Blurring Lines and Increased Regulatory Risks for Data Brokers

By: Charles E. Washburn, Jr.
– BNA Social Media & Law Policy Report

The data broker industry is very much on the radar of regulators. In various forms, the Federal Trade Commission (FTC) has made it clear that entities that collect and aggregate consumer information on a large scale from various sources are one of its highest priorities. This position was made very clear recently when the agency brought an action against an online company that sells consumer data collected through various social media sites. As the company marketed its list for specific purposes, such as employment screening, the FTC claimed that the company was acting as a credit reporting bureau, but failed to comply with applicable federal laws. This case and other actions by the FTC discussed in this article serve as a reminder that companies that collect and market data to third parties must be careful about making representations that could inadvertently trigger laws governing specific regulated industries. Moreover, in addition to following FTC actions in this area, firms must also be aware of and monitor the activities of the new cop on the beat overseeing consumer financial products and services, the Consumer Financial Protection Bureau (CFPB).

Reproduced with permission from Social Media Law & Policy Report,1 SMLR (Aug. 31, 2012). Copyright 2012 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>

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