Lawmakers target data brokers in privacy bill

The Data Broker Accountability and Transparency Act, introduced by four Democratic senators Thursday, also would require the U.S. Federal Trade Commission to craft rules for a centralized website for consumers to view a list of data brokers covered by the bill.

Data brokers collect personal information about consumers, often without their knowledge, and resell it to other businesses.

The bill is needed because data brokers are a "shadow industry of surreptitious data collection that has amassed covert dossiers on hundreds of millions of Americans," Senator Edward Markey of Massachusetts, a co-sponsor of the bill, said in a statement. "Data brokers seem to believe that there is no such thing as privacy."

Other sponsors of the bill are Richard Blumenthal of Connecticut, Shelden Whitehouse of Rhode Island and Al Franken of Minnesota. The new version of the DATA Act is similar to a 2014 bill co-sponsored by Markey that failed to pass in the Senate.

Blumenthal, in a statement, called data brokers "insidious, invisible threats" to privacy on the Internet.

The legislation isn't needed, countered the Direct Marketing Association, a trade group representing data brokers and other companies using data-collection services. Three 2014 investigations of the data-broker industry, by the FTC, the U.S. Government Accountability Office and the Senate Commerce, Science and Transportation Committee, found little evidence of wrongdoing in the industry, said Rachel Thomas, the DMA's vice president of government affairs.

Data brokers are continually taking steps on their own to improve transparency to consumers, she said. "That kind of transparency is happening every day, in terms of self-regulation in the marketplace," she said.

Critics of data brokers often fail to define specific problems, Thomas added. "When you talk about insidious threats or wrongdoing by a particular company, there isn't a real clear understanding of who's being pointed to there," she said. "There's not a business in American that's not dependent on the responsible flows of data about consumers."

The senators introduced the bill just days after President Barack Obama's administration offered a proposal for a consumer privacy bill of rights. Several privacy groups have criticized the Obama administration plan, saying it provides weak privacy protections and does little to rein in data broker practices.

Last May, the FTC called on Congress to consider legislation that limits the ways data brokers can use personal information.

The data-broker industry "largely operates in the dark," with most U.S. consumers unaware that companies are collecting data about consumers' place of residence, interests, children, health conditions and income, FTC Chairwoman Edith Ramirez said then.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.