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Feds cracks down on data brokers

But protecting your online privacy remains an uphill battle

By Julie Sartain, Network World
July 02, 2012 07:02 AM ET

Network World - J. Elizabeth Hill, a nurse living in San Diego, recently received a Gmail message from her nephew. Pasted inside was an article about soldiers in Afghanistan and the discrepancies regarding the ammunition they use.

15 social media scams

Nine days later, Hill received via snail mail at her home address a catalog for a company that sells magnum semi-automatic air pistol revolvers, border patrol survival knives, self-cocking crossbows, armor-piercing "performance ballistic alloy" ammunition rounds, Israeli-issue gas masks, plus lots of other survival gear and military surplus items.

"I have never owned, fired, or even handled any type of weapon," Hill says, "And I have never visited a website connected to the military, war, or weapons of any kind. In addition, this is the first and only email I have ever received that mentioned these types of keywords. Does this mean my name will start showing up on lists of potential terrorists?''

Hill has good reason to be concerned. There are nearly 200 companies out there that collect and sell your personal information. And there's very little you can do if that information is flat-out wrong or gives a false impression of who you are.

In fact, it's perfectly legal for online data brokers to collect information about you from any number of sources and then to aggregate and sell that information. The Interactive Advertising Bureau says personal information on Internet users is worth $31 billion a year, up 22% from last year.

However, there is a glimmer of hope.

Last month, for the first time ever, the Federal Trade Commission stepped in and spanked a data broker, in this case it was Spokeo, to the tune of an $800,000 fine for selling personal information to employers and job recruiters without taking steps to protect consumers under the Fair Credit Reporting Act.

The FTC also sent warning letters to six unidentified mobile app makers notifying them that their background screening apps may be violating federal statutes. The collecting of personal information is not at issue in these cases, it's the use of that information for employment screening, housing, credit or other purposes that fall under the Fair Credit Reporting Act.

Where Spokeo crossed the line, according to the FTC, is that it failed to maintain reasonable procedures to verify who its users are and that the information would be used for a permissible purpose; that it failed to ensure the accuracy of consumer reports and that it failed to provide proper user notice. Also, Spokeo was posting endorsements of its service on news and tech websites, but those endorsements were written by Spokeo employees, according to the FTC.

Spokeo has agreed to change its practices and the FTC settlement should have a ripple effect throughout the industry. But the fact remains that these companies can legally gather whatever information they can about you, and there's not much you can do about it.

Who Are These People?

"Most of these broker sites are actually search engines that scatter little Pac Man bots through cyberspace collecting every scrap of data that's ever been recorded anywhere in the world. They justify this privacy intrusion by labeling it as a safety measure; that is, a way to check out your babysitters to ensure that no secret child corrupters are watching your children. Others claim it's a fast way to connect with old friends," says Jack Stratton, independent IT consultant and former Novell systems analyst.

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