What are data brokers, and how do they work?

The data broker industry is booming, and your data is how they turn a profit.

Most simply, a data broker or information broker is a company that makes money off your personal data. But it’s a little more complex than that.

A data broker collects data from all kinds of different sources, may process or analyze it to provide specific insights or consumer profiles, and then makes that data available to other people or businesses (often at a price). And even though this is personal information about you, a data broker can do all of this without you ever even knowing.

How do data brokers get your information? 

In the United States, some data brokers collect information that’s available in public records. A third party data broker serves as an information reseller by collecting consumer data from other companies and possibly selling it to individuals or companies that want to use it for marketing purposes–or other, reasons.

It’s natural to feel like the data brokerage industry must be acquiring information in questionable ways. But federal law and various privacy laws only go so far to protect consumer information. Because a lot of what you think of as personal information is actually available from public records.

In addition to public records, there are other ways that data brokers collect information about you, and some of these ways have led to questions about social media and other companies’ personal data protection, data sharing, and consumer privacy practices. Posts on your social media accounts (or even “likes” or interactions with a related post), websites that you visit, online gaming activity, online quizzes that you take, mobile apps that you use, and other social activity: all of this is user data that can be used by savvy marketers to target marketing to you.   

What information do data brokers collect? 

Data brokers collect personal information that is available through public records, data from social media, or personal data or consumer information that can be purchased from other companies.

Public records can include information about where you live, your age, your employment history, the names and ages of your family, names of people you have direct relationship with, how much you spent on your house, whether you have been married or divorced, whether you have filed for bankruptcy, and more. Census data, voter registration information, court records, motor vehicle records-all of this and more can be accessed legally by data brokers. Data brokers may acquire and aggregate information about your purchases, the coupons you use, the sweepstakes you enter, your location data, stores or brands you prefer…all of this can come from sources like loyalty cards, accounts you’ve signed up for, email offers you’ve responded to, mobile apps that you use, and other social activity. All of this is user data that can be purchased by data brokers and then provided to other companies or posted for sale on people search sites.

What are data brokers doing with your information?

Data collection isn’t necessarily helpful on its own. But there are a lot of different ways that businesses in the data broker industry can make money.

• A data broker can take all kinds of personal information and consumer data, and can use these to create audience segments and customer profiles that can be used for direct marketing. This is how a company might create and target advertisement specifically to consumers they think will be most likely to buy their product, based on things like age, location, previous purchase history, social media activity, etc.
• A data broker can provide your personal data to a company or government agency that wants to lower the risk of fraud by cross-referencing information to make sure that you are who you say you are.
• A data broker website might also serve as a people-search site, which can be used by anyone with internet access. Even though much of the personal data on people-search sites may be public record, it might not otherwise be readily available to the average user. The online data broker delivers aggregated information about an individual to a data user.

How can you be protected from data brokers?

In the United States, the Federal Trade Commission published a report in 2014 that recommended Congress enact legislation to give consumers more control over their personal information. 

If a data broker is a credit reporting agency (CRA), that data broker is subject to the Fair Credit Reporting Act. The Act gives a consumer rights to access and contest the information that the CRA has on them. To be a CRA, a data broker must be used by companies who use that information to make decisions about a particular consumer’s eligibility for credit, a job, housing, etc. Most data brokers are not CRAs and are not subject to the requirements under the Act.

California provides strong consumer protection regulations. The California Consumer Privacy Act (CCPA) gives more control to consumers over their personal information. California also has laws that apply directly to data brokers.

All consumers in the United States can, and should, start taking control of their personal data that is available on people-search sites. This form of data brokering can be concerning, as any individual may be able to purchase personal data about anyone else. This could include location data that puts your physical safety or privacy at risk, other data points that could facilitate identity theft, and sensitive data that you may not want readily available to just anyone.

You can visit the Privacy Rights Clearinghouse to learn more about data breaches, privacy law, and access the Data Brokers Database to learn where your information may be posted. Then you can visit each data broker website to opt out.

Is there an easy way to start opting out of information broker sites?

Yes! Discover® Online Privacy Protection is a free service available to all customers through the Discover mobile app.  It reduces exposure of your personal information online by helping remove it from 10 people-search sites that could sell your data. Activate recurring protection scans for free with the Discover app.¹