Sellers of big data have a big problem with accuracy, a new report from a consumer advocacy group finds.
The National Consumer Law Center asked 15 of its own employees to request information about themselves from some of the country's largest data brokers. The responses the volunteers received were often riddled with errors, according to the NCLC's report.
Consumer lenders increasingly rely on information they purchase from data brokers to help make decisions on credit applications. If some of that data is faulty, calculations derived from the data may be less predictive of the borrower's creditworthiness.
While the NCLC report says some of the errors found by its volunteers were mundane, such as incorrect phone numbers, others were more significant. For example, of the 15 responses provided by data broker eBureau, seven of them included erroneous information about the consumer's estimated income, according to the report.
"Even given our initial skepticism, we were astonished by the scope of inaccuracies among the data brokers we investigated," the NCLC authors wrote in the report.
In addition to eBureau, the report's volunteers obtained personal information from the data brokers Intelius, ID Analytics and Spokeo.
It's difficult to make direct comparisons among the four companies because each firm provided different types and amounts of information to the NCLC volunteers.
At ID Analytics, 12 of the 15 reports were correct, but the San Diego company provided only bare-bones information to each consumer. At eBureau, which also turned over sparse data, only five of the 15 reports were entirely accurate.
Spokeo and Intelius provided more information about consumers, including data about their occupation and social media profile. For each of those companies, 13 of the 15 volunteers received reports containing inaccuracies.
A decades-old federal law, the Fair Credit Reporting Act, requires companies that qualify as consumer reporting agencies to meet various consumer protection standards. Some data brokers tout themselves as being compliant with the law, while others argue that the information they sell does not force them to meet the law's requirements.
In response to the NCLC report, Spokeo said that it is not a consumer reporting agency; rather, the Pasadena, Calif., firm is a people-search service that helps individuals research and reunite with each other, the company stated. Spokeo's website touts both personal and business uses for its data.
"The information we provide is always evolving as we are consistently working to ensure addition of data from the best possible sources," Spokeo's general counsel, Angela Saverice-Rohan, said in an email.
Intelius also is not a credit reporting agency, according to a company spokesman. The Bellevue, Wash., firm informs its customers that its reports are not allowed to be used for the purposes defined by the Fair Credit Reporting Act, the spokesman said.
ID Analytics follows all credit reporting laws, a company spokeswoman said in an email after reviewing the NCLC report.
eBureau did not respond to a request for comment on the report's findings.
Persis Yu, an NCLC staff attorney who co-authored the report, said that the four companies examined were chosen in large part because they allow consumers to request information that's been gathered about them. That's in contrast to certain other data brokers, which can be hard even to locate.
"A lot of data brokers don't want to be found, in my experience," Yu said.
Much of the information that data brokers sell comes from the digital footprint consumers leave online. It is frequently used by lenders as a way to gauge the creditworthiness of borrowers who don't have enough mainstream borrowing history to generate a credit score.
The Federal Trade Commission has been studying the data broker industry, looking into concerns about the accuracy of the information being sold as well as consumer privacy. The FTC plans to hold a public event exploring the issues in Washington on March 19.
The NCLC report, which adds to a growing chorus of criticism about inaccuracies in information sold by data brokers, argues that federal authorities should examine the companies for their compliance with federal law.
It also recommends that the Consumer Financial Protection Bureau, in coordination with the FTC, write regulations designed to ensure that the information data brokers gather is accurate, as well as to provide consumers an opportunity to dispute erroneous information.
"Big data brokers do not provide consumers with a meaningful way to verify the accuracy of their information," the NCLC report states, "nor is there any way that inaccurate information can be disputed."