Eight members of Congress are investigating nine data brokers. Data brokers are companies that collect, analyze and sell information on consumers’ activities online, offline and via cell phones for marketing and other purposes. The nine brokers include FICO, the credit scoring company that invented the FICO credit score; Equifax and Experian, two of the three consumer reporting agencies; Acxiom and Epsilon, marketing services firms; and Intelius, a company that offers background checks and reverse phone look-ups. Equifax and Experian are not being contacted regarding their credit data, but concerning their consumer analytics divisions.
Some of the information collected by data brokers includes consumers’ financial and retail behavior and recreational interests. This information is sold to banks, credit card issuers, airlines, auto industry and retailers for customer retention and new customer acquisition. For example, information could include that this individual is interested in international travel, investments and/or sports.
Congress sent letters requesting information about how they collect, accumulate, sell and share consumer data. The letters were sent on July 24 and they were given three weeks to respond. The letter requested the following information:
These companies were asked to list all data sources and specific consumer information collected, including religion, race and ethnicity.
They were asked to describe how the data is collected. For example, how social media or mobile phone activity is tracked.
The data brokers were asked to explain the products and services they have marketed to third parties, since January 2009. This included the data used in these products and services.
They were asked to describe the opt-out, data access, correction and deletion options their company offers consumers.
The purpose of the investigation is to determine whether this industry should be regulated. The consumer reporting agencies are required by federal law to provide one credit report free annually per consumer reporting agency, and correct errors. Data brokers are not required by law to show any of the information they collect on consumers. Congress members are concerned that individuals are considered a good or bad prospect without their knowledge or consent.
Credit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. Follow him on Twitter here.