What Are ‘Data Brokers’ and Are They Evil?  

Key Points

• Data brokers are companies that buy, collect, and sell your data to turn a profit.
• Data brokers are also called information brokers collect information and sell it to third parties.
• Data brokers are legal, but that’s the short answer.

Data brokers are companies that buy, collect, and sell your data to turn a profit, and they can pose a severe threat to your privacy. Although you may not know who they are, they surely know — and even use essential details about — you! Data brokering firms obtain your data by purchasing it from other companies.

There are various channels for accessing this information, including credit card companies, government records, or even public sources such as social media.

In fact, you might be surprised to learn that Facebook and Google are considered two of the modern data brokers, and they’ve certainly been in the limelight when it comes to scandals regarding selling public data.

However, they’re not alone. Acxiom, Epsilon Data Management, Oracle America, Equifax, and Experian are some of the largest data brokerage firms on the market today.

What are Data Brokers, and How Do They Work?

Data brokers (also called information brokers) collect information and sell it to third parties. They collect data from various sources — both online and offline — that might be related to your daily life, likes and dislikes, web search preferences, recent purchases, and the city you live in.

The data collection might also relate to personal facts such as marital status, health, and even your current location and address.

The information is then sold to parties such as commercial advertisers, and the brokerage firm earns a profit from it. This can prove to be quite lucrative. In fact, an average data broker’s salary can start around $30,000, with the top 90% of earners making over $120,000 annually.

Not surprisingly, there are a large number of broker sites in existence.

Types of Brokers

There are typically four types of brokers in the brokerage industry: Marketing and advertising, people search, financial information, and health.

Marketing and Advertising

Have you ever clicked on a product once and then seen similar products from other brands popping up on your social media feed? This is called targeted marketing, and it’s done by the marketing brokers.

People Search

A people search brokerage firm collects information on your personal identity such as your name, address, age, and phone number. They then sell the information to government agencies, companies, or other individuals who are willing to pay a premium price for it.

Financial Information

These brokers have a risk-mitigating role in that they collect information on things like your credit score, your ability to repay loans, and the chances you will default on a loan or payment. This information is in the highest demand by financial institutions looking to avoid the risk of fraud and default.

Health

Health data brokers are the ones who keep track of your health issues and record them based on what you search on the internet as well as your offline purchases. For example, say your cousin is staying with you for a few weeks, and she’s experiencing perplexing symptoms that lead to an internet search on your browser for treatments.

A data broker might assume the search is related to your health and sell the information to the insurance companies, which may raise or reduce your insurance rate based on the information provided. This can make you an unfair target given that the information isn’t accurate.

Are Data Brokers Legal?

The short answer is, “yes.” As there are no strict laws regarding data protection, they are mostly legal. Unfortunately, the United States also doesn’t have any strict laws on data privacy. Thus, brokers can easily and freely invade our privacy, collect information, and sell to third parties. Websites and online registrations often include a consent box where you can only continue if you agree to it.

This consent box requests permission to share your data with third parties. Moreover, there are publicly available sources of information such as social media, where a lot of information can be gathered and sold. These are two ways data brokers can collect your information in a legal manner.

Are Data Brokers Good or Bad?

This question is cause for some debate. With a tremendous rise in internet usage, computing technologies, and even the emergence of AI, a significant number of brokerage firms are surfacing. This has led to increased data sharing and selling to other parties, prompting the brokerage industry to become an established industry — this tends to raise more concerns and put additional emphasis on data protection.

Although data brokers claim that they are selling information in an anonymous way, that’s not entirely plausible. Once a data broker has recorded a significant file of facts and information about an individual, that person is at risk of being figured out — even if the data broker never shares his or her name. Essentially, the third party will eventually be able to figure out who the individual is based on the data clues.

The biggest risk with a brokerage firm is the major threat of data misuse or data breach. If a company’s data is compromised by hackers, it is a direct threat to any client information they have stored. At the end of the day, our worlds revolve around the internet, and online access means our information is out there. Whether we like it or not.

Thankfully, some broker companies carefully handle that data and ensure it is not misused. Companies such as Snowflake and DataMarket, for example, are working hard to provide advanced security solutions for data storage.

And it isn’t to say data brokering is without its upside. On a positive note, data sharing can aid in fraud detection and cross-checking details. This is particularly beneficial for financial institutions. Plus, to some extent, the advertising and marketing brokers make life easier — after all, how else would you find that awesome headlamp you searched for but haven’t been able to locate since?

Wait a day or two, and you’re likely to see pop-up advertisements with every brand of headlamp imaginable. Mission accomplished.

Final Thoughts

Evolving technology, internet exposure, and an increase in competition have given rise to the emergence —and the consequent influx of — Data Brokers.

Data brokers certainly aren’t all evil (we’d be remiss to make that generalization), but the fact remains that your privacy and most of your data are at risk 24/7. Your information is never completely safe.

This is why data protection laws have taken on so much importance! No matter how many benefits data brokering offers, knowing there are people out there who have knowledge of your personal details (despite never having met you) is both scary and intimidating. Are data brokers evil? We’ll let you decide.

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