F.T.C. Opens an Inquiry Into Data Brokers

The Federal Trade Commission on Tuesday opened an investigation into data brokers, the companies that collect and sell information about consumers for marketing and other purposes.

The agency issued administrative subpoenas to nine different information resellers, requiring each company to provide extensive details about how it collects information about consumers; how it uses, stores, analyzes and shares that data; and whether the company allows consumers to access and correct the records the company holds about them. Some of the companies named in the inquiry do not directly sell information about consumers, but offer analytics services in which they categorize, score or evaluate consumer data.

The companies include Acxiom of Little Rock, Ark., one of the world’s largest information resellers, which manages customer databases for major banks, automakers and retailers; eBureau, a company in St. Cloud, Minn., which, on behalf of clients like credit card companies, lenders, insurers and educational institutions, evaluates and scores online consumers in the market for those companies’ products; Intelius, a company in Bellevue, Wash., which offers people-search look-up services and background checks; and PeekYou, a company that analyzes social media sentiment. Acxiom and eBureau were the subjects of separate articles this year in The New York Times.

In an e-mail message in response to a reporter’s query, Gordy Meyer, the president of eBureau, wrote that the company “welcomes the opportunity to describe, to the F.T.C., its practices and the benefits we provide to businesses as well as consumers.” Representatives of other companies did not immediately return e-mails from a reporter seeking comment.

The F.T.C.’s action comes nine months after the agency issued a report on consumer privacy, calling on data brokers to make their practices more transparent to the public. Because most data brokers are business-to-business enterprises, regulators say, many consumers are not aware that such companies may compile and sell hundreds of details about their race or ethnicity, financial status, shopping habits, health interests, vacation preferences, Web browsing history, online search queries and other matters. In fact, some larger data brokers have collected more than 1,000 pieces of information each on a majority of adults in the United States. Regulators say they are concerned that the information could be used to unfairly narrow or limit the kinds of financial, insurance, health, education or other offers certain consumers receive.

“Data brokers aggregate huge amounts of data on individuals and have the capacity to create powerful profiles combining information about what you do offline and online,” David C. Vladeck, the director of the F.T.C.’s Bureau of Consumer Protection, said in a phone interview Tuesday. “We worry that this information may be used in ways that could be harmful to consumers.”

In a statement, the Direct Marketing Association, an industry trade group, welcomed the F.T.C. investigation, saying the results would highlight the “significant benefits” consumers derive from receiving marketing pitches that are based on information about their personal tastes and activities.

Yet some legislators and regulators say they are taking a harder look at the industry because of practices that are opaque to consumers. Unlike consumer reporting agencies, for example, which are required by federal law to show consumers their credit reports and allow them to correct errors in their own records, data brokers who collect and sell consumer information for marketing purposes are not required to give individuals access to the records those companies hold about them. In its report earlier this year, the F.T.C. asked Congress to consider enacting regulations to give consumers some rights to data collected about them.

The F.T.C.’s investigation represents at least the fourth inquiry into the industry this year.

In July, Representative Edward J. Markey, Democrat of Massachusetts, and Representative Joe L. Barton, Republican of Texas, co-chairmen of the Bipartisan Congressional Privacy Caucus, started an examination into the practice of nine data collectors. That investigation is continuing; the lawmakers held a public briefing in the House with executives from the companies last Thursday. In October, Senator John D. Rockefeller IV, Democrat of West Virginia, opened his own investigation into nine information resellers . (Each investigation involves different companies, although a few companies were included in more than one inquiry). The Government Accountability Office has also started its own research into the industry.

But the F.T.C.’s 15-page administrative orders require each company to provide much more detailed information than the legislators asked for.

“We are going to get a huge amount of data,” Mr. Vladeck said. “We are going to get answers.”