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Inside the shadowy world of data brokers

Matt Kapko | March 28, 2014
Data brokers operate in the shadows of the Internet. Most consumers are unaware or unsure how to put restrictions of their activity. In fact, one U.S. senator called these companies and their practices 'the dark underside of American life.'

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Most consumers would not recognize the names of the large data brokers that constantly collect detailed information on their finances, health and other personal information. It's safe to say most people probably have no idea this is happening at all. Those who are aware should be shocked by the extent to which their online and offline behaviors are being sifted through for profit.

Call it panning for gold in the digital age.

The World Wide Web has always been a vehicle for advertising, but as the Internet permeates every facet of society from our apps to our appliances its role is expanding in kind. While surfing the Web or updating social apps on our smartphones, we blindly share valuable information about ourselves often without considering the ramifications - or, in some cases, even knowing we are sharing it.

Despite these growing privacy concerns, without advertising the Internet would deliver very few of the experiences many of us enjoy today. Companies need to be profitable to survive, and for most that path to revenue is advertising. While companies like Facebook and Google capture most of their data through consumer-facing products and services they offer for free, outside firms are collecting and organizing virtually all activity elsewhere.

'The Dark Underside of American Life'
As 2013 came to a close, Sen. Jay Rockefeller (D-W.Va.) issued a scathing report about the role and unchecked power of data brokers. Following a year-long investigation by the Senate commerce committee into the collection, use and sale of consumer data for marketing purposes, he called these companies and their practices "the dark underside of American life."

"Your smartphones are basically mini tracking devices that supply the kind of information that really talks about who you are on a day-to-day basis." —Federal Trade Commissioner Julie Brill

"In 2012, the data broker industry generated $150 billion in revenue. That's twice the size of the entire intelligence budget of the United States government — all generated by the effort to detail and sell information about our private lives," Rockefeller adds.

Privacy concerns have ebbed and flowed with the rise of the Internet for decades now, but the backlash against data collection has grown more recently as consumers wake up to the reality that their personal information is being bought and sold as a commodity. Former NSA contractor Edward Snowden's revelations about the wide and almost unfathomable reach of the federal government's surveillance apparatus has only stoked these flames of discontent.

Recent reports from the likes of CBS' news magazine "60 Minutes" are shining fresh light on data brokers as well. During that featured report, Federal Trade Commissioner Julie Brill says "your smartphones are basically mini tracking devices" that supply "the kind of information that really talks about who you are on a day-to-day basis."


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