Thursday, August 28, 2014

Data Brokers: Shadow Industry, Privacy Flashpoint, Research Problem

By Marc Dresner, IIR

I attend a lot of research conferences and I’ve noticed that when the subject of privacy comes up, people frequently check out—laptops open, fingers wander to phones, sometimes eyes even roll…

I attribute this to the fact that heretofore privacy has been pretty much a non-issue for researchers. Arguably no other industry adheres to more rigid privacy standards.

The problem, however, is that we live in a world where data are no longer rare, and researchers obviously aren't the only ones who trade in information nowadays.

Experts and authorities warn of a “Big Privacy” backlash in response to Big Data collection

Experts and authorities from a variety of fields and sectors—from public policy to data security—warn of a mounting “Big Privacy” backlash in response to passive Big Data collection.

And if you’ve not been paying attention to the public discourse on privacy of late, perhaps it’s time to start, because the outcome of this debate could affect consumer research.

Flashpoint: Data Brokers

Where there’s a Big Data and privacy concern, you’re increasingly likely to hear "data brokers" mentioned.

I’ve been surprised by the number of researchers who’ve told me they haven’t heard of this $250 billion industry, especially since so many of our companies (or our clients, if you’re a research firm) do business with them.

Data brokers collect information about consumers from public records and private sources and sell it to marketers.

The chief complaint against them is that they often do so without people's knowledge or consent. 

It's also a relatively unregulated space, which coupled with the perceived lack of transparency—some call it a “shadow industry”—makes people uncomfortable.

Now, these aren’t shadowy guys in sunglasses lurking in alleyways hocking hot dossiers under their trench coats (although that’s how they’re increasingly depicted).

They include big, well-known names like Acxiom and Equifax, as well as a lot of smaller companies you may not have heard of.

Like any industry, there may be responsible and not-so-responsible actors, but it’s the possibility of the latter that’s captured the attention of regulators and the media.

The collection and use of consumer information by marketers is being characterized as somehow sinister or potentially dangerous

What’s especially troubling here is that the collection and use of consumer information by marketers, in general, is being increasingly characterized as somehow sinister or at least potentially dangerous to people.

  • CBS’s “60 Minutes” aired a breathless segment on data brokers back in March that made admirable use of government surveillance anxiety in the wake of the NSA/Snowden scandal to scare the heck out of the viewing audience.

  • The FTC issued a report May 27 calling on Congress to regulate data brokers (with only a slightly less ominous tone than the “60 Minutes” episode).

  • A subsequent commentary about data brokers published online by the Wall Street Journal—that bastion of left-wing conspiracy nuts—went so far as to compare Big Data to the Nazis’ use of IBM punch cards to identify and round up Jews and enemies of the state. (The lead sentence of that article: “Adolph Hitler used Big Data.”)
There’s more where that came from, but you get the idea.

Data brokers have come to represent a “threat” to personal privacy that has already catalyzed a backlash

Data brokers have come to represent a “threat”—whether real or imagined—to personal privacy that has already catalyzed a backlash.

Notably, concerns about data brokers have begun to figure into international relations.

The EU has pushed for suspension of the 2000 Safe Harbor agreement with the U.S. over alleged breach of consumer privacy by data brokers, and earlier this month, the Center for Digital Democracy filed a complaint with the FTC alleging the same.

The debate is even reportedly spilling over into the Transatlantic Trade and Investment Partnership (TTIP) negotiations.

As noted, the FTC has already pushed Congress for action. It’s not unlikely that we’ll see such calls intensify domestically.

I’ll also point out that many articles on the subject either don’t trouble to distinguish between or—as is the case with the “60 Minutes” coverage—conflate research companies and data brokers.

This needs to be taken seriously.

It’s time for the research industry to engage, before the court of public opinion renders a verdict that may not serve the common good.

Marc Dresner is IIR USA’s sr. editor and special communication project lead. He is the former executive editor of Research Business Report, a confidential newsletter for the marketing research and consumer insights industry. He may be reached at Follow him @mdrezz.

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