How Data Brokers Make Money Selling the Data They Collect About You

Data brokers are companies that collect personal information about consumers from various sources and then sell that data to other businesses. The data broker industry has grown rapidly in recent years, raising concerns about privacy and how these companies profit from buying and selling personal data, often without the knowledge or consent of the individuals involved.

What Data Do Data Brokers Collect?

Data brokers gather information about consumers from a wide variety of sources both online and offline. This can include public records, social media activity, web browsing history, purchase history, loyalty program data, census records, and more. The types of personal data collected can include names, addresses, email addresses, phone numbers, browsing and buying habits, demographics, interests, and much more.

Some of the largest data brokers have data on hundreds of millions of consumers. They use this vast trove of data to build detailed profiles of individuals and households for marketing purposes. The more data points they have on someone, the more insights they can derive about that person’s habits, interests, and preferences.

How Do Data Brokers Make Money from Consumer Data?

There are several ways data brokers monetize the personal information they collect:

• Selling data to other companies – This is the primary business model. Data brokers package and sell consumer data to other businesses who want to use it for targeted advertising, credit decisions, fraud prevention, or other business interests.
• Consumer profiling – Data brokers analyze the data to identify trends and create detailed profiles of consumers that they then sell. Profiles focusing on income level, buying habits, interests, and other factors are valuable to marketers.
• People search services – Data brokers sell access to their databases through people search sites that allow users to look up individuals’ contact info, background checks, criminal records, and more.
• Risk mitigation services – Data is sold to insurance firms, lenders, and others to help assess risk levels of prospective customers. Data can verify identities and spot potential fraud.
• Marketing services – Data brokers provide mailing lists, telemarketing lists, email lists, and other services to help businesses acquire new customers. Lists can be segmented based on demographics, interests, purchase history, and more.

The extensive data broker industry essentially profits by trading in individuals’ personal information, usually without consent. The largest firms make billions of dollars a year selling consumer data.

Data Removal Services

While data brokers amass information on people with little oversight, there are some options for consumers who want their data removed or protected:

• A data broker removal service provides forms to opt out of databases of major data brokers like Acxiom and Epsilon. This requests data not be shared or sold for marketing.

• Privacy rights organizations like the World Privacy Forum offer advice and sample opt-out letters for individuals to manage data sharing.
• Direct requests to individual brokers may also have some success in limiting the sale of personal data, though brokers are not legally required to comply.
• Be aware of privacy policies and cookie consent notices when browsing online retail, social media, and other sites. Opt out of data collection where possible.
• Use a VPN, limit sharing personal info online, and take other steps to minimize the data trail available to brokers.

While data brokers face limited regulation in how they collect and distribute private data, individuals can take some steps to try to minimize their exposure. But ultimately stronger privacy laws are likely needed to control how personal data is monetized without consent.

Data brokers make billions of dollars annually by collecting vast amounts of personal data and selling it to businesses for marketing and other purposes – often without consumer knowledge. While options exist to reduce exposure, stronger regulation of data collection and sales practices may be necessary to truly reform the industry and protect privacy.