Data Brokers: How Your Info Turns Into Profit

Understanding the Data Broker Industry

You’ve been planning on fixing your brakes and Googling auto repair shops. At the same time, you have been longing to buy butterscotch fudge ripple ice cream and searching for it on your Instacart app. Suddenly, you’re seeing ads for car repair and ice cream parlors. It may seem like a weird coincidence, but it’s actually a scheme cooked up by data brokers.

When you visit a website or use an app, you consent to specific data being used by that company. This can be purchased by ad auction companies, who compile that personal information into profiles, which can be used to display unique ads — refreshing ice cream in a waffle cone.

This is how data brokers operate. A data broker collects information about consumers’ personal lives and their financial information.

The Data Broker Industry

The data broker industry, estimated by some to be worth $277 billion, is one in which your intel is sold, sometimes to reputable firms and sometimes not. Countries around the globe may purchase your information. If your data is an actor, think of a data broker as the agent. Except when they sell your information, they get all of the money, and you don’t.

Whether it matters depends on how comfortable you share your personal information with the world.

“Even if personal information doesn’t include highly sensitive details like Social Security numbers, data brokers can still use it to build surprisingly detailed profiles of individuals,” says Adwait Nadkarni, professor at the William & Mary Cybersecurity Center.

“By combining demographic details such as age, location, and gender with other data points, brokers and their clients can infer financial status, dietary habits, political leanings, and even certain health information, if not covered by HIPAA,” Nadkarni says.

How Data Brokers Work

It isn’t as if there’s one big file on you, and the data brokers grab it and sell it. Data brokers compile the file. With the help of software and algorithms, they gather countless small pieces of data from different sources, piecing them together to create a detailed, holistic picture of — you.

Data brokers aren’t all alike. You can generally break them down into three categories:

Marketing Data Brokers

These companies build consumer profiles for targeted advertising and marketing campaigns. The more a marketing company knows about you, the more likely they can sell you something you want. You may welcome that — or prefer finding things to buy instead of retailers finding you.

People Search Sites

You probably have seen these websites on the internet; they aggregate public records and other information to create searchable profiles of individuals, often for a fee. This isn’t ominous if you’re the one paying to look for somebody and have pure reasons; maybe you’re searching for a long-lost cousin or want to learn more about the guy your daughter is dating (your daughter may think you’re crossing a line). However, it becomes a much more worrisome story if you’re on the receiving end of an unwanted search.

Risk Mitigation Brokers

These are companies that sell data to help businesses assess risk, such as for fraud prevention or identity verification. This can be a good thing. For instance, if somebody has stolen your identity, a company that uses a risk mitigation broker may learn that the thief isn’t actually you and refuse to, for instance, take out a loan in your name.

How Data Brokers Collect Your Data

Data brokers hunt down your data in various ways, but there are three lanes they travel down the most.

Public Records

Here, data brokers engage in a practice called web scraping, where they use software to scrape information about you from government and public databases, including:

• Voter registration records
• Property records (home ownership, taxes)
• Birth and marriage certificates
• Motor vehicle records
• Court records (criminal history, bankruptcies)

Commercial Sources

Some companies and brands you interact with on a daily basis sell your data.

• Retailers and loyalty programs: Sure, you get deals with these programs, but your shopping habits, brand preferences, and purchases are valuable.
• Credit card companies and financial institutions: They collect data on your spending habits, income level and creditworthiness.

Online Activity

This is the third way that data brokers collect data — by analyzing your digital footprint. Practically speaking, the entire internet is one giant data brokerage.

Some of the ways that companies learn about you online, include:

• Website tracking: Cookies, tracking pixels and web beacons follow your browsing history.
• Social media: Data brokers can scrape public information from social media profiles, compiling your likes, interests and connections.
• Mobile apps: Many apps, from games to weather services, request extensive permissions from you.

What Type of Personal Information Do Data Brokers Collect?

Data brokers are interested in virtually everything about you, including:

• Identity and demographics: Your full name, current and past addresses, phone numbers, and email addresses.
• Your age, gender, marital status, ethnicity and family members.
• Your education level and occupation.
• Behavioral and lifestyle: Your shopping habits and purchase history.
• Web browsing history and search queries.
• Hobbies, interests, and political affiliations.
• Location data (places you visit, commute patterns).
• Financial and health: Your income level, credit score, assets and debts.
• Inferred health conditions based on purchases (e.g., pharmacy data) or online searches.

What Do Data Brokers Do With Your Information?

Once data brokers have a wealth of information on you, there’s virtually no limit to what it can do. Some of the ways it can make money off of you include:

• Targeted advertising: Companies buy data to create particular ad campaigns.
• People search sites and background checks: This data is compiled for sites where we can all look up each other’s personal details for a fee.
• Risk assessment: Insurance and finance companies use the data to set premiums, assess creditworthiness, or detect fraud.
• Other uses: Then there are less common but significant uses, such as political campaigns micro-targeting voters.

Protecting Your Information from Data Brokers

If the idea of data brokers makes you squeamish, there are ways that you can protect yourself. Make no mistake — it’s not easy and not practical for most people to try to keep their personal information private.

Still, you can request that data brokers not collect your information and not sell it, and depending on the company and the laws governing where you live, they may have to comply.

If you don’t feel up to contacting data brokers individually, a strategy referred to as “manual opt-out,” you can pay for a data removal service. Numerous data removal services exist, with names like DeleteMe, Optery and EasyOptOuts. They come at a cost, though, with some charging over $100 and $200 a year.

You can also try to minimize your digital footprint, so a lot of your information doesn’t get out there in the first place. You may want to try the following:

• Use a VPN and private browsers.
• Use the best antivirus software you can find and afford.
• Be selective about the apps you download and the permissions you grant.
• Read privacy policies and terms of service.
• Decline marketing opt-ins and loyalty programs whenever possible.
• Be mindful of what you post on social media and other public forums.
• Try to avoid being scammed, obviously.

Protecting yourself from identity theft can only help you keep your information private. The bottom line? You have a lot of valuable personal information, but you aren’t watching out for it. It really isn’t your own — it belongs to the data brokers.