What’s in a Name? Data Broker or Marketing Data Broker

The marketing industry has come under fire recently for its use of consumer data to provide ads and offers. There are a number of misconceptions at the heart of the issue. To begin with, we should correct the misperception that all data brokers operate the same. I don’t presume to understand the inner workings of each type of data broker, but marketing data brokers collect and use information to offer more relevant ads in a variety of channels. Federal Trade Commission (FTC) Commissioner Julie Brill said that data brokers (specifically naming only marketing data brokers- Acxiom, Experian, and Epsilon) are using “dossiers” to “determine the rates we pay [and] even what jobs we get.” However, the reality is that marketing data brokers use information for marketing purposes only.

What is a “marketing purpose?” Let’s look at an example: Bob really likes Twinkies, and this has entered the databases of various data brokers—some aid in decision-making and others do not. How is that information used across various settings?

Marketing Purpose: Great! How about an ad for Twinkies? Or maybe an ad or offer for other similar snack items? Relevant ad ensues.

A marketing purpose is not:

Employment: The hiring boss wants someone healthy and views a love of Twinkies as an unhealthy lifestyle choice and undesirable trait. Adverse action ensues.

Insurance: Oh my! Twinkies! Really? Bob is clearly unhealthy. Adverse action ensues.

Using this overly simplistic model, you can see that the scope of marketing data brokers is more limited than suggested by the FTC and other opponents. As Commissioner Brill points out, the Fair Credit Reporting Act (FCRA) doesn’t apply to all data brokers. The reason is that some data brokers—such as marketing data brokers—don’t engage in selling information for the purpose of making decisions on granting credit, insurance, housing or employment. And all data brokers are on notice that a foray into this arena without ensuring the proper protections is unadvisable.

Marketing information is agnostic in nature. It is not used to make decisions or used in ways that are harmful to consumers. Marketing data brokers take the information and use it in a way that is intended to benefit their various clients —companies who pay to provide relevant ads to their customers or potential customers—as well as consumers, helping to keep internet services free or low cost. Additionally, the marketing companies singled out by Commissioner Brill are all part of the Direct Marketing Association (DMA) and subscribe to the DMA’s Guidelines on Ethical Business Practices, which requires that information usage be limited to marketing purposes only. As an industry, marketing data brokers have long advocated for, and have a very successful history of, self-regulation and responsible use of data.

In a recent article, Prof. Anita Ramasastry also conflates the definition of data broker. She uses “data brokers” and “marketing data brokers” interchangeably throughout her article. Providing a parade of misleading statistics, she mentions the large number of inconsistencies in credit reports and that individuals are unable to get credit because of these inconsistencies. While she points out that the FCRA doesn’t apply, her examples are exactly the types of actions that are already covered by FCRA. Responsible marketing data brokers do not use consumer information for credit reports or other FCRA purposes; they use marketing data for marketing products to consumers.

Using the earlier example, let’s assume Bob actually hates Twinkies and he has no way to correct the information. How is Bob harmed by an ad based on an inaccurate love of Twinkies? If Bob contacts the marketing data broker and the reference to Twinkies is removed, the result is that Bob will receive an ad for another product. Bob will not receive fewer ads, just different ads. Correcting information may not be as effective as proponents have suggested.

So where do we stand? Marketing data brokers use information for marketing purposes only. Critical decisions, such as housing, financial or employment decisions, are not made using marketing information, and correcting the information has a minimal impact—and there’s no evidence that it’s even something consumers want. As a privacy professional, I agree with advancing privacy awareness; however, let’s advance in a direction that is meaningful to consumers.

photo credit: Josh Kenzer via photopin cc

Written By

Nicole Tachibana, CIPP/E, CIPP/US


If you want to comment on this post, you need to login
  • Steve Henderson, Compliance Office, Communicator C Oct 4, 2013

    Interesting that your comments all relate to marketing data as a liking for a specific product. Working for Epsilon, you will know that marketing targeting, profiling and segmentation is performed on far more personal information than this - such as household income, address, job title and employer, age and gender, family demographics... and more. This information is held by all types of data broker; is freely traded between data brokers; and is used for both marketing and critical life-changing decisions