Data brokers change labels describing poor

They used to be called the "X-tra needy". Now they just have "X-tra time on their hands". These are the Bible-reading, budget-conscious 60-somethings who have been relabelled by one big US data broker looking to ward off controversy over the way its industry uses personal information to target vulnerable consumers.

Epsilon, which collects and sells data garnered from retail purchases, public records and marketing surveys, has renamed its categories of financially vulnerable consumers amid a growing clamour from regulators, privacy advocates and lawmakers for greater scrutiny of the $150bn industry.

Lawmakers have chastised brokers for scoring individuals based on financial and health data and selling that information without people's knowledge or consent.

The US Senate Commerce Committee and the US Federal Trade Commission have launched investigations into the largely unregulated data broking industry, which scours thousands of sources to build dossiers about hundreds of millions of people.

These profiles can include sensitive details including lists of rape victims and information on people who have been denied credit.

Privacy advocates fear that companies buy these profiles to target vulnerable consumers for risky lending products, such as payday loans, and fraud schemes.

Data brokers are resisting calls for tighter regulation. "Existing laws governing unfairness and deception can and should be used to stop schemes by predatory lenders and fraudulent marketers," said Experian, one of the largest brokers.

Despite repeated requests, Experian and two other big data brokers, Acxiom and Epsilon, have refused to provide lawmakers with details about both the sources and the purchasers for the data they sell. The companies say such information is contractually confidential, and note that people have the option to opt out of having their information used for marketing.

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Experian sells information on groups of consumers under a "Struggling Societies" label. It describes its "Hard Times" consumers as "an underclass of the working poor and destitute seniors" and "the bottom of the socioeconomic ladder, the poorest lifestyle segment in the nation".

Acxiom, a rival data broker, sells lists of "Financially Challenged" people whom it describes as struggling with some of the lowest incomes and little wealth.

Equifax's lists include the titles "Tough Start: Young Single Parents" and "Relying On Aid: Retired Singles", both of which were highlighted in the Senate committee investigation.

Epsilon and Acxiom said they were not aware of companies using their information to take advantage of vulnerable consumers with predatory products.

Acxiom said that it was not changing how it sold data about its "Financially Challenged" group in light of the Senate investigation. "Financially challenged consumers need help and ethical companies use that data to offer them services that they need and/or might not know about," it said in a statement.

Epsilon's rebranding of segments highlighted in the senate investigation includes renaming the "Very Spartan" as "Value Focused."

"Those names weren't meant to be draconian or pejorative," Jeanette Fitzgerald, Epsilon's chief privacy officer, told the Financial Times. "Once you put things out into the public realm, there is often a misunderstanding. The best way to resolve that is to correct the name."

The US Senate Commerce Committee last month requested more information from the six data brokers about how information on vulnerable populations is ultimately used. Senators John Rockefeller and Edward Markey, meanwhile, have introduced the Data Broker Accountability and Transparency Act, which would require companies to be more transparent and accountable for the information they track and sell.

Senator Rockefeller, chairman of the commerce committee, told the FT: "I am glad to hear that Epsilon is acknowledging the offensive nature of some of their products and descriptions of American consumers. However, if Epsilon is going to address my concerns, they need to do more than play with semantics."

"It's outrageous that Epsilon and other data brokers are still refusing to be transparent about their customers and sources of consumer information," he added. "Consumers deserve to know who is buying and selling their personal information - and I intend to get to the bottom of this mystery."

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