The Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), and some lawmakers are turning up the heat on data brokers that compile profiles of financially troubled consumers from social media and market them as sales leads to lenders. "If it's being used to harm consumers, we're very concerned about it, and we will think about whether there are violations of law we can address," said CFPB director Richard Cordray.
Earlier this month, Sen. Jay Rockefeller (D-W.V.) sent letters to six companies asking for information on the sale of products that identify consumers based on financial vulnerability or health status. On Wednesday, he and Sen. Edward Markey (D-Mass.) introduced a bill that would require data brokers to be accountable and transparent about the information they collect and sell; prohibit the companies from deceptively collecting information; and allow consumers to access and correct their data.
The FTC last year alerted 10 data brokers of possible violations to the Fair Credit Reporting Act after try appeared willing to sell consumer information for uses such as creditworthiness. There are concerns that such information is being collected without consumers' knowledge. Information also could be used to market products that may have high interest rates or could trap consumers into a cycle of debt.
The World Privacy Forum estimates that there are more than 300 million U.S. consumers profiled by data brokers, and that there were about 4,000 data brokers as of 2012. Some brokers group consumers under such categories as "Zero Mobility" or "Underbanked Prime Prospects" and advertise them as ideal leads for banks, credit card issuers, and payday lenders.