What Information Do Data Brokers Have on Consumers, and How Do They Use It?
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S. HRG. 113–693 WHAT INFORMATION DO DATA BROKERS HAVE ON CONSUMERS, AND HOW DO THEY USE IT? HEARING BEFORE THE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE ONE HUNDRED THIRTEENTH CONGRESS FIRST SESSION DECEMBER 18, 2013 Printed for the use of the Committee on Commerce, Science, and Transportation ( U.S. GOVERNMENT PUBLISHING OFFICE 95–838 PDF WASHINGTON : 2015 For sale by the Superintendent of Documents, U.S. Government Publishing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\GPO\DOCS\95838.TXT JACKIE SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION ONE HUNDRED THIRTEENTH CONGRESS FIRST SESSION JOHN D. ROCKEFELLER IV, West Virginia, Chairman BARBARA BOXER, California JOHN THUNE, South Dakota, Ranking BILL NELSON, Florida ROGER F. WICKER, Mississippi MARIA CANTWELL, Washington ROY BLUNT, Missouri MARK PRYOR, Arkansas MARCO RUBIO, Florida CLAIRE MCCASKILL, Missouri KELLY AYOTTE, New Hampshire AMY KLOBUCHAR, Minnesota DEAN HELLER, Nevada MARK WARNER, Virginia DAN COATS, Indiana MARK BEGICH, Alaska TIM SCOTT, South Carolina RICHARD BLUMENTHAL, Connecticut TED CRUZ, Texas BRIAN SCHATZ, Hawaii DEB FISCHER, Nebraska EDWARD MARKEY, Massachusetts RON JOHNSON, Wisconsin CORY BOOKER, New Jersey ELLEN L. DONESKI, Staff Director JAMES REID, Deputy Staff Director JOHN WILLIAMS, General Counsel DAVID SCHWIETERT, Republican Staff Director NICK ROSSI, Republican Deputy Staff Director REBECCA SEIDEL, Republican General Counsel and Chief Investigator (II) VerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 S:\GPO\DOCS\95838.TXT JACKIE C O N T E N T S Page Hearing held on December 18, 2013 ...................................................................... 1 Statement of Senator Rockefeller ........................................................................... 1 Staff report entitled ‘‘A Review of the Data Broker Industry: Collection, Use, and Sale of Consumer Data for Marketing Purposes’’ by the Office of Oversight and Investigations Majority Staff .......................................... 4 Statement of Senator Thune ................................................................................... 54 Prepared statement of Alicia Puente Cackley, Director Financial Markets and Community Investment, U.S. Government Accountability Office ..... 56 Statement of Senator Booker .................................................................................. 119 Statement of Senator Johnson ................................................................................ 121 Statement of Senator Blumenthal .......................................................................... 123 Statement of Senator Markey ................................................................................. 126 Statement of Senator McCaskill ............................................................................. 129 Statement of Senator Fischer ................................................................................. 135 WITNESSES Jessica Rich, Director, Bureau of Consumer Protection, Federal Trade Com- mission .................................................................................................................. 66 Prepared statement .......................................................................................... 68 Pam Dixon, Executive Director, World Privacy Forum ........................................ 72 Prepared statement .......................................................................................... 73 Joseph Turow, Robert Lewis Shayon Professor of Communication, Associate Dean for Graduate Studies, Annenberg School for Communication, Univer- sity of Pennsylvania ............................................................................................. 102 Prepared statement .......................................................................................... 104 Tony Hadley, Senior Vice President of Government Affairs and Public Policy, Experian ................................................................................................................ 105 Prepared statement .......................................................................................... 107 Jerry Cerasale, Senior Vice President of Government Affairs, Direct Mar- keting Assocation ................................................................................................. 110 Prepared statement .......................................................................................... 111 APPENDIX Response to written question submitted to Jessica Rich by: Hon. John D. Rockefeller IV ............................................................................ 143 Hon. Kelly Ayotte ............................................................................................. 143 Response to written questions submitted to Jerry Cerasale by: Hon. Amy Klobuchar ........................................................................................ 145 Hon. Kelly Ayotte ............................................................................................. 145 (III) VerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\GPO\DOCS\95838.TXT JACKIE VerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\GPO\DOCS\95838.TXT JACKIE WHAT INFORMATION DO DATA BROKERS HAVE ON CONSUMERS, AND HOW DO THEY USE IT? WEDNESDAY, DECEMBER 18, 2013 U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, DC. The Committee met, pursuant to notice, at 2:31 p.m., in room SR–253, Russell Senate Office Building, Hon. John D. Rockefeller IV, Chairman of the Committee, presiding. OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV, U.S. ENATOR FROM WEST VIRGINIA The CHAIRMAN. The Committee will come to order. There are, at this point, two people sitting at the dais, and they are two wonderful people, but I would be pleased if there were more. Senator Blumenthal and Senator Pryor, Senator Markey, Senator Fischer, Senator Warner will be here. But this is the day that we almost vote on the budget, actually. We don’t quite. We always find ways to do it. You have the motion to proceed to it, and then you have a motion to—whatever. And then tomorrow at some point we vote on the budget. Just be grate- ful you are in private life. [Laughter.] The CHAIRMAN. OK. You are all welcome. The disclosures about U.S. intelligence activities over the past few months have sparked a very public debate in this country about what kinds of information the government should be gath- ering and how we protect the privacy of Americans who have done nothing wrong. The Snowden disclosures have harmed our country’s national se- curity, but they have made Americans think more than they usu- ally do about how their lives, both online and offline, can be tracked, monitored, and analyzed. People are aware of that, not to the extent that they are in Great Britain, where they are so accus- tomed to being videotaped in everything they do. We are still going through that adjustment period. I am glad we are talking about these important privacy issues, in general and today. We have all benefited from the rapid ad- vances in computing technology, but we also cherish our personal freedoms. We always use that word, ‘‘cherish’’ our personal free- doms. But we do. And it is a complicated subject. And we want to (1) VerDate Nov 24 2008 11:27 Aug 14, 2015 Jkt 075679 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\GPO\DOCS\95838.TXT JACKIE 2 be able to protect ourselves and our loved ones from the unwanted gaze of the government and our neighbors. What has been missing from this conversation so far is the role that private companies play in collecting and analyzing our per- sonal information. A group of companies known collectively as ‘‘data brokers’’ are gathering massive amounts of data about our personal lives and selling this information to marketers. We don’t hear a lot about the private-sector data broker industry, but it is playing a large and growing role in our lives. Let me provide a little perspective. In the year 2012, which you will recall was last year, the data broker industry generated $156 billion in revenues—that is more than twice the size of the entire intelligence budget of the United States Government—all gen- erated by the effort to learn about and sell the details about our private lives. Whether we know it or like it or not, makes no dif- ference. One of the largest data broker companies, Acxiom, recently boasted to its investors that it can provide, quote, ‘‘multi-sourced insight into approximately 700 million customers worldwide.’’ When government or law enforcement agencies collect informa- tion about us, they are restrained by our Constitution and our laws, and they are subject to the oversight of courts, inspectors general, and the United States Congress through the Intelligence Committee in the Senate and the House. And I have served on the Intelligence Committee since before 9/ 11, and I can declare to you absolutely without a single thought that the protection that NSA provides to security and secrecy is far better than what we are going to be talking about today. They have rules. They have all kinds of judges and hoops that you have to jump through. The FBI is involved, DOJ. It is all—it is very