What Are Data Brokers?

In the digital age, data has become one of the most valuable commodities. With this in mind, it’s important to know about so-called “data brokers”. What are data brokers?

As people interact with various online platforms, they leave behind traces of personal information, including browsing habits, location, purchase history, and much more. This treasure trove of data is highly sought after by businesses, advertisers, and even governments, which have led to the rise of a new industry—data brokers.

But who exactly are data brokers, what services do they provide, and what risks do they pose to consumers and their online data privacy? This article delves into these questions, exploring the world of data brokers, their practices, and the dangers they pose.

What is a Data Broker?

A data broker is a company or individual that collects, processes, and sells data about individuals or businesses to third parties. This information typically includes personal details such as age, gender, income, education level, location, online activity, purchasing behavior, and more. Data brokers gather this information from a wide range of sources, including public records, social media, online activity, and even offline activities such as credit card transactions or retail purchases.

Unlike other entities that collect data for internal purposes, such as tech companies or e-commerce platforms, data brokers’ primary business model is to gather and sell this information to third parties, usually for advertising, marketing, or other commercial uses. The information collected by data brokers can be incredibly granular and detailed, often allowing for highly targeted advertising or other forms of marketing that can influence consumer behavior.

Examples of Data Brokers

Some of the most well-known data brokers in the industry include both large corporations and smaller niche players. Examples of these companies include:

1. Acxiom: Acxiom is one of the largest and most recognized data brokers globally. The company gathers personal information from a variety of sources, including surveys, transactions, and digital activity. Acxiom then uses this data to create detailed profiles of individuals and sell them to businesses looking to engage in targeted marketing.
2. Experian: Originally known for its credit reporting services, Experian is also a prominent player in the data broker industry. The company collects information on consumer behavior, spending habits, and credit history, which it sells to businesses that want to refine their marketing and customer engagement strategies.
3. CoreLogic: CoreLogic specializes in data related to real estate, property ownership, and financial information. Its offerings are valuable to industries such as real estate, mortgage lenders, and insurance companies.
4. TransUnion: Like Experian, TransUnion is primarily known for its credit reporting services but also acts as a data broker. It collects a wealth of information about consumers’ credit history, personal details, and other financial behaviors to sell to marketers and other interested parties.
5. Intelius: Intelius is a data broker that collects a variety of personal information, including contact details, background checks, and social media profiles. It sells this information to businesses and individuals who want to access detailed personal data for various purposes.

These are just a few examples — and you can see there are some well-known companies in the above list — but the industry is surprisingly vast, with hundreds of other companies involved in collecting and selling data to third parties. Data brokers tend to operate in the background, often without the knowledge or consent of the individuals whose data they are collecting.

What Services Do Data Brokers Provide?

Data brokers offer a range of services that are valuable to businesses, marketers, and other organizations looking to make data-driven decisions. Some of the primary services provided by data brokers include:

1. Targeted Advertising: One of the primary uses of the data sold by brokers is for targeted advertising. Businesses and marketers use detailed consumer profiles to serve highly personalized advertisements. By understanding an individual’s preferences, behaviors, and demographics, companies can craft advertisements that are more likely to resonate with the consumer and prompt a purchase.
2. Risk Assessment and Credit Scoring: Financial institutions, insurance companies, and other entities use data broker services to assess the risk associated with lending or providing insurance. By accessing credit history, transaction data, and other personal details, businesses can determine whether an individual is a good candidate for a loan, insurance policy, or other financial product.
3. Market Research and Analysis: Data brokers provide valuable insights for companies looking to understand consumer trends, demographics, and purchasing behaviors. By aggregating data from multiple sources, brokers can offer businesses detailed reports and analyses that help them better understand their target audience and refine their products or services accordingly.
4. Lead Generation: Data brokers often help businesses identify potential customers by providing leads based on specific criteria. This can include contact information, interests, or other relevant data points. This is particularly useful for sales teams who are looking to reach out to potential customers in a more targeted manner.
5. Consumer Profiling: Data brokers compile comprehensive profiles on individuals, gathering information from both online and offline sources. These profiles can include personal preferences, purchasing habits, lifestyle choices, and even psychographic data. Businesses use these profiles to refine their marketing strategies and develop products that cater to specific consumer needs.

The Dangers of Data Brokers to Consumers

While data brokers provide valuable services to businesses, they also pose significant risks to consumer privacy and online security. The growing reliance on personal data and the increasing amount of information being collected about individuals have raised serious concerns about privacy. Here are some of the dangers that data brokers present to consumers:

1. Lack of Consent and Transparency: One of the main concerns with data brokers is that they often collect information without the explicit consent or knowledge of consumers. Individuals are usually unaware that their data is being collected and sold to third parties. Unlike many tech companies that provide users with the option to opt out of data collection, data brokers operate in the background, making it difficult for consumers to control or even know what information is being collected.
2. Invasion of Privacy: Data brokers collect vast amounts of personal information, including sensitive data such as health history, financial details, and personal preferences. This can lead to a significant invasion of privacy, as individuals may have no idea who is accessing their information or for what purpose.
3. Data Breaches and Identity Theft: Data brokers store massive amounts of personal information, making them prime targets for cybercriminals. Data breaches at data broker firms have exposed the personal details of millions of individuals, increasing the risk of identity theft, fraud, and other malicious activities.
4. Discrimination and Profiling: The data collected by brokers is often used to create detailed profiles of individuals, which can then be used to make important decisions about a person’s life, such as whether they qualify for a loan, insurance, or even a job. This kind of profiling can lead to discrimination, as certain individuals may be unfairly targeted based on factors such as income, location, or purchasing behavior.
5. Manipulation of Consumer Behavior: By using detailed personal data, businesses can manipulate consumer behavior through targeted ads and other marketing tactics. Consumers may be bombarded with personalized ads designed to influence their purchasing decisions or actions, often without fully understanding how their data is being used.
6. Loss of Autonomy Over Personal Data: As data brokers continue to operate in the shadows, consumers lose control over their own personal data. With so much information being collected and shared without consent, individuals have little ability to manage who has access to their data and how it is being used.

Conclusion

Data brokers are a significant force in the modern digital economy, providing valuable services to businesses that rely on data for marketing, risk assessment, and other purposes. However, their practices raise serious concerns about privacy, consumer rights, and data security.

Without clear regulations and transparency, consumers remain vulnerable to exploitation, discrimination, and privacy violations. As the data broker industry continues to grow, it is crucial for lawmakers and privacy advocates — like Privacy Partners — to push for stronger protections and to develop tools that give individuals more control over their personal information.