Buying and Selling Data, Part 1
It’s difficult to actually know how much the industry of buying and selling data is worth. The companies that sell data, data brokers, are incredibly secretive and far-reaching in their collection of information.
Recently, there have been some laws passed that have forced more transparency, but data selling practices are still very murky.
Data Brokers
So, what are data brokers? Essentially, they are the main middleman in the industry of buying and selling data. These companies buy up, compile, and analyze data to sell to whoever wants it.
These companies usually fall into one of three categories in terms of their function and how they make money. The first is people search sites, like Spokeo or PeopleSmart, where you can pay a small fee to find information on someone. On these sites, you can usually find addresses, phone numbers, marital status, and plenty of other data.
Data brokers also sell data for marketing. These companies specialize in categorizing data, essentially creating profiles of potential customers. These profiles include a vast amount of information, from ethnicity to education level to the ages of your children. Other companies can then buy this information and use it to tailor ads and promotions to specific customers.
There are also data brokers that focus on risk mitigation. These companies collect data to detect fraud — basically, using older data to find any inconsistencies in behavior.
Harvesting Information
To create these troves of data, data brokers mine a vast array of sources, both online and offline. Social media is a prime source of information. Take, for example, Facebook. Facebook itself stores pretty much all of what you do on the site, so your friend lists, who you’ve unfriended, what ads you’ve clicked on, what links you’ve clicked on, your relationship status, your education level, your location every time you log in, what you’ve bought on Marketplace, everything you’ve ever searched for, the groups you’re in, and much more. If you connect your contacts list, either from your phone or email, to find friends or to use Facebook messenger, it can see all of that.
It also tracks you off Facebook using Facebook Pixel. This tracks you across websites so companies can see if you buy their product after seeing one of their Facebook ads. It also means Facebook can see what political campaigns you donate to, what shoes you bought, or what you ate for dinner last week. Facebook can also track you if you log into other apps using your Facebook account.
Third-party websites also share data about your activity with Facebook — how many times you visited the site, whether you bought something — so Facebook can advertise to you.
Facebook maintains that it doesn’t sell this data — which is mostly true. Facebook uses your data as an incentive to advertisers to buy Facebook ads. Basically, this means that even though it’s not selling your data directly, it’s selling indirect access to your information for advertisers to use to optimize their campaigns.
Facebook does however share contact information with advertisers. This means that they could see your full name, email address, phone number, and birthdate. This is bad enough, but it also means they can then connect you to more information about your online activity that they buy from data brokers.
Only one app, and already the massive web of data collection starts to emerge.
And Facebook is by no means the only tech company doing this. One reporter covering the data collected by tech companies found that Google had collected a record of every app he had opened, including date and time, on his phone for several years.
It’s not just tech companies, either. If you have a driver’s license, the information that you are legally required to disclose on the forms to get one can then be sold by the DMV to data brokers and even private investigators. In 2019 alone, the California DMV made 50 million dollars selling personal information to data brokers, and similar sales are happening in DMVs across the country.
Retail companies that have loyalty programs might ask you for your phone number or maybe your ZIP code. Once that information is put into their system, a data broker like Axciom can determine your identity within a 10 percent margin of error.
By gathering information from a variety of different sources, data brokers can compile a fairly accurate profile of you and your behavior. Once formed, the data broker can grow their web of data with even small data points, refining your profile to be even more and more specific.
And it’s not just your purchases that are being tracked. Facebook quizzes and quiz apps, the kind that ask you about your personality and personal tastes, are used to score users on psychological traits. The data that you inadvertently enter is collected by data brokers like Cambridge Analytica. The data broker then uses the information to create a psychological profile which then can be used for granular targeting. The companies that use the methods often apply them to political campaigns. Rather than just using data to sell you something, data brokers work to suppress certain populations from voting while mobilizing others by playing on their fears.
Medical information is also up for grabs to data brokers. The FTC recently filed a complaint against Flo, a period and fertility tracking app for misleading users on how their data was being used. Wellness apps don’t have to comply with HIPAA and aren’t necessarily checked out by public health officials. While some health apps have been able to use anonymized medical data input by users for good, such as providing data for understudied areas like women’s health, the lack of regulation means that the data can also be used for nefarious purposes.
Because they gather so much data from so many sources, data brokers can create a huge web of information that allows them to create distinct and granular profiles.
This sort of information is incredibly useful to retailers, political organizations, and other companies. So far, data brokers have had near unfettered access to personal data. While there have been some attempts at legislation, more is needed to bring data brokers out of the shadows and allow users to reclaim ownership over their information.
See part two of our deep dive into the data brokerage industry for more on how the information collected and analyzed by data brokers is used.
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