According to the report, marketers who buy that data then use the information to sell risky financial products to people who can least afford them.
Although marketers often argue that consumer data is necessary make advertising relevant to customer interests and preferences, the Committee’s report states that the nine data collection companies it examined place people in less benign categories such as “Rural and barely successful,” “Second Town Ethnic Wrestlers” and “Credit Crunched:” City Families ”.
Here is a list of the less than favorable descriptions that data brokers use to define subsets of poor consumers, according to the Senate Commerce Committee report:
Committee staff compiled their report using information they requested from nine data vendors on where they get their information and how they use it. Respondents were: Acxiom, Experian, Epsilon, Reed Elsevier, Equifax, TransUnion, Rapleaf, Spokeo and Datalogix.
The report says that while some data brokers have policies that prohibit their clients from using their information to sell debt-related products, the lack of industry oversight leaves data brokers wiggle room when they need it. It is about applying the terms of these contracts.
He highlighted the “Hard Times” product offered by Experian as an example of how brokers define financially vulnerable consumers. Experian told the Committee that it describes the people whose contact details are included in its package as follows:
“It’s the bottom of the socio-economic ladder, the poorest lifestyle segment in the country. Hard times are older singles in the slums of cities. Almost three quarters of adults are between 50 and 75 years old; it is a subclass of the working poor and the destitute elderly without family support… A quarter of households have at least one retired resident.
Marketing materials for another Experian product explicitly advertise its ability to help marketers identify “underbanked consumers” who have purchased payday loans, whereby a person borrows a small amount of money at a high interest rate in the hope that the money will be repaid when the borrower receives his next salary.
According to The Pew Charitable Trusts, these loans are either expressly prohibited or made illegal by other lending laws in 14 states and the District of Columbia.
“The product companies described to the Committee include consumer profiles that characterize consumers by degree of financial vulnerability and propensity to use payday loans and other non-traditional financial products,” the report said. “The names, descriptions and characterizations of these products are likely to appeal to companies that sell high cost loans and other financial risk products to populations more likely to need cash quickly, and the sale and use of these consumer profiles deserve careful consideration. “
Although the Senate Trade Committee report did not investigate whether the companies surveyed gave consumer information to traders who used it in predatory ways, the report cites several past incidents as evidence of how such fraud actually occurs.
In a particularly egregious case, a telemarketer stole the bank account of a 92 year old army veteran after receiving information from the data broker InfoUSA, which published lists such as “Oldies But Goodies” to reach people described as “gullible… [who] want to believe that their luck can change.
The report further berated three of its respondents – Acxiom, Experian and Epsilon – for failing to give certain information about where their data came from.
“These are serious matters,” said Jay Rockefeller, chairman of the Senate Trade Committee. said in a hearing on the day the report was released. “We have the feeling that people are getting ripped off or being ripped off. … It is up to you to dissuade us from doing so.