The advent of the internet ushered in profound transformations across industries, business models and society itself over the past three decades. But arguably one of the most radical shifts lies in how consumer data – ranging from browsing habits to purchase histories, location trails to biometric readings – has become a commodity bought and sold on a vast scale by obscure companies known as "data brokers." By compiling intimate digital dossiers on hundreds of millions of individuals, the data brokerage industry touches the lives of nearly every connected consumer today – yet remains little understood outside specialized technology circles.
This investigative guide will peel back the inner workings of these digital gatekeepers and analyze the existential questions around privacy and ethics data brokers provoke. Core issues we will unravel include:
- How do data brokers gather such sensitive personal information with little disclosure?
- What categories and business models do different data broker segments operate under?
- Is the entire industry fundamentally compatible with expectations of civil liberties in a digital age?
- What does the regulatory landscape look like? How have emerging technologies expanded risks surrounding uncontrolled data sharing?
Defining the Data Broker Landscape
Before assessing the rights and wrongs of their practices, we must properly define what constitutes a data broker:
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Data Brokers – Companies acquiring bulk raw consumer information from partners, aggregating records on individuals, appending additional data, and licensing access to marketers, risk analysts and other clients.
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Information Resellers – Firms focused specifically on compiling comprehensive people search reports, including government records, social media trails and contact details, on specific individuals for client requests.
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People Search Services – Websites allowing anyone to lookup public record details on other individuals by name – used by debt collectors, lawyers, but often abused by stalkers or harassers.
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Consumer Reporting Agencies – Companies focused exclusively on gathering credit history, repayment risk and other analytics sold to lenders and insurance providers. Includes major credit bureaus like Equifax and Experian.
While lines blur between some subsets, data brokers generally focus first-party on large-scale aggregation of consumer data for marketing purposes – integrating information goods resold from other providers. Core revenue comes from licensing access to different audience segments by attributes.
In pursuing this business model, leading brokers like Oracle and Acxiom now maintain profiles on over 700 million consumers globally – including nearly all American adults. But the depth of intimate knowledge data brokers possess on even a single individual far exceeds what anyone could reasonably anticipate…
Alarming Breadth of Information Collected
Through an opaque web of offline and online sources, data brokers gather both voluntary and observed data points on consumers at a scale nearly impossible for individuals to conceptualize – until disaster strikes. Some categories include:
Self-Reported Information
- Detailed demographic questionnaires through product registrations or warranty cards
- Sweepstakes entries asking for current salaries, employer names and years on the job
- "Free trial" offers that convert to recurring subscriptions without notification
Public Records
- Property deeds, mortgage and tax details including home values and assessed worth
- Court records including arrests, bankruptcies, divorces, estates and probates
- Voter registration and motor vehicle records
Retail Purchase Data
- Every item bought or browsed in store thanks to discount clubs and loyalty cards
- Precise timestamps, store locations, payment details down to tender types
Location Trails
- GPS pings from weather apps, fitness trackers and games tracking real-time movements
- WiFi and Bluetooth signals from mobile devices constantly scanned to enable location-based ads
Device Fingerprinting
- Hundreds of unique signals like browser version, plugins, hardware IDs allowing persistent tracking across sites
Website Tracking
- Extensive logs of every page visited, ad clicked, search query entered to create behavioral profiles
Thanks to this data free-for-all, brokers can make eerily accurate inferences about medical conditions, family relationships, political views and sexual orientation without directly asking consumers. Where legal lines exist at all, they focus narrowly on specific harms rather than systemic privacy. And hiding behind dense terms of service agreements, consumers "consent" remains notional rather than meaningful…
Four Key Segments of the Data Broker Industry
While often treated as unitary entities, a diverse array of companies with specialized focuses operate under the data broker label – integrating information from partners into proprietary data lakes. Major categories include:
Marketing/Advertising Data Brokers
Focused on compiling demographic and behavioral data for targeted digital advertising, this segment powers display ads following you across sites as well as eerily relevant Instagram posts. BlueKai, Oracle‘s data marketplace, leads this category – licensing access to over 5 billion audience profiles with thousands of data points each. But even smaller players hold alarming levels of intimate details – like Throtle aggregating location trails and sensor data from tens of millions of phones.
People Search Data Brokers
Offering confidential "background check" investigations on any stranger with just a name, people search brokers scrape social media activity, criminal histories, bankruptcies, property deeds and other public records. While sometimes used legitimately by journalists or lawyers, these unregulated reports enable harassment or abuse. Despite lawsuits, leading firms like Spokeo, TruthFinder and Instant Checkmate continue exposing deeply private details to anyone paying a small fee.
Financial Data Brokers
Focused exclusively on risk scores, credit history, income details and other analytics of interest to lenders, financial data brokers provide crucial fraud prevention. But concerns exist around biased or racially disparate lending decisions driven by third-party analytics. Established leaders like CoreLogic along with alternative data brokers like LexisNexis provide predictive models supplanting traditional credit reports.
Health Data Brokers
Especially controversial, this segment sells condition inferences mined from prescription purchases, browsing histories and location trails to insurance providers or pharmaceutical marketers without notifying patients. While regulated under HIPAA and other health privacy laws, technical loopholes and lax oversight enable practices eroding medical confidentiality. Key firms like IMS Health and Optum Insights thrive in the absence of comprehensive federal regulation.
This diverse landscape shows "data broker" encapsulates far more than just marketing-focused CRM giants…
The Opaque and Dubious Question of "Consenting" to Tracking
A central defense offered by data brokers focuses on user consent legitimizing these practices. But relying as they do on vague, misleading or outright deceptive terms of service agreements, notions of "consent" hardly align with common sense expectations…
