Laboratories of Transparency: The FTC’s Data Broker Report and the Role States Can Play

Yesterday, the Federal Trade Commission released a report on data brokers and called for legislation that enables consumers to access their data, learn how it is collected and shared, and opt out of sharing for marketing purposes. The enormous data broker industry operates out of view and is estimated to possess records on most Americans, all of which raises privacy concerns in need of creative solutions. As policymakers consider next steps in light of the FTC’s report, California provides an example of how a state can push forward with transparency measures on its own.

For years now, California has been at the forefront of efforts to provide consumers with tools for learning how personal information is collected and shared. In the 1970s, California voters added a privacy provision to the state constitution inspired directly by commercial data collection. In 2003, the state enacted a law known as “Shine the Light” that gave residents a right to ask companies how information was shared with marketers. Last year, state legislators seeking to update that law introduced the Right to Know Act, which provided consumers the ability to learn how their information was collected and shared with data brokers, online advertisers and other third parties. California websites today must reveal how they respond to Do Not Track signals, and last week the state attorney general released a best practices guide for website transparency. The state Senate has just approved a bill specifically requiring data brokers to provide consumers with access to their information and a right to correct it, two core recommendations from the FTC’s report.

What little we know about data broker practices only underscores the necessity of allowing consumers to learn more. Information organized by these companies is widely available online and may include sensitive personal information. In fact, newspapers have reported data brokers selling lists of “Suffering Seniors” and even rape victims. While some data brokers can provide useful services, even seemingly innocuous information can be misused. As an example, the FTC’s report notes that while a person classified as a diabetic might find it useful to see ads for sugar-free products, an insurance company may use the same information to conclude that person is a higher risk.

The FTC’s data broker report subjects this industry to overdue scrutiny and calls for policymakers to act. But the federal government is not the only place where solutions can be found. As California’s recent past shows, states are capable of putting forth innovative solutions to nationwide problems. This ability for local governments to serve as policy laboratories is exactly what U.S. Supreme Court Justice Louis Brandeis once praised as a benefit of the American federal system. As technology advances and it becomes easier to amass consumers’ personal information, these state-driven solutions will be essential to ensuring our privacy is not left behind.

Matthew Cagle is a Technology and Civil Liberties Fellow with the ACLU of Northern California.