Data brokers are firms that have made billions of dollars gathering and selling Americans’ personal information, including how much money they earn, what they buy and how many children they have. They get their data from a variety of sources, including public records as well as transaction histories compiled by credit card companies, retailers and other merchants.
Many consumers have no idea they are being tracked in this way. And while the practice is legal in the United States, it has fueled concerns among privacy advocates about the accuracy of this highly personal information, as well as the methods by which it is collected, bought and sold.
HOW BANNING BROKERS FAILED
Since 2013, Facebook had collaborated with major data vendors including Experian and Axciom. Using personal information about consumers provided by the brokers, Facebook built an ad-targeting tool on its site known as Partner Categories. Advertisers using the system could pinpoint their ads to Facebook users who met certain criteria, say, those who owned their own homes, just had a baby or drove luxury vehicles. Partner Categories was particularly powerful because it allowed marketers to direct their ads based on information that users may never have disclosed to their friends on Facebook.
Facebook announced March 28 it was shutting down Partner Categories. That same day, the company told ad agencies they would be prohibited from uploading lists of potential prospects acquired from data brokers into Facebook.
Together, those two steps would have effectively amounted to a total ban of data brokers from the site.
Facebook’s initial move was a blow to consumer-goods manufacturers that lack direct relationships with the people who buy their products, marketers said. Car makers, for example, often know little about consumers who walk into dealerships. Ditto for food manufacturers, which sell to supermarkets, not grocery shoppers.
To target customers on social media, these companies rely on data brokers to guide them to the best prospects, according to interviews with current and former data broker executives.
Ad agencies besieged Facebook to reconsider, according to three people familiar with the situation.
One executive conveyed a blunt message to Facebook: “’Dollars would go to other places if we can’t find suitable alternatives,’” she recounted to Reuters.
On March 30, just two days later, advertiser complaints persuaded Facebook to allow them to continue to target Facebook users with ads based on uploaded customers lists purchased from data brokers. The company told Reuters its Partner Categories tool will still be phased out by October.
Arkansas-based Acxiom, one of the nation’s largest data brokers, told Reuters it researches the sources of its consumer information carefully, using methods that are “not only legal, but also just and fair to the individual.”
Experian, another major vendor based in Dublin, Ireland, did not respond to multiple requests for comment on their privacy policies.
Many Americans are mistrustful of data brokers. A Reuters poll of 1,780 people in the U.S. found that, of those who were familiar with the brokers, 68 percent said they were opposed to social media firms working with those information vendors. The poll found 59 percent of those who were familiar with the data brokers said they would use a social media site less if they knew the tech firm was partnering with them.
The poll conducted between May 15-21 found 751 were “somewhat” or “very” familiar with data brokerages. The poll has a credibility interval, a measure of the poll’s precision, of 4 percentage points.