WASHINGTON, D.C. — U.S. Senator John Thune (R-SD), Ranking Member of the Senate Committee on Commerce, Science, and Transportation, delivered the following prepared remarks at today’s “What Information Do Data Brokers Have On Consumers, and How Do They Use It?” full committee hearing:

Thank you, Mr. Chairman, for holding this hearing. Thank you also to the witnesses for coming here to testify. Our economy is increasingly data driven and data brokers play a growing role in facilitating the provision of goods and services to consumers.   

Data, or information, brokers are companies that collect data, including personal information about consumers, from a wide variety of sources – such as public records, websites, and retailers – and then re-sell such information for purposes that range from verifying an individual’s identity and preventing fraud to marketing products. As the Chairman noted in his initial letters to several data brokers in 2012, the purpose of his inquiry has been to better understand the industry, and I look forward to today’s hearing as we focus on how the information collected by data brokers is used for marketing purposes.

Without question, data driven marketing can provide benefits and greater convenience to consumers. It can lower the cost of products and services because businesses can target marketing more precisely. It also can help businesses create and sell products that consumers actually want, lowering start-up costs for new businesses. Data driven marketing is one important reason that many of us are able to use search engines and our email accounts for free.  It also allows consumers to receive frequent shopper benefits and coupons. And, it promotes the targeting of resources to reduce the amount of junk mail and catalogues that aren’t tailored to a consumer’s particular interests – at least that’s the goal. 

Put simply, this industry is at the center of something the Commerce Committee cares about – commerce. In today’s economy, data driven marketing is widely used across all sectors of the economy – financial, insurance, automotive, retail, technology, healthcare – it’s even used by non-profits, governments, and political campaigns. In fact, many media outlets have noted how the use of commercial data sources helped the President’s re-election in 2012. 

As we’ll hear from the Direct Marketing Association, the marketing data industry is also helping to fuel job creation and technical innovation in our slowly recovering economy.

While the industry creates many benefits, this hearing will also explore important questions about the privacy implications of data brokers’ activities, including issues of transparency, profiling, and concerns about allegations of differential pricing. Questions have also been raised about whether consumers are aware of the instances in which their personal information may be collected, bought and sold, resulting in calls for more transparency into data broker practices. Advocates have also raised concerns that data brokers create profiles of individual consumers based on the aggregation of sensitive, sometimes personal data – including health conditions. These are important issues and I look forward to the discussion today. 

In a rapidly changing marketplace, the Federal Trade Commission has done important work examining data brokers and related privacy issues, including developing educational efforts. They have also brought enforcement actions under the FTC Act and the Fair Credit Reporting Act. The FTC is also completing a study about practices in the data broker industry and will provide recommendations to Congress based on their findings next year. I look forward to their testimony. The Government Accountability Office has recently produced a report on the data broker industry, which I understand will be submitted as part of the record for this hearing as well to help inform this committee.  

I will be asking our witnesses how data broker practices for marketing purposes may impact consumers – both positively and negatively. I am also interested in hearing from our witnesses how the industry can work to balance the privacy concerns of individuals with the information needs of businesses and our economy.

Finally, Mr. Chairman, while I’ve expressed my thanks to all of our witnesses being here today, I do want to add a special note of thanks to Tony Hadley from Experian. This inquiry began with letters sent to nine companies, and over time it has also included letters to several consumer-facing websites. Having only one of those companies testify is a good way to keep the number of witness manageable in light of the busy Senate schedule this week. Mr. Hadley, I’m sure many of the other companies are grateful for your willingness to testify and help advance our understanding of the data broker industry. I certainly am. With that, I thank you again Mr. Chairman for holding this hearing, and I look forward to hearing from our witnesses. 

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