is not a violation? 

Mr. HADLEY. We would disagree with them, and we wouldn’t give 

them the—— 

Senator BLUMENTHAL. Is that true of other companies in your industry? 

Mr. HADLEY. I think it is a pretty standard practice among those 

that belong to DMA and practice good standards. 

I can’t vouch for all of them, but it certainly is with Experian. 

We know the bright line between those. 

Mr. CERASALE. It would violate our—— 

Senator BLUMENTHAL. Your company does, but from the information that has been provided to my office, not all companies do. Do 

you—— 

Mr. HADLEY. Then it is a violation of law, and the FTC should 

take action against those companies. 

Mr. CERASALE. It is unethical, it violates our guidelines to use 

marketing data—— 

Senator BLUMENTHAL. It is unethical, it violates your guidelines, 

but maybe the law—— 

Mr. CERASALE. That is correct. 

Senator BLUMENTHAL.—ought to be clarified so that everybody 

understands it is illegal. 

126 

Mr. Chairman, I apologize for exceeding my time. I tried to move 

as quickly—I want to apologize to the witnesses for perhaps interrupting you. 

Unlike Senator Booker, although I am still a new guy on the 

block, I didn’t say at the outset I was going to stop when I should 

have. So—— 

The CHAIRMAN. Well—— 

Senator BLUMENTHAL.—I know I am on your bad side now. 

The CHAIRMAN. No, you are not on my bad side, but, you know, 

you are clearly just sort of settling into this role of being a licensed 

lawyer. 

[Laughter.] 

The CHAIRMAN. He was attorney general for 29 years. 

Senator BLUMENTHAL. I am a recovering lawyer. 

[Laughter.] 

The CHAIRMAN. Yes. 

Senator BLUMENTHAL. I apologize, Mr. Chairman, and—— 

The CHAIRMAN. No. 

Senator BLUMENTHAL.—thank you. 

The CHAIRMAN. Senator Booker will learn from you. 

[Laughter.] 

The CHAIRMAN. Senator Markey? 

STATEMENT OF HON. EDWARD MARKEY, 

U.S. SENATOR FROM MASSACHUSETTS 

Senator MARKEY. Thank you, Mr. Chairman, very much. 

So the bottom line is that there are digital dossiers being collected on every American right now by the companies represented 

at this table. And there is a lot of promise from that: services that 

can be provided. There is a lot of peril from that: the compromise 

of the privacy and the most intimate secrets of families that can 

go out and on sale across the country and across the world. 

And the bottom line is no company should be allowed to do that. 

If the individual doesn’t want that information compromised, they 

should have a right to be able to control that data. And no company should be allowed to play fast and loose with the information 

which they have gathered about Americans. 

So I had a caucus meeting over on the House side last year, and 

we had some of the gentlemen here today over there for that. And 

we began to talk about propensity scores—propensity scores. And 

that is a practice of attaching a propensity score to individuals, 

hundreds of thousands, millions of Americans. And the scores are 

created without the consumers’ knowledge, without the consumers’ 

consent. 

And then they become the basis for targeting offers, benefits, 

products to certain consumers. And as a result of these e-scores, 

high-value prospects may receive marketing details and discounts 

regularly, but others may not. They may be dismissed as low-value 

people, characterized as ‘‘waste’’ in industry slang. 

So, Ms. Dixon, what are the dangers attached to an industry that 

engages in those kinds of practices, in terms of its impact upon 

tens of millions of Americans? 

Ms. DIXON. The real problem with the propensity scores and the 

propensity values that are attached to consumers is that, unlike a 

127 

credit score that would be pulled, that would be covered under the 

Fair Credit Reporting Act, but these scores are not covered under 

the Fair Credit Reporting Act. 

If they are health scores, they are not covered under HIPAA, 

they are not being held by a healthcare provider. 

So, therefore, you can be tagged with these characteristics, and 

these characteristics are not under any regulation. There is no law 

that says that an employer cannot use these to determine job eligibility. There is no law that says that an insurer cannot use these 

scores to determine rates, because these are not regulated scores. 

So the propensity scores are of great concern. 

And, of course, consumers do not have the opportunity to learn 

about these scores. These are secret scores. And consumers do not 

have the opportunity to opt out of this, as they would if the scores 

were covered under the Fair Credit Reporting Act. 

Senator MARKEY. Great. 

So we have to do something about that, Mr. Chairman. You 

know, we are hearing language about, well, that might not be illegal, so we can actually pass a law and make it illegal. So that is 

what this committee is all about. 

And now let me go back to you again, Ms. Dixon. Thank you for 

that. 

We know that data brokers categorize people into market segments, so-called ‘‘suffering seniors,’’ ‘‘burdened by debt,’’ singles,’’ 

‘‘credit crunch,’’ ‘‘city families.’’ And these are the real labels that 

actual data brokers use to describe all these different segments out 

there as they are trying to decide who they are going to be talking 

to. 

But that categorization can cause real economic harm, including 

profiling, redlining, and racial discrimination. And, in fact, there is 

actually a term for it: not redlining, but ‘‘web-lining.’’ We are just 

going to use the web to kind of segment people out. They are in 

the wrong income group, the wrong racial group, the wrong sex, the 

wrong whatever. And they just can do it. And there probably aren’t 

enough laws on the books to protect people against that. 

Ms. Dixon, can you talk about that and what the need is to fill 

in that vacuum, as well? 

Ms. DIXON. There is an interesting situation that is going on. 

And, interestingly enough, the DMA report came to the conclusion 

that offline information and online information are now thoroughly 

merged. And as a result, web-lining is real-life-lining, as well, so 

what happens on the web now happens in real life. 

So if there is a discriminatory problem there, we are going to be 

experiencing it elsewhere. It is a circular process now. We can’t 

just go online and block our cookies. 

Any reasonable consumer who is shredding their Social Security 

number, blocking cookies, and surfing the web responsibly, they 

can still not evade being put on a list of data brokers according to 

their health condition. 

Senator MARKEY. So let’s go to that line, that kind of blurry line 

that has been allowed to be created, and what the consequences 

are for consumers, kind of that line between credit reporting agencies and data brokers that market financial products. That is an atVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00131 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\95838.TXT JACKIE
128 

mosphere of ambiguity, and some fraudsters could do some real 

harm to people, huh? 

So if you could talk about that a little bit, Ms. Dixon. 

Ms. DIXON. So the pseudo credit scores, or pseudo scores, they 

are made up of about 1,500 factors. They are all non-credit-file factors, so they don’t fall under the Reporting Act. They can include 

factors that would be prohibited under the Equal Credit Opportunity Act. This is troubling, deeply troubling. 

So we don’t know everything that goes into these scores. We need 

to. We need to know how the scores are being used, and we certainly don’t want these scores being used to target underserved 

Americans with predatory offers. 

Senator MARKEY. And let’s just move on to the next category. 

You know, we can talk about the sale of lists of people with particular diseases, huh? And just kind of circulate those lists around 

to people, just so that, you know, marketers know who not to even 

get anywhere near, huh? I am going to get all the people with these 

different diseases that we have been able to compile and just make 

a list of it and make sure they are over here and they are walled 

off. 

Talk a little bit about that and what that means for our country. 

Ms. DIXON. I was stunned, in doing my research, when I found 

lists of people who were rape sufferers, people who were genetic 

disease sufferers, people who were victims of domestic violence. 

This was deeply troubling to me, and I was just shocked. 

So what is happening is that through survey instruments that 

are operated online and through other methods that are typically 

consumer-generated, people will volunteer this information to 

websites, thinking they are getting help, you know, from a website, 

and they will volunteer. And they have no idea that this information is going to be attached to not just a cookie but their name, 

their home address, their phone number. 

Senator MARKEY. And I am a lawyer but I have never had any 

clients, so I am going to be careful in how I rule here. But it just 

seems to me that it is kind of, on its face, a violation of Section 

5 of the Federal Trade Commission Act, violation of unfair and deceptive practices. 

So, Ms. Rich, back over there at that Federal Trade Commission, 

what can you do about this? 

Ms. RICH. I think—well, for all of these scenarios that you described, especially the particularly disturbing ones involving discrimination, we would obviously, if we had specific targets we were 

looking at, take a close look to see if it did violate the Fair Credit 

Reporting Act or the FTC Act. We wouldn’t give up on that. 

But one thing I want to say about—you know, our laws are limited, as I mentioned in my opening statement. For the Fair Credit 

Reporting Act to apply, the data has to be collected and used for 

certain purposes. And the FTC Act allows us to go after deceptive 

practices, meaning affirmative false statements or omissions need 

to be made, or unfair practices, and we have a lot of hoops to jump 

through to prove those. 

But there is nothing in our laws that would require the entities 

amassing those lists to tell consumers about it or to allow them acVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00132 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\95838.TXT JACKIE
129 

cess to the data they have on them. Those are the limitations of 

our laws. 

Senator MARKEY. Yes. Thank you. And, again, there is nothing 

like a little Section 5 action, you know? But when you are saying 

it is even beyond the penumbra of that, then we have a real issue 

here. 

And it is a real invitation for us to act, Mr. Chairman, so that, 

you know, we put on the books the—— 

The CHAIRMAN. I am going to act—— 

Senator MARKEY.—actual specific language. Excuse me? 

The CHAIRMAN.—since you have just gone through your second 

round of questions. 

[Laughter.] 

Senator MARKEY. No, I know that, Mr. Chairman. I have now 

taken your graciousness, your beneficence, and I have stretched it, 

you know, to a point that—— 

The CHAIRMAN. Claire McCaskill is very unhappy. But she is 

going to be even more—— 

Senator MCCASKILL. No, I am not. 

The CHAIRMAN.—even more unhappy when I call on Senator 

Thune, who—— 

Senator MCCASKILL. I am not unhappy at all. 

The CHAIRMAN.—he and I were the first two to come. 

And then you. 

STATEMENT OF HON. CLAIRE MCCASKILL, 

U.S. SENATOR FROM MISSOURI 

Senator MCCASKILL. No, I think it is terrific to have Senator 

Markey on this committee. And he obviously has worked on this 

issue in the House, and I think we will all benefit from the amount 

of time and effort he has spent at it. 

I want to try to home in on a couple of things. 

The case, Mr. Hadley, of Experian and Superget. You purchased 

the company Court Ventures in 2012, in the spring of 2012. For 

more than a year after the time you purchased this company that 

had all this data, you were taking monthly wire transfers from 

Singapore, and your company did nothing. And as it turns out, 

those wire transfers were coming from a man in Vietnam who specialized in identity theft and was marketing the information that 

you owned to criminals to ruin people’s lives. 

So my first question to you is, you were quoted as saying, ‘‘We 

would know who was buying this.’’ You were getting wire transfers 

from Singapore on a monthly basis, and no one bothered to check 

to see who that was? 

Mr. HADLEY. Now, I want to be clear that this was not Experian 

marketing data; this was Experian authentication data. So it is 

under a different company, a different use. So I just want you to 

know that it is not part—— 

Senator MCCASKILL. I don’t understand the distinction. 

The CHAIRMAN. Nor do I. 

Senator MCCASKILL. I think it is a distinction without a difference. I believe it was data that you owned, Experian owned. You 

had purchased this data from Court Ventures, and they had, in 

fact—— 

130 

Mr. HADLEY. No. Let me clarify. 

Senator MCCASKILL.—sold it to someone else. 

Mr. HADLEY. Yes, let me clarify that for you, because we have 

provided a full response to that question to the Committee, and it 

is part of the eight submissions that we have given. 

And I do have to say that it is an unfortunate situation. And the 

incident is still under investigation by law enforcement agencies, so 

I am really extremely limited in what I can say publicly about it, 

but I do want to say this. 

The suspect in the case obtained data controlled by a third 

party—that was U.S. Info Search, that was not an Experian company—through a company we bought, Court Ventures—— 

Senator MCCASKILL. OK. Let me—— 

Mr. HADLEY.—prior to the time that we acquired that company. 

And to be clear, no Experian data was ever accessed in that deal. 

Senator MCCASKILL. I understand what you are saying. Here is 

what happened. You had U.S. Info Search—— 

Mr. HADLEY. No, we did not—— 

Senator MCCASKILL. No, no, I am—U.S. Info Search existed, and 

Court Ventures existed. They decided—— 

Mr. HADLEY. And they had a partnership. 

Senator MCCASKILL.—for commercial reasons, to make more 

money, to combine their information. And so they had a sharing 

agreement, those two companies, correct? 

Mr. HADLEY. Right. 

Senator MCCASKILL. OK. So these two companies had a sharing 

agreement. Then you bought one of those companies. 

Mr. HADLEY. Court Ventures. 

Senator MCCASKILL. Correct. So now you owned it. Now you 

stood in their place. Are you a lawyer? 

Mr. HADLEY. I am not a lawyer, but I understand we stood in 

their place, right. 

Senator MCCASKILL. Are there any lawyers on the panel? 

OK. She will back me up. 

[Laughter.] 

Senator MCCASKILL. You stand in their place when you buy this. 

So now you are there. 

Now, you said in your earlier testimony, we would know who was 

buying this. So you now are part of their transactions. 

Mr. HADLEY. During—— 

Senator MCCASKILL. And you were receiving the benefit of these 

monthly wires. 

Mr. HADLEY. So, during the due diligence process, we didn’t have 

total access to all the information we needed in order to completely 

vet that. And by the time we learned about the malfeasance, I 

think 9 months had expired. The Secret Service came to us, told 

us of the incident, and we immediately began cooperating with the 

Secret Service to bring this person to justice. 

Senator MCCASKILL. OK. 

Mr. HADLEY. And we are continuing to cooperate with law enforcement in that realm. This was—we were a victim and scammed 

by this person. 

Senator MCCASKILL. Well, I would say the people who had all 

their identity stolen were the—— 

131 

Mr. HADLEY. And we know who they are, and we are going to 

make sure that they are protected. There has been no allegation 

that any harm has come, thankfully, in this scam. 

[The Committee received the following letter regarding Mr. Hadley’s previous statement. The author of the letter requested that 

the statement be removed from this hearing record.] 

VENABLE LLP 

Washington, DC, March 18, 2014 

Via e-mail: 

Peter Curtin 

U.S. Senate Committee on Commerce, Science, and Transportation 

254 Russell Senate Office Building 

Washington, DC. 

Re: Correction to Transcript on Hearing Titled, ‘‘What Information Do Data Brokers 

Have on Consumers, and How Do They Use It?’’ 

Dear Mr. Curtin, 

Lines 12–14 in the attached document are crossed out. In reviewing the testimony, we checked with the Experian lawyers that are directly involved in handling 

this matter, and they have indicated that these lines are not accurate. In actuality, 

Experian does not know the identities of the individuals as the data was owned and 

controlled by U.S. Infosearch. 

Sincerely, 

STUART INGIS, 

Venable LLP. 

Senator MCCASKILL. OK. 

Mr. HADLEY. And we have closed that down, and—— 

The CHAIRMAN. Let Senator McCaskill—— 

Mr. HADLEY.—we have modified our process—— 

The CHAIRMAN. Let Senator McCaskill continue. 

Senator MCCASKILL. OK. So let’s talk about that process. This 

person who got this man who they lured to Guam to arrest and 

who is now facing criminal charges in New Hampshire, they posed 

as an American-based private investigator. 

What is your vetting process when people want to buy your stuff? 

Mr. HADLEY. That would have been Court Ventures who would 

have vetted that prior to our—— 

Senator MCCASKILL. OK, but I am talking about now, you. What 

is your vetting process? 

Mr. HADLEY. Right now, before we would allow access—first, let 

me say that that person would have not gained access to Experian 

or this data if they had gone through our vetting processes prior 

to the acquisition. 

Senator MCCASKILL. And what would have stopped him? 

Mr. HADLEY. We would have known who that company is. We 

would have had a physical onsite inspection of that company. We 

would have known who that business is and what that business’s 

record is. We would have known exactly why they wanted that 

data and for what purposes. And that would have been enshrined 

in our contract. And we would have known the kinds of systems 

they have in place to protect the data that they gained. 

Those are all incumbent upon us under the Gramm-Leach-Bliley 

Act and the FCRA. 

Senator MCCASKILL. Well, listen, I understand that this was not 

a crime that began under your watch. 

Mr. HADLEY. Thank you. 

132 

Senator MCCASKILL. But you did buy the company, and you did 

keep getting the wire transfers from Singapore. And the only reason you ever questioned them is because the Secret Service 

knocked on your door. I don’t know how long those wire transfers 

from Singapore would have gone on until you caught them. I don’t 

have confidence that it would have stopped at all. 

So I guess what my point is here, I maybe do not feel as strongly 

as others on this panel that behavioral marketing is evil. I believe 

behavioral marketing is a reality, and, frankly, the only reason we 

have everything we have on the Internet for free is because of behavioral marketing. So I don’t see behavioral marketing as an evil 

unto itself. 

What I do see is some desperate need for Congress to look at how 

consumers can get this information, what kind of transparency is 

there, and whether or not companies that allow monthly wire 

transfers into their coffers from Singapore from a criminal who is 

trying to rip off identity theft, whether or not they should be held 

liable for no due diligence on checking those wire transfers from 

Singapore until the Secret Service knocked on their door. 

And that is what I think we need to be looking at. And I don’t 

think there is enough—I mean, I know that some of my friends on 

the other side of the aisle, you say trial lawyers, and they break 

out in a sweat. But the truth is that if there were some liability 

in this area, it would be amazing how fast people could clean up 

their act. And, unfortunately, in too many instances there is not 

clear liability because we haven’t set the rules of the road. 

So I didn’t mean to pick on you, Mr. Hadley, but this is a great 

example. And you are not a fly-by-night company. 

Mr. HADLEY. No, we are not. 

Senator MCCASKILL. If this is happening under your watch, can 

you imagine what is going on with companies that are not as established as yours? I think it is—— 

Mr. HADLEY. Cybersecurity is a huge problem. 

Senator MCCASKILL. It is serious and significant, and we need to 

look at it. 

Thank you all very much. 

The CHAIRMAN. Thank you, Senator McCaskill. 

Senator Thune, to be followed by Senator Fischer. 

Senator THUNE. Thank you, Mr. Chairman. 

Mr. Hadley, one of the big users of your service is the Federal 

Government, correct? 

Mr. HADLEY. Yes. 

Senator THUNE. OK. Are there some areas in which you can 

identify how the Federal Government uses your services? 

Mr. HADLEY. Certainly. 

The biggest users of Experian data in the Government are the 

Department of Health and Human Services. Right now, we operate 

on HealthCare.gov to authenticate the identities of individuals 

signing up for health care to make sure that fraud is eliminated 

on that, to make sure that Tony is getting an account, establishing 

the account, and not an imposter in his name. 

We also have a contract with the Social Security Administration 

as they move persons for online accounts from paper-based accounts. We all get our Social Security statement in the mail; they 

133 

want people to move online to get those. So we authenticate individuals to have online accounts with the Social Security Administration. 

We, too, believe that HHS could be a good user of our marketing 

data, particularly in the lower economic echelons, to reach out to 

people to see if they are eligible for health care and try to determine how to market that process to them. They haven’t done that 

yet, but the state agencies are far ahead of them in that way, of 

using these economic segments to reach out and inform consumers 

of benefits that are available to them. 

Senator THUNE. So for purposes of Obamacare implementation, 

they are using you to authenticate people who are applying but 

not, at this moment, to market, the Federal Government. The 

state—— 

Mr. HADLEY. That is exactly right. 

Senator THUNE.—exchanges are. 

Mr. HADLEY. Right. 

Senator THUNE. OK. 

Some have concerns about the profiles that data brokers compile 

on consumers, that they will have a long-lasting impact and put 

these consumers at a disadvantage, especially if that information 

is incorrect. And I would like to have you respond to that incorrectinformation issue or concern. 

Mr. HADLEY. Yes. Our data is highly accurate. It comes from 

very reputable sources. We know what sources they are, and we 

check those sources to make sure of the integrity of that data. 

Marketing profiles are not static. This is very important. They 

change. When I was a young man with young children, I used to 

get a lot of ads for diapers. Then my sons grew up, and I got solicitations and they got solicitations for college. Soon, I got solicitations for home equity loans because they knew that I might want 

to finance my sons’ college education. Now I am getting solicitations for retirement planning and for vacations. So my marketing 

profile has changed with my age and my family status and my interests that I have expressed to data brokers. 

I want to make one point that is very clear here, with health information. Experian has health information from consumers, but 

only—only—on an opt-in basis, if they have said and clearly opted 

into telling us what their ailments are and saying, I am an arthritis sufferer, I want to know about new products and services coming onto the market to help me; or I suffer from migraines. 

These are not used, though, never used, for healthcare eligibility. 

They are used so that consumer product companies can offer solicitations and coupons for over-the-counter drugs, for the most part. 

Senator THUNE. Yes. 

Mr. HADLEY. So it is always opt-in with health for Experian, 

clear and conspicuous opt-in. 

Senator THUNE. Mr. Cerasale, there have also been concerns 

raised that consumers should not only have the ability to see what 

information is collected about them for marketing purposes but 

also have the ability to correct it. And I am wondering what your 

thoughts are on that. 

Mr. CERASALE. On first look, that sounds like a great idea. However, as you delve deeper into it, as you look at access and then 

134 

correction for marketing data—this is data that, as Mr. Hadley has 

said, is not used for eligibility purposes. But as you look into access 

to marketing data, it requires you to authenticate who is coming 

in. In other words, is it Jerry Cerasale or is it an imposter? And 

in order to have that data, in order to be able to authenticate, you 

need more data. 

So in the essence of access and then correction, it is going to require more data, more accurate data, because you can have inaccuracies in marketing data. Tony says that it is great, but it is not 

as precise as Fair Credit Reporting data because it is not for eligibility; it determines what ad I will receive, what type of offer I will 

receive. And if a marketer is off, it is 95 percent correct, that is 

OK because it is not worth the expense to go to 100 percent, whereas in Fair Credit Reporting you need it. 

So having access and correction requires more data. And, of 

course, it is, therefore, more expensive, as well. So, I mean, let’s 

be truthful here. But I think it goes against the idea you are worried about with data because you are going to create more data on 

the marketing side and requiring it to be more precise, and therefore that is an issue. You need to have one bit of information more 

than the imposter in order to prevent that kind of fraud in that 

area. So it raises that problem. 

Senator THUNE. Ms. Rich, the FTC released a report on consumer privacy in 2012 that recommended, and I quote, ‘‘companies 

should provide reasonable access to the consumer data they maintain; the extent of access should be proportionate to the sensitivity 

of the data and the nature of its use,’’ end quote. 

The report continued that, for marketing data, the commission 

believes that the cost of providing individualized access to consumers would likely outweigh the benefits. 

Can you comment on that statement, expand on what the costs 

and benefits would be to have individualized access to marketing 

data? 

Ms. RICH. What we said in the report was that, you know—and, 

obviously, the report was a prelude to further discussion and potentially Congress acting, because at the time we were recommending 

legislation. 

But what we said in the report is that we saw a difference between marketing data and, for example, fraud mitigation and identity verification products, and that for marketing data it might be 

appropriate to not only give consumers access to the categories of 

data that is collected about them but to allow them to suppress use 

of the data, but not necessarily to give them individualized access. 

But we didn’t say there shouldn’t be access at all. We said there 

should be access to the categories of data and an ability to suppress 

use of the data. And then, for other products, it may be appropriate 

to give individualized information about the data. 

Senator THUNE. OK. But the calculation you made, according to 

this at least, is that the individualized access to consumers would 

likely outweigh the benefits for marketing purposes. 

Ms. RICH. Yes. Yes. But for further consideration also by Congress. But, yes, we did see a difference, we did see a distinction between marketing uses and other uses. 

Senator THUNE. OK. 

135 

Mr. Chairman, thank you. 

The CHAIRMAN. Thank you. 

Senator Fischer? 

STATEMENT OF HON. DEB FISCHER, 

U.S. SENATOR FROM NEBRASKA 

Senator FISCHER. Thank you, Mr. Chairman and Ranking Member. 

Ms. Rich, in your testimony, you referenced the commission’s activities with regard to enforcement. Can you describe to me what 

you think the focus of the enforcement activity should be? 

Ms. RICH. Well, we always, in our enforcement, focus on uses of 

data that have the potential to harm consumers. And most of our 

enforcement actions have been in the area of the Fair Credit Reporting Act because that is where we have our strongest tools. And 

when data is used for purposes covered by the FCRA, it can be 

used to deny consumers important benefits like employment or 

credit. 

Senator FISCHER. Do you think that the FTC has done a good job 

with its existing authority to address what has been the numberone consumer complaint for the past 13 years running, and that is 

fighting identity theft? 

Ms. RICH. We are trying our hardest. We don’t have the authority to go after the perpetrators of identity theft, but one of the main 

reasons we are so strong in our data security enforcement is that 

we do believe that it is the responsibility of companies to protect 

sensitive information, and to maintain and protect it from getting 

in the hands of identity thieves. 

Senator FISCHER. Are you able to identify the thieves themselves? And what happens then? How does that all work? 

Ms. RICH. Well, you know, many of the thieves are overseas. We 

do work with criminal authorities, and sometimes they are investigating the thieves while we are investigating the companies that 

failed to maintain reasonable procedures to protect the data. 

Often, the thieves are never caught because they are in Russia 

or China. But if a company does not maintain reasonable procedures to protect data, we have some good tools to hold them liable. 

Although, we continue to recommend passage of a strong data security law that would give us civil penalty authority and strengthen 

those tools. 

Senator FISCHER. Have you brought those forward before this 

committee? I am a new member on the Committee. Has the FTC 

suggested those in the past? 

Ms. RICH. Yes. Senator Rockefeller would be very—Chairman 

Rockefeller would be very familiar with our advocacy for data security and data breach legislation. 

Senator FISCHER. OK. Thank you very much. 

Mr. Turow, when we talk about the data broker—and you had 

a definition of a data broker as somebody who connects the dots for 

marketers, is that correct, in your testimony? 

Mr. TUROW. That is not my only definition, but certainly that is 

what they do. They can do that. 

One thing I would like to point out—may I go on? 

Senator FISCHER. Yes. 

136 

Mr. TUROW. One thing I would like to point out that I don’t know 

if we have had enough discussion about today, which is, it is not 

just discrete bits of information that is going on more and more 

and that are sold, and it is not just the aggregation of these. Really, what is happening is the industry and so much of our world is 

turning into an actuarial activity. It really is the predictive analytics that are changing the ballgame. 

And so a person can be giving out the most benign-sounding 

piece of data, and that can turn against him or her in an instant 

if it gets put into an algorithm that comes up with an either accurate or inaccurate sense of who that person is. 

And we have no way to deal with this at this point and no way— 

even to where I have been told in the ad industry that the word 

‘‘soccer mom’’—that I have had people tell me they don’t know, necessarily, how a person is tagged as a soccer mom. The number of 

data points—seriously told me this—the number of data points that 

are involved in designating a soccer mom, the person said in the 

ad agency to me, was such that they couldn’t tell me where that 

got that designation from. 

Now, if it is true, that is very complicated. And if it is not true, 

that is a problem in itself. And I was trying to figure out why it 

is that ad companies can’t tell people where particular labels on 

them come from. And now I am being told more and more it is the 

algorithm, it is the predictability. 

Senator FISCHER. With your definition or an expanded definition, 

then, how many private companies do you think can be classified 

as this, just in the United States? How many private companies 

are we talking about? 

Mr. TUROW. I haven’t seen a definition, but I would agree that 

more and more we are dealing with companies of all sorts connecting lots—— 

Senator FISCHER. It would be like any small business? 

Mr. TUROW. I wouldn’t worry—— 

Senator FISCHER. The big box retailers? Who? 

Mr. TUROW.—so much about a small business, but I would worry 

about big supermarkets. 

Senator FISCHER. Big box retailers? 

Mr. TUROW. I would worry about, yes, big box stores. I would 

worry about a whole lot of companies that on a daily—we haven’t 

talked about retail outlets and the fact that the Internet inside a 

store and the connecting of online and offline is taking place increasingly as people walk through looking at products, the so-called 

moment of truth, and how that relates to the algorithms I have 

been discussing. What does it mean to have predictive analytics 

stare you in the face while you are deciding diapers, OK, or something even more important? 

And, in fact, the notion—it may be that Experian doesn’t deal 

with over-the-counter drugs, but there are companies that, in one 

way or another, take what people purchase over the counter and 

solicit opinions through sweepstakes about their health activities 

and purchases and sell them, very clearly. 

Senator FISCHER. So what I hear you saying is what I believe, 

that really almost any retailer could be classified then—— 

Mr. TUROW. If they share data, and I have—— 

137 

Senator FISCHER. And how, then, do you believe the government 

should become involved in private business in this country, when 

you have that expanded definition? 

Mr. TUROW. It obviously makes it much more complicated. And 

that is what I have begun to believe that, at least as a start, there 

may be some useful public discussion in asking how many data 

points firms are allowed to buy and sell about us at a time and how 

they can be merged to other data points, so that we won’t have continual flows of data being appended to our lives. 

It is really an interesting difficulty that you bring up—— 

Senator FISCHER. OK. Thank you. 

Mr. TUROW.—aside from the fact that, for example, if you go to 

Kroger’s website and look at their privacy policy, I couldn’t figure 

out head nor tail whether they sell that stuff, because they use 

words like ‘‘affiliates’’ and ‘‘subsidiaries,’’ and it is done in such a 

way that it is extremely difficult to tell. 

And I know of one company that sells bracelets for health where 

I looked at their website, and basically at one point after they say 

what data they can get out of the bracelet, they say, some of this 

data might indicate poor health on your part. And then the issue 

is, what do they do with it? 

Senator FISCHER. Right. 

Mr. TUROW. And we don’t know. You can’t tell. 

Senator FISCHER. Right. Thank you. 

Mr. Chairman, could I ask Ms. Rich if she wanted to say something? She is eager—— 

Ms. RICH. I am going like this. 

Senator FISCHER. And I was trying to stay within my time limit, 

seriously. Thank you, Mr. Chairman. 

Ms. Rich? 

Ms. RICH. I just wanted to add something to the point you were 

making about the number of data brokers. One of the things that 

we—the way we think about it at the FTC, to make it a more manageable issue and problem, is to focus on the non-consumer-facing 

data brokers, because, after all, if the issue is really about transparency, at least that is where the concerns are the greatest, that 

consumers don’t even know who those invisible, behind-the-scenes 

companies are. 

And although I think that there has been a lot of discussion 

about how the definition is so broad we can work on that. But I 

think it is kind of proof of the problem, not that there isn’t a solution. Because the fact that Pam says there are thousands of data 

brokers and the Committee report says hundreds and the industry 

says hundreds, I mean, I think that is part of the problem. We 

don’t know who all these entities are and we don’t have a handle 

on it. And that is part of the proof that there really isn’t transparency in this industry. 

Senator FISCHER. So would you say that just about any website 

that a person goes to, they are in danger of having information 

gathered that they may not want to have either private companies 

or the government know about? 

Ms. RICH. Well, I mean, as I was saying, if we are talking about 

the data broker issue, we would prefer to focus on the non-consumer-facing sites, where they are truly not transparent. 

138 

You know, we have other recommendations for consumer-facing 

websites. We think there should be choices and opt-outs there so 

that consumers have some ability to prevent sales to third parties 

if they so choose. 

But for this data broker problem, we at the FTC would really 

like to focus on the non-consumer-facing sites. 

Senator FISCHER. OK. Thank you very much. 

Thank you, Mr. Chair. 

The CHAIRMAN. Thank you, Senator Fischer. 

We have a vote at 4:30. I would like to ask one more question. 

And this is coming right at you, Dr. Turow. You have been taking all kinds of notes. 

Mr. TUROW. I have. 

The CHAIRMAN. So you are ready. I would like to further explore 

the notion that data brokers are selling products to help marketers 

target pitches to the specific interests and needs of consumers. 

Let’s take a product called ‘‘Relying on Aid.’’ This is a grouping 

of consumers that the data broker defines as follows: ‘‘These single 

retirees of limited means and meager retirement savings are just 

barely able to make ends meet.’’ 

The description goes on to say, ‘‘With only a high school education at best, it has been hard to get ahead. Poorly insured and 

Medicare/Medicaid-dependent, they are generally pessimistic about 

their economic situation,’’ and, incidentally, about themselves. 

My question to you, Professor Turow: In your testimony, you 

highlight some other ways companies may be using such consumer 

lists that don’t necessarily involve product pitches, such as deciding 

who should have to wait longer for customer service, who should 

be rejected as a valued customer, or who should be offered coupons 

for only non-nutritious foods. 

What thoughts come to your mind when you hear data brokers 

are marketing descriptions like ‘‘Relying on Aid’’ to potential consumers? 

Mr. TUROW. It is not unpredictable. It has been going on for 

years. It is a problem, I agree, and it is going to get worse as the 

baby boomers get older. I think we are only beginning to see the 

tip of the iceberg here. 

But I think one of the issues is also that, as we get more individualized—— 

The CHAIRMAN. What do you mean, tip of the iceberg? 

Mr. TUROW. I think we are going to have this huge generation 

of older people in 15 years that are going to be—— 

Senator THUNE. Not you. 

[Laughter.] 

Mr. TUROW.—divebombed with these kinds of offers. And I was 

beginning to say, it is going to be more particularized. 

The thing about that category, Chairman Rockefeller, is that it 

is a category. More and more, that is going to become anachronistic. And what it is going to be is a particular person who can 

be maybe even more persuaded because of other characteristics 

that predict that. So that category will be broken up—— 

The CHAIRMAN. Including low self-esteem. 

Mr. TUROW. Yes, and a lot of other things: what kind of car they 

drive that leads them to be this, that, and the other thing. So that 

139 

you won’t even be able to point to the category in a catalog anymore; it will be something that you won’t be able to easily track 

down. And yet those people will be targeted increasingly because 

of the situations they are under. The same category, only divided 

up into millions and millions of people and personalized. 

The CHAIRMAN. So what would you do about it? 

Mr. TUROW. As I said, I think—well, these are social questions. 

And I believe that we have to worry about the kinds and the 

amounts of data that get combined. I don’t have an answer for 

that. I think it is a very important social discussion. At this point 

in time, we haven’t had that social discussion. 

People don’t even know this stuff is going on. Our studies have 

shown that people know they are being tracked. But when you ask 

people basic questions of how this stuff works and how they think 

it works—we did a 2005 study in which Americans said, a majority, 

a clear majority of Americans said that they think that price discrimination is illegal. OK? 

We continually find that people see the word ‘‘privacy policy’’ on 

a website, they think it means—and we have done this five times 

in national surveys—they think the words ‘‘privacy policy’’ means 

that the site can’t share information about you without your permission. 

The ad icon is a great idea, but it doesn’t work. You know, the 

studies have shown, including one that we did a couple of years 

ago, that Americans, like Senator Booker, have no clue that it exists most of the time. 

I suggest—and that is how I got into the algorithm thing. The 

idea for an icon that I had originally, before this one came out, was 

that when you clicked on an ad that was tailored to you, you could 

find out who gave you the ad, what were the elements of the ad, 

why did you get that particular ad just at that moment. 

But those data are considered too proprietary, and then people 

tell me the algorithm doesn’t help. And so, at this point in time, 

there is nobody who wants to volunteer to give that information. 

The CHAIRMAN. And people use barcoding, don’t they—— 

Mr. TUROW. Well, I—— 

The CHAIRMAN.—to find out names and addresses and other 

stuff? 

Mr. TUROW. Oh, yes. And even if you are anonymous—a very 

short example that happened to me. It is not quite a big data company, but it shows the direction. 

I was at O’Hare, and I had to switch planes when one of my 

planes was canceled. So I went to the customer service place of the 

affiliated airline. They asked me to put my barcode in, and they 

gave me a number. On the side of me, on the screen, it said, the 

amount of time it will take to serve you will be based on your priority in terms of your status with our loyalty program. 

The CHAIRMAN. Interesting. 

Mr. TUROW. And so I, fortunately, had a lot of points, I got 

served pretty quickly, but I noticed there were people who were 

just sitting there. And that meant that they didn’t get the flights 

that they could have gotten. 

140 

The CHAIRMAN. This is segmenting Americans. It is pre-predicting what will happen to them by virtue of the circumstances 

into which they fall. 

Mr. TUROW. And who is valued—— 

The CHAIRMAN. And all the research has been done to put them 

in that situation so they can control how they market and maximize their profit and maybe end up absolutely giving a horrible experience to that consumer. 

Mr. TUROW. I agree. 

The CHAIRMAN. Senator Thune, I have something I want to say, 

but you are important around here. Do you want—— 

Senator THUNE. No, go ahead. I am fine. 

The CHAIRMAN. OK. 

I want to come back—since before 9/11, I have been on the Intelligence Committee, and every day I wake up to seven newspapers 

with nothing but NSA headlines. And I am here to tell you, as one 

of the authors of FISA and the PATRIOT Act and all the rest of 

it, that the NSA is so secure in its protection of privacy as compared to this group that we are talking to, these data brokers, it 

is not even close. 

This affects, as was pointed out, anybody, everybody. Who 

knows? NSA knows. They are only likely to interact at a .000001 

percent of people that they conclude need, you know, further observation. This is everybody, anybody, but more than that, divided 

into race, economic activities, education. 

And there is something—I can’t prove it is wrong, but there is 

something lethal about it. There is something unfair about it. It is 

something like—you know, if somebody is poor or less educated— 

and this is what I have spent my life—I come from West Virginia, 

where a lot of people face these problems. They are stigmatized. 

They have to live with it. The system is stacked against them. And 

a lot of people are making a lot of money out of it, and one are the 

data brokers. 

I am not asking for an argument because the bell just went off. 

But I am here to say that this is a very serious situation. I think 

everybody here agrees this has not been talked about. We have 

done an investigation of it, FTC has looked at it, you all have 

looked at it, you certainly have. And we have to continue on this 

thing. 

You know, the slogan of one of the companies that the Committee reviewed in this investigation, the company says it lives by 

the following words: ‘‘Just because you can doesn’t mean you 

should.’’ Unfortunately, I have been thinking about this because today’s testimony and the Committee’s inquiry shows the industry as 

a whole is falling far short of that standard—appears to be falling 

far short of that standard. In fact, it seems to me the motto of data 

brokers is: ‘‘We can, and indeed we will.’’ Full of optimism. 

We heard from Ms. Dixon about the lists generated by data brokers from genetic disease sufferers and dementia sufferers to payday-loan responders, products that seem tailor-made for businesses 

seeking to take advantage of consumers. I hate that. I personally 

am revolted by that. I have seen it in the treatment of coal miners 

and their safety. I have seen it in every aspect of life in the state 

that I come from and elsewhere, living abroad. I don’t like it. 

141 

I think it is our job as a government to minimize that possibility 

and to bring out into sunlight what is going on. If Senator Booker 

doesn’t know that this is happening to him—he does now, and he 

doesn’t like it. Senator McCaskill really nailed something that 

could not be responded to. 

And so we are going to continue on this track. I think it is serious, and I think it is a dark underside of American life on which 

people make a lot of money and cause a lot of people to suffer even 

more and, therefore, have even lower self-esteem, which is not the 

America we want. 

This hearing is adjourned. 

[Whereupon, at 4:30 p.m., the hearing was adjourned.] 

(143) 

A P P E N D I X 

RESPONSE TO WRITTEN QUESTION SUBMITTED BY HON. JOHN D. ROCKEFELLER IV 

TO JESSICA RICH

Question. Ms. Rich, the Commission currently has authority under the Fair Credit 

Reporting Act to seek enforcement actions against data brokers that provide information that is used to make eligibility decisions about consumers. Furthermore, the 

Commission has its broad organic authority under the FTC Act to enforce against 

unfair or deceptive acts or practices. However, the Commission lacks authority to 

mandate the type of transparency that all of the hearing’s witnesses apparently 

agree is important for the industry. In this context, does the FTC have authority 

to require data brokers to allow consumers to: 

• Access the information data brokers possess on them? 

• Correct any inaccuracies? 

• Affirmatively ‘‘opt out’’ and prevent the data broker from selling their information? 

Answer. Although the FTC has used its authority under the Fair Credit Reporting 

Act (FCRA) and the FTC Act to take action against unlawful practices by data brokers, the FTC does not have the authority to impose the requirements you identify. 

The FTC has consistently treated the Fair Credit Reporting Act (FCRA) as an enforcement priority. It has brought almost 100 cases alleging violations of the FCRA, 

obtaining in excess of $30 million in civil penalties. However, as we explained in 

our March 2012 report Protecting Consumer Privacy in an Era of Rapid Change: 

Recommendations for Businesses and Policymakers (Privacy Report), the FCRA covers only some data broker activities. The FCRA generally does not cover data brokers that maintain data for marketing purposes and for other non-marketing purposes, such as to locate people or detect fraud. Thus, consumers do not have, for 

all data broker activities, the access, correction, or consumer control rights the 

FCRA provides for data brokers engaged in certain eligibility determinations. 

In addition, the FTC has used its authority under the FTC Act to address unfair 

or deceptive practices in the data broker industry. See, e.g., United States v. 

ChoicePoint, Inc., No. 1:06-cv-00198 (N.D. Ga. Feb. 15, 2006) (FTC alleged, among 

other things, that a data broker engaged in unfair practices by failing to properly 

screen or monitor purchasers of sensitive consumer data) ; In re U.S. Search, Inc., 

FTC Docket No. C–4317 (Mar. 25, 2011) (FTC alleged that a data broker deceived 

consumers by offering an opt out that was ineffective). Unless they are implemented 

as remedies to a violation of the FTC Act, however, we do not currently have the 

authority to require data brokers to provide consumers with access or correction 

rights, or to allow consumers to suppress or opt out of the sale or use of data held 

by data brokers. 

In recognition of these gaps, the agency recommended legislation, in its March 

2012 Privacy Report, that would offer the consumer rights you have identified. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. KELLY AYOTTE TO

JESSICA RICH

Question 1. Earlier this year, FTC Commissioner Julie Brill called upon state AGs 

to take a more active role in investigating and holding accountable data brokers for 

violations of the Fair Credit Reporting Act. Can you talk about the role of state law 

enforcement officials in this field? Does your agency work closely with your state 

law enforcement counterparts on pursing privacy and marketing complaints? 

Answer. The FTC has consistently treated the Fair Credit Reporting Act (FCRA) 

as an enforcement priority. It has brought almost 100 cases alleging violations of 

the FCRA, obtaining in excess of $30 million in civil penalties. State attorneys general (AG) also have a role to play in enforcing the FCRA. Under section 621 of the 

144 

FCRA, state AGs can bring an FCRA enforcement action, so long as they provide 

the FTC and the Consumer Financial Protection Bureau with advance notice; the 

FTC has the right to intervene in such matters. This provision ensures that states 

coordinate their FCRA enforcement efforts with the appropriate Federal regulators. 

In addition, we work very closely with the states to educate identity theft victims 

of their rights under the FCRA. Our Tax Identity Theft Awareness week, involving 

multiple outreach events across the country, is a good example of our collaborative 

efforts with states to protect consumers in this area. See ftc.gov/taxidtheft. 

Outside the FCRA, the FTC and state AGs cooperate often on privacy and security and related marketing investigations. One notable example is the action the 

FTC brought with 35 state AGs against LifeLock for deceptive claims about the effectiveness of LifeLock’s identity theft services and its security measures. This 2010 

action is one of the largest FTC-state coordinated privacy-related settlements on 

record. The FTC has also pursued several Do Not Call privacy cases with state AGs 

serving as co-plaintiffs, including enforcement actions brought against Dish Network, LLC, United States Benefits, LLC and Worldwide Info Services, Inc. In addition, the FTC participates in monthly telephone conferences with members of the 

National Association of Attorneys General’s Do Not Call working group. The FTC 

continues to coordinate with state AGs on a variety of law enforcement investigations involving privacy and security in order to avoid duplication of efforts and ensure appropriate and responsible allocation of enforcement resources. 

Question 2. When we look at current Federal law governing data brokers, we have 

Fair Credit Reporting Act, Graham-Leach-Bliley, HIPPA, Children’s Online Privacy 

Protection Act, and Electronic Communications Privacy Act. Plus there are 50 AGs 

policing behavior and activity. In addition to that, we have brokers touting their aggressive self-regulatory policies. Can you address specifically what more legislation, 

mandates or regulations you think we need? Some have argued that before we add 

more laws and/or regulations to the books, we should enforce the ones we have. 

Answer. While these statutes all provide important protections for consumer data, 

they have limitations. Gramm-Leach-Bliley, for example, applies only to financial institutions; HIPAA covers only medical records maintained by specifically defined 

medical providers; the Children’s Online Privacy Protection Act does not cover data 

collection or use for individuals age 13 and over; and the Electronic Communications 

Privacy Act is focused on government access to electronic data. Similarly, as we explained in our March 2012 report Protecting Consumer Privacy in an Era of Rapid 

Change; Recommendations for Businesses and Policymakers (Privacy Report), the 

Fair Credit Reporting Act covers only some data broker activities. The FCRA generally does not cover brokers that maintain data for marketing purposes and for 

other non-marketing purposes, such as to locate people or detect fraud. 

The Commission agrees that self-regulation can be an effective way to protect consumer interests while promoting innovation. The Commission has long supported robust, enforceable self-regulatory mechanisms established by industry to protect consumers. As we noted in our Privacy Report, however, self-regulatory efforts by the 

data broker industry have lagged. The Commission has monitored data brokers 

since the 1990s. In 1997, the Commission held a workshop to examine database 

services used to locate, identify, or verify the identity of individuals, referred to at 

the time as ‘‘individual reference services.’’ The workshop prompted industry members to form the self-regulatory Individual Reference Services Group (IRSG). The 

Commission subsequently issued a report on the workshop and the IRSG in which 

it commended the progress made by the industry’s self-regulatory programs, but 

noted that the industry’s efforts did not adequately address the lack of transparency 

of data broker practices. Although industry ultimately terminated the IRSG, a series 

of public breaches—including one involving ChoicePoint—led to renewed scrutiny of 

the practices of data brokers. The Privacy Report noted that the industry has continued to operate since then with a lack of transparency. To address this concern, 

the Privacy Report expressed support for legislation that would give consumers access to information held by data brokers. 

145 

1Deighton and Johnson, The Value of Data: Consequences for Insight, Innovation & Efficiency 

in the U.S. Economy (2013), available at http://ddminstitute.thedma.org/#valueofdata 

RESPONSE TO WRITTEN QUESTION SUBMITTED BY HON. AMY KLOBUCHAR TO

JERRY CERASALE

Question. Most consumers would like to believe that any of their personal information held by companies is private, secure, and accurate. However, with rapidly 

changing marketing strategies and technology platforms, consumers are no longer 

sure that this is the case. 

Mr. Cerasale: How do your members, both large and small marketers, work to 

promote consumer trust in your services? How can a lack of consumer trust in private data storage and use policies impact the broader economy? 

Answer. Consumer trust forms the bedrock of the Data-Driven Marketing Economy—and the American economy as a whole. Consumer trust is critical to a company’s success, regardless of the size of the business. This is especially true for remote sellers that rely on customers to purchase goods sight unseen. Businesses have 

every incentive to protect and promote consumer trust in the goods and services 

they deliver. 

While businesses are already incentivized to promote consumer trust, DMA supports this incentive with a robust ethics and compliance program that calls on its 

members to adhere to its Guidelines on Ethical Business Practice. For more than 

four decades, DMA has administered its Guidelines and promoted accountability for 

its members, setting a high bar for responsible marketing. The DMA Ethics Policy 

and Ethics Operating Committees develop, update and enforce DMA’s Guidelines as 

part of DMA’s public trust with regulators and consumers. The accountability program is flexible enough to address ongoing changes in technology, markets, consumer interest and new business practices. 

Data security is a prime example of DMA’s commitment to maintaining consumer 

trust, having long served as a core principle of the DMA’s Guidelines. Like many 

elements in the Guidelines, the DMA’s data security standards have remained far 

from static. In January 2014, the DMA approved updated Business Ethical Guidelines on data security, calling on every data-driven marketer to take proactive measures to further enhance data security across the data-driven marketing industry. 

In addition to data security, DMA members are committed to offering consumers’ 

choice, and to using marketing data for marketing purposes, not for eligibility such 

as employment and financial transactions. These and other consumer-friendly practices help build and maintain trust in the data-driven marketplace. 

When it comes to assessing whether businesses have gained consumers’ trust and 

confidence, the proof is in the numbers. Remote selling, including through 

ecommerce, is a fast growing segment of our economy. More broadly, the data-driven 

marketing economy (‘‘DDME’’) added $156 billion in revenue to the U.S. economy 

and fueled more than 675,000 jobs in 2012 alone. 

$110 billion and 46,000 jobs depend on the ability of firms to exchange data across 

the DDME.1 Indeed, responsible use of data by marketers has revolutionized one of 

the most costly aspects of doing business in any industry. As businesses of all sizes 

innovate to deliver more efficient, convenient, and secure marketing and transactional solutions, consumers are responding with a vote of confidence with their 

feet and with their pocketbooks. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. KELLY AYOTTE TO

JERRY CERASALE

Question 1. Do self-regulatory programs, such as the DMA’s Guidelines for Ethical 

Business Practice, and other industry codes of conduct based on these and other 

guidelines, promote responsible use and sharing of data in the marketplace? How 

widespread is adoption of these programs in the marketing industry? How do governing organizations enforce the rules of these programs against bad actors? 

Answer. Yes. Self-regulatory programs, like the one administered by the DMA, 

not only promote, but also require companies to engage in the responsible use and 

sharing of data in the data driven marketing economy (‘‘DDME’’). The DMA believes 

that self-regulation and education are important components for addressing consumer privacy while ensuring that data flows continue to benefit consumers and the 

economy. 

DMA Reach & Scope. The DMA has established an enforceable framework of industry best practices that focus on providing transparency, choice, and other protections to consumers. At the foundation of this framework are the DMA Guidelines 

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1Direct Marketing Association, DMA Annual Ethics Compliance Report 2012–2013 (2013), 

available at http://thedma.org/compliance/. 2Deighton and Johnson, The Value of Data: Consequences for Insight, Innovation & Efficiency 

in the U.S. Economy (2013), available at http://ddminstitute.thedma.org/#valueofdata (hereinafter ‘‘The Value of Data’’). 

for Ethical Business Practice (‘‘DMA Guidelines’’), which have been adopted by all 

DMA members, representing every segment of the marketing industry. In addition, 

the DMA enforces its guidelines against both members and non-members covering 

thousands of companies, making the DMA Guidelines the standard for the industry. 

DMA members deeply value consumer trust and understand that responsible data 

practices are critical to building and maintaining customer relationships. To that 

end, the DMA and its members have developed and implemented more than 50 code 

sections in the DMA Guidelines that regulate marketing data practices, which are 

regularly updated to adapt to new technologies and business practices. The DMA 

Guidelines address a wide variety of marketing practices including, the conduct of 

data brokers, sweepstakes, mobile marketing, internet-based marketing, and 

texting. 

Enforcement. The DMA has a long history of enforcing these guidelines. The DMA 

Guidelines have been applied to hundreds of cases concerning a wide range of issues 

including deception, unfair business practices and personal information protection. 

In addition, companies that represent to the public that they are DMA members, 

but fail to comply with the DMA Guidelines, may be liable for deceptive advertising 

under Section 5 of the FTC Act and comparable state laws. 

Compliance Process. The DMA receives complaints from consumers, members, 

nonmembers, and consumer protection agencies. These complaints are reviewed by 

the DMA’s Ethics Operating Committee and if a potential violation is found to exist, 

the company will be contacted, investigated, and advised on how it can cure the violation. Most companies work with the Ethics Operating Committee voluntarily to 

cease or change the questioned practice. However, if a company does not cooperate 

with the Ethics Operating Committee, action can be taken by the Board of Directors 

and the results of the investigation may be made public. For example, from February 2012 to June 2013, the DMA Corporate & Social Responsibility Committee reviewed 55 cases and 12 of these were made public.1 Additional Board actions could 

include public censure, suspension or expulsion from the DMA. The DMA also refers 

cases to Federal and state law enforcement authorities for review when appropriate. 

Education. Beyond enforcement of the DMA Guidelines, the DMA also provides 

education to both businesses and consumers about responsible data collection and 

use. Through the regular publishing of case reports that summarize questioned marketing promotions, webinars, in-person seminars, and regular communication with 

its members, the DMA helps to promote best practices in the industry. This communication and education is a great benefit to small businesses as they begin to market their products and services to consumers. The DMA also maintains a section of 

our website focused on consumers entitled ‘‘Consumer Help,’’ and offers consumers 

a centralized tool to help manage their direct mail and e-mail preferences at 

DMAChoice.org. 

Question 2. In large part, New Hampshire’s economy depends on small businesses 

and start-up companies. My husband is the owner of a small business. Does the use 

and sharing of data across all sectors of the economy help or hurt the ability of 

small businesses to compete with larger entities in the marketplace? Does the use 

and sharing of data increase or decrease barriers to entry in the marketplace? How 

do these trends impact job creation? 

Answer. Small businesses benefit significantly from the use and sharing of data. 

A recent study entitled, The Value of Data: Consequences for Insight, Innovation & 

Efficiency in the U.S. Economy (‘‘Value of Data’’), quantified the important role that 

the use and sharing of data plays in fueling economic growth.2 This study, which 

was conducted independently by Professors John Deighton of Harvard Business 

School and Peter Johnson of Columbia University, revealed that the Data Driven 

Marketing Economy (‘‘DDME’’) was a major asset to small businesses and start-ups. 

The Value of Data study found that the sharing of data across the DDME enables 

small businesses to compete effectively with larger competitors. Data gives all companies, and especially small businesses, the ability to effectively match products to 

customers both on and offline, lowering barriers to market entry for specialized or 

niche offerings. Thanks to the responsible use and sharing of data across the economy, small business have access to data they would not otherwise have available 

to them, enabling them to more efficiently and effectively market their products and 

better compete in the marketplace. Data sharing also allows small businesses to inVerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00150 Fmt 6601 Sfmt 6621 S:\GPO\DOCS\95838.TXT JACKIE
147 

3The Value of Data at 74. 4The Value of Data at 96–98. 

crementally build their customer base, and grow their product in ways never before 

available to companies of their size. 

The Value of Data study also found that the DDME generated $156 billion in revenue to the United States economy and fueled more than 675,000 jobs in 2012 alone. 

Further, the study found that an additional 1,038,000 people owe their employment 

to these DDME jobs.3 The study also found that in New Hampshire, the DDME was 

responsible for $1 billion in revenue and 3,000 jobs in the state’s economy.4 The 

study estimated that 70 percent of the value of the DDME—$110 billion in revenue 

and 475,000 jobs nationwide—depends on the ability of firms to share data across 

the DDME. If this ability to share data were curtailed, those jobs and revenue 

would be impacted and the U.S. economy would be much less efficient. 

Æ