Today, getting on the latest apps is seemingly effortless, convenient, and quick. But, once you become a user, you’re giving away access to your data. And most times, it is not a fair trade. While you enjoy a service, the company providing it shares and sells your personal information to dozens of third parties.
Your digital self has a price tag, and data brokers manage this surprisingly legal and lucrative business field.
Let’s dig deeper into the fine prints of online data collection and the data transactions that happen behind closed doors.
What are data brokers
Data brokers are companies that collect, compile, and sell online data. You might also know them as information brokers or data suppliers.
Through web tracking, they gather valuable information about users and combine it with data from other offline sources, such as credit cards or insurance companies.
Data brokers sell sensitive details like your:
- Full name
- Address of residence (and previous addresses)
- Telephone number
- Email addresses
- Age and gender
- Social security number
- Data about real estate properties
Quite scary, right?
These companies fall into two categories: first-party and third-party data brokers, so let’s take a closer look at them.
First-party data brokers
First-party data brokers earned their name because they have a direct relationship with you, the customer. They collect large amounts of data while you use their product.
Some companies use vague wording to skate around privacy regulations. For instance, advertisers won’t know your personal details like your name, age, or gender, but they will receive access to your interests and purchase intents.
In some cases, data brokers sell access to your data, not the data itself.
Third-party data brokers
Third-party data brokers are companies that don’t have a direct relationship with you, but they buy, repack and sell your data.
What’s more, this consent may be sneakily included as one of the checkboxes you have to select when you sign up for a service. For example, a company might divulge this information in small print when you sign up to get a loyalty card.
And it’s not just digital sources that data brokers use. They also rely on your:
- Social media
- Web browsing history
- Buying history and warranty information
- Credit card information
- Public records (everything from your driver’s license and motor-vehicle records to census data, birth certificates, marriage licenses, and even voter registration information.)
Data brokers combine them all together and create audience and user segments. They then proceed to sell these to other companies.
Hmm. So Bill proposes turning the #DataBrokers (@Experian, @Equifax, etc.) into ‘#DataTrusts‘, letting them help other corporations fleece you 👇 while they themselves charge you for the privilege? 🤦🏻♂🤦🏻♂🤦🏻♂ No thanks! Data #rights, not #ownership, is far preferable (done well). https://t.co/0CshuYNZdj pic.twitter.com/eMbUYcEh1S— Phil Booth (@EinsteinsAttic) March 12, 2021
How data brokers get your data
Ever counted the number of websites you visit daily? Or how many apps you use?
They all run through web tracking and record all your clicks, page views, time on site, and even your mouse movements in some cases. All these details are then stitched together and help data brokers categorize you.
Imagine a huge library, and on one of the thousands of shelves, there’s a book with your name on it. When you open it, you see it has all your information segmented into chapters. Your education, job history, online shopping, social media activity, and plenty more are all there. That’s what data brokers have on you.
Depending on the type of company they do business with, data brokers select relevant chapters. That’s how your digital life ends up being for sale, one chapter at a time.
Data brokers from the Federal Trade Commission have on average 3,000 pieces of data on nearly every US consumer.
Data brokers thoroughly analyze user profiles before licensing them. But sometimes, what they think they know about you isn’t entirely accurate. And that’s because not everything you do online is about your needs or your desires.
For example, if you browse for diabetes medication, data brokers will classify you as a health risk, even if the pills are not for you.
Are you writing a research paper about the psychological effects of divorce on kids? Well, data brokers will take that as a confirmation that you’re preparing to sign divorce papers.
Regardless of their slight inaccuracy, it’s still terrifying to see the load of data they know about you.
Why companies buy from data brokers
Data brokers wear many hats and have clients from all fields. And here are some of the reasons they’re in such high demand.
A marketing data broker will gather information about you to create better-targeted ads.
They’re interested in your web and purchase history but may also use age, gender, and income to improve targeting.
Most times, marketing data brokers combine that data into segments and sell it to the highest bidder. And, yes, this is another cause of all those spam emails you get.
Sometimes, data brokers serve companies like banks, credit, or insurance companies.
Let’s say you are applying for a car loan. Before the bank decides whether to give it to you or not, they might check with a fraud detection data broker to see if the information you provided regarding income, debts, and salary isn’t false.
Mortgage lenders and credit companies want to know how much you owe and if you have a good track record of paying back your loans.
But they’re also interested in the websites you visit. If you have a mortgage loan with a high-interest rate, these companies will try to tempt you into refinancing a loan at a lower rate. So, they’ll target you with online ads.
Likewise, credit card companies have a close bond with online shopping retailers, making sure they have a way of bombarding you with new credit card offers.
Do you use any fitness or workout apps? Data brokers collect info from these services too.
These kinds of details tell them how likely you are to have a heart problem or other health condition. It’s all so that they know whether they should send you offers for heart medication or other products.
They can also make reasonable estimates of your income by tracking the number of your online purchases. So, these brokers will show you high-risk/high-interest offers or low-interest avenues to invest your money.
The value of your digital data
Now, here comes the juicy part. The whole idea of ‘data has become the new oil’ has turned into a familiar tune in recent years. The numbers suggest this seems to be true.
Data brokerage is a lucrative industry generating $200 billion in revenue yearly.
Data brokerage s a multi-billion-dollar industry. How much is your data worth? Or, better said, how much money do they make just from your data?
That price tag varies from $89 per email address to $8 per month to access your social media accounts.
For instance, a US digital advertising company would make $35 per month for data from a single user.
The jackpot for data brokers is when they sell data as a consumer bundle: more details, more profit.
Is this all legal?
In the European Union, data brokers operate under GDPR restrictions.
The data protection law states that users have the right to know how their personal info is processed and stored, including why and for how long businesses hold on to it.
In the US, each state gets to rule and pass its privacy laws.
In 2018, Vermont passed a law requiring all businesses that sell or share data on residents to register in a public database and share information about how they work.
California’s Consumer Privacy Act also allows residents to obtain copies of the information that data brokers have uncovered on them. Plus, people in the area can request to have the data erased or opt-out from having their data sold.
In 2019, New York also passed its own bill to force data brokers to register with the state. The bill also directed the state’s Attorney General to maintain a website listing these data brokers.
Patchy regulations aside, there’s also a security factor. Not only do you have no idea about what data brokers are doing with everything they gather on you, but they also might not even put enough effort into keeping it safe.
Remember the 2017 Equifax data breach? That’s when this big data brokerage company failed to ensure strong cybersecurity practices, leading to the exposure of millions of users’ data.
How to keep data brokers off your back
There’s one tiny silver lining in this whole situation. You can ask data brokers to stop collecting and sharing your data. Although, in most cases, you have to pay the price for it. Ironic, I know.
Here are some of the biggest data brokers you can contact to opt-out of data collection:
It’s time you protect your data
As privacy is becoming more important for users, smartphone manufacturers picked up on the trend and started implementing some changes. You can now opt-out of ad tracking, for instance.
With the iOS 14 software update, Apple took one step further, letting users opt-out of app tracking altogether. This move drastically reduces the amount of data brokers and advertisers can collect.
Google also rolled out new app controls for location data, so you can now automatically delete your Location History data on iOS and Android devices.
We can only hope privacy by design principles will become the norm and not the exception.
Until then, there are some things you can do to improve your privacy.
Were you aware of data brokers and what they do with your info? Have you ever requested a company to delete all the data they had on you? How did that go?
Let me know in the comments below.