The data broker industry, a multibillion-dollar sector, is facing growing scrutiny as concerns about privacy and data security continue to grow. Recent incidents involving significant breaches at data brokerage firms have heightened public awareness regarding the handling of sensitive personal and financial information. The Federal Trade Commission (FTC) has acted forcefully to stop illegal activities in this business. This legislation has since banned third parties from collecting and sharing consumers’ data without express consent.
Data brokers make a lucrative business out of collecting reams of Americans’ personal data, from Social Security numbers to real-time location data. To this end, over the past year, two major data brokers have experienced major breaches. National Public Data suffered a breach that leaked SSNs of over 3 million people as well as other sensitive documents online. This breach ultimately resulted in that company’s bankruptcy as a result of the repercussions from this breach.
Gravy Analytics suffered a breach that exposed billions of individual location data points. This breach put the sensitive, personal information of millions of Americans at risk. These breaches have raised alarm over the security practices employed by data brokers. One of the things that they fear is how sensitive information will be misused.
Into 2024, the FTC made history with its aggressive enforcement, introducing a nationwide ban on six data brokers. These companies can’t sell or disseminate person-specific data without first having explicit consent. This regulatory action was preceded by a series of complaints regarding illegal use of tracking technology. It shows the urgent and continued need for greater accountability in this industry. InMarket, a data brokerage firm, recently had its ability to sell location data banned. This decision indicates that regulators on all levels are ramping up efforts to protect consumer privacy.
Despite these measures, the Consumer Financial Protection Bureau (CFPB) recently terminated a proposed rule intended to safeguard Americans from the practices of data brokers. This decision has further jeopardized the major industry promises of consumer privacy and underscored the bluntness of existing regulations.
Public awareness of data privacy threats is rapidly increasing. To that end, consumers are growing understandably skeptical of data broker practices, which can often seem obscure as to how data brokers observe and utilize their information. The continuing pattern of breaches, however, has raised regulatory fury. Taken together, this represents a new frontier for the role of data brokers in the United States.
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