FTC Calls for Curbs on Consumer Data Collection

The fact that advertisers track what consumers do online is common knowledge, but federal regulators raised alarms Tuesday about just how much data are being collected and how they're used to profile consumers.

Data brokers are grouping Americans based on race, income, hobbies and medical conditions, according to a report released Tuesday by the Federal Trade Commission calling for legislation that would restrict the industry and make it more transparent.

The report acknowledged that data brokers can help consumers find relevant products by grouping them in categories such as "dog owner" and "expectant parent." But the agency found that other categories consumers fall into focus on ethnicity and income levels.

The groups "urban scramble" and "mobile mixers," for example, have high concentrations of low-income Latinos and African Americans. Another set flags medical conditions, including groups such as "diabetes interest" and "cholesterol focus."

Nearly every U.S. consumer is being tracked this way, and the data can be used to target advertising, deny business services and more, the FTC said.

"We don't really know very much about how these segments are used, because the system is so complicated," FTC Commissioner Julie Brill said.

The FTC based its analysis on information ordered from nine major data brokerage firms. Among the recommendations from the FTC was legislation that would require data brokers to provide consumers with the data collected about them and allow consumers the opportunity to know what inferences are made based on those data.

The FTC also called for lawmakers to require retailers to be more transparent when data brokers' information is used to deny consumers services.

Online privacy advocates welcomed the report's findings.

Jeffrey Chester, executive director of the Center for Digital Democracy, called the report a "wake-up call" about an "out-of-control digital data collection industry."

"The report reveals the largely invisible Big Data-driven complex that regularly spies on every American,...

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