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Should consumers trust data brokers to protect their information?

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'You may not know them, but data brokers know you,' FTC's chairwoman says in pushing for privacy rules
An FTC proposal recommends creating a website that would let people see what data brokers know about them

Federal regulators say companies that buy and sell consumer data operate largely in the shadows and should be reined in with new privacy laws.

The marketing trade group that speaks for so-called data brokers says that no such laws are necessary and that these companies do a fine job of policing themselves.

As the Joker said in Tim Burton's "Batman," "Who do you trust? Hubba, hubba, hubba! Money, money, money! Who do you trust?"

The Federal Trade Commission laid out its case last week in a 110-page report on why data brokers should be dragged forcibly into the sunlight.

"You may not know them, but data brokers know you," said FTC Chairwoman Edith Ramirez. "They know where you live, what you buy, your income, your ethnicity, how old your kids are, your health conditions and your interests and hobbies."

She said data brokers collect and store billions of data points on "nearly every U.S. consumer," then compile "extensive profiles about us" that can be sold to marketers, employers and others.

The industry also lumps people together based on its own conclusions, Ramirez said. Thus, some consumers may be categorized as "financially challenged" or "rural everlasting" — a term used by data brokers to describe people over age 66 with "low educational attainment."

"Will these classifications mean that some consumers will only be shown advertisements for subprime loans while others will see ads for credit cards?" Ramirez asked. "Will some be routinely shunted to inferior customer service?"

Those are exactly the right questions. We are, I'm sure you'd agree, more than the sum of our credit scores and buying habits. Rural everlasting? Why not call people "hicks forever" and be done with it?

Data brokers are represented by the Direct Marketing Assn., an industry group that looks after the interests of companies that make a living intruding on consumers' lives.

Peggy Hudson, the group's senior vice president, said data brokers don't disagree with the FTC about the merit of greater transparency. They just don't see why lawmakers and regulators need to be involved.

The Direct Marketing Assn. "has long supported transparency and choice for its members," Hudson said. She noted that the FTC's calls for more consumer control over personal information "are consistent with existing hallmarks of the ethical standards for our industry."

The organization's members "provide consumer protection through strong self-regulatory practices, specifically outlined in our Guidelines for Ethical Business Practice," Hudson said.

Well, good enough for me.

Except for one teensy-weensy problem.

Left to their own device over the years, data brokers have consistently striven to keep consumers in the dark about the information they collect and what they do with it.

The FTC isn't trying to shut the industry down. It simply wants to give people more say over how their personal info is used.

Among the agency's recommendations is creation of a website that would allow consumers to see what various data brokers know about them and opt out of having their info used in the future.

It also wants retailers and other businesses to notify consumers before sharing information with data brokers and, again, to allow people to opt out of such activities.

If information is especially sensitive, such as medical info, people would have to be asked for their permission before it could be placed in the hands of data brokers.

These are excellent proposals. Will Congress act on them? I wouldn't hold my breath, considering Washington's lousy track record for privacy safeguards since the Sept. 11, 2001, terrorist attacks.

Hudson observed that the FTC's report cited "no actual harm to consumers," focusing instead on potential abuses of people's information.

Even if that's true, it doesn't mitigate the need for some oversight. Private companies that treat people's personal information as a profit center have no right to operate with impunity.

It's our information, not theirs.

Or does that point never come up in the Guidelines for Ethical Business Practice?

A tangled bill

Larry Scher, 68, of Whittier related an elaborate misadventure involving a questionable $4.98 charge on a recent Verizon telephone statement.

The charge ostensibly was for a pair of calls to directory assistance. Trouble was, neither Scher nor his wife had called 411.

On top of that, the calls apparently were made simultaneously on the dedicated line used for Scher's fax machine.

But getting Verizon to help untangle what should have been a minor issue turned into a major headache involving multiple calls to the company and multiple conversations with service reps unable to deal with the matter.

I won't delve into the blow-by-blow details. Suffice it to say that when Scher made a reasonable request to see the detailed call logs for his own line, he got nowhere. "They finally told me that if I wanted to see my call logs, I'd have to get a court order," he said.

Say what?

Jarryd Gonzales, a Verizon spokesman, said customers can indeed access their call logs online or ask for copies to be mailed to them. And it doesn't require a court order.

"In this situation, a simple request to one of our customer service representatives should have resulted in the call log being mailed or faxed to the customer," Gonzales said. "This time we fell short of our own expectation, and we apologize to the customer."

The takeaway for me: Never take no for an answer, especially from a phone company.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

Copyright © 2014, Los Angeles Times
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