Data brokers AKA information brokers are companies that collect information on individuals and sell it for a profit. Data brokers can collect information by buying it from other companies (such as credit card companies), crawling the internet for public sources of information (such as social media like LinkedIn, Instagram, Facebook etc) and many other legal means. The data brokerage industry generates over $200 billion of revenue yearly and continues to grow annually. This shouldn’t be surprising given the amount of information that is created every year. It’s estimated that 1.7MB of data was created by every person, every second of 2020. Combine that with the increased usage of the internet and integration of applications like GPS, fingerprint scanning and facial recognition into people’s everyday lives and you have a very valuable product.
What kind of information do Data Brokers collect:
– Full names
– Address of residence
– Phone Numbers
– Email Addresses
– Age and gender
– Social Security Number
– Income
– Education
– Occupation
– Financial Assets (such as real estate)
– Interests
– Purchase history
– Web browsing history
How is this information used?
Data brokers combine these pieces of information into audience segments that are then sold to other companies. Typically, a single user’s information isn’t useful to another company but imagine you’re a business that markets hair products to 20-30 year old white women. It would be useful to be able to purchase a list of email addresses for 100,000 20-30 year old white women within your target area that have been actively browsing the web for hair products in the last 7 days. By having such specific information and targeting those people, you greatly increase the chance of making sales, as opposed to just blindly putting out ads.
The information sold can range from public information like an email address to very private information. One big scandal involved a data broker selling contact information for rape victims, alcoholics and erectile dysfunction sufferers to an advertiser for $79 per 1,000 contacts. However, this type of situation is the exception, for the most part the information is much less sensitive and will mostly be categories that display an interest or lifestyle like cat lover, vegetarian, athletes interested in protein supplements etc.
Below is a ted talk where one women highlights exactly how much information data brokers were able to find out about her.
What are the different types of data brokers?
Marketing and Advertising: These data brokers focus on creating databases of individuals based on factors like age, location, educational level, income, web history, purchase history and interests for targeted advertising and marketing. Some examples include Acxiom, comScore, Lotame and Oracle.
Fraud Detection: Some data brokers will specialize in fraud detection, commonly used by banks and mobile phone operators. For example, they will often check if a customer’s information is accurate and legitimate before the bank approves the person’s loan.
Risk Mitigation: These types of data brokers search a person’s history in order to offer them high-interest (high-risk) or low-interest (low-risk) loans. For example, if you have a history of holding gym memberships and living an active life you can get better life-insurance premiums because you are considered less at risk for health issues.
People searching websites: This includes websites like hunter.io or PeekYou that allows individuals and companies to find information about a person by searching their name, phone, email address, physical address or government issued ID numbers.
Are Data Brokers Legal?
For the most part yes, data brokers can operate in full accordance with the law. Especially if the country doesn’t have very strict data privacy laws or don’t regularly enforce them. Many times, the consent to share a person’s data can be included in one of the mandatory check boxes on a company website or in the fine print when someone signs up for an online discount or loyalty card. Combine that with publicly available sources of information like social media and other data brokers and there’s many legal ways for these companies to collect information. Some brokers like Luth Research have programs where they directly pay people for details about themselves and the right to resell their information to third parties. It can be a win-win for everyone because data brokers are able to make profits by selling the information while customers get more targeted advertisements for products and services.
Is Google a Data Broker?
Companies like Google are first-party data miners that collect information directly from users that interact with their services. Google doesn’t sell your information to any other companies; they use it strictly for their own products/services such as targeted ads based on your browsing/search history. Other first party data miners include Facebook, Walmart and Target.
Conclusion
Data brokers make a profit by collecting, aggregating and reselling information to other companies. This information is organized into audiences based on common characteristics of the individuals. Typically, audiences are used to create targeted marketing campaigns, which are far more effective than regular marketing campaigns. For the most part the practices of data brokers are completely legal and it’s a legitimate $200 billion industry. If you want to limit your digital footprint your best bet is to be careful of who you give your consent to online, reduce the information in your public profiles and only use services by companies that you trust not to misuse your information.