"If you're not paying for the product, you are the product." The quote, which has cirulated in some form other the other since the 1970s, is vastly overused in today's internet world, but distills a complicated reality into a simple principle: data is extremely valuable today and many businesses are after it. Social media companies are among the most voracious collectors of user data, mainly via targeted ads. Data brokers,however, are not so different, as they painstakingly collect information and sell or trade cumlative data to the highest bidder.

But what are data brokers, and how can you stop them from taking hold of your data? Here's an introduction to data brokers 101.

What are data brokers?

From an organizational standpoint, data brokers are firms that collect information about users and then bundle it into an organized format in order to sell it to others, usually other companies or individuals.

Data colllection is a lucrative business. According to data from WebFX, there were over 4,000 data brokering companies worldwide in 2020, and that number has only grown since. The same article suggests Acxiom, one of the largest data brokers on the market, had 23,000 servers that collected and analyzed consumer data; the data was then collated to create individual user profiles with more than 3,000 data points per person.

This may sound disproportionate, but its easier to target advertisements and other media campaigns when you know more about your customer. A profile with 3,000 data points will theoretically provide a more holistic view of an individual versus one that may have 1,500 or 2,000 data points.

Conversely, companies that choose not to use data brokers and that manually collect information directly are often slower than competitors to react to market trends.

What types of information do data brokers collect?

Data brokers collect a variety of personal information that includes full names, age, gender, email addresses, phone numbers, dates of birth, registered residence details, purchase habits, personal interests, political leanings, and education level, among other things. In certain cases, data brokers can obtain users health status, arrest record and income.

How do data brokers collect my data?

Much like social media companies, data brokers collect user data by tracking online and offline activity.

When it comes to online tracking, data brokers typically utilize application programming interfaces (APIs) from social media and e-commerce sites, along with mobile apps and search engines. Many websites can also track​​​​​​ clicks, page views, time on site, and even mouse movements. Offline activities, on the other hand, can be tracked via public records and include court records, motor vehicle records, census data, marriage and divorce records, and bankruptcy records It's worth mentioning that offline data collection doesn't necessarily live offline; providers such as Accurint and TLOxp store offline records in paid databases. Data from brick-and-mortar loyalty programs also falls within this category.

How is my personal data used?

The exact process varies depending on individual company strategies, but generally speaking, data brokers collect, bundle, and sell information. Legally speaking, data ownership is often not transferred from the data brokers to the purchasing companies but is leased to them in the form of subscription packages. It goes without saying that the more refined (and/or sensitive) the packaged data is, the higher the price it will fetch.

The majority of the companies that buy information from data brokers use it for marketing and targeted advertising purposes, but there are other scenarios. For instance, financial institutions may use the data to assess whether a specific person is likely to repay a loan or to confirm their identity and thwart fraud attempts.

How can I limit the data brokers collect?

There are several steps that you can be take in order to limit the amount of information data brokers collect. The most direct way, although not always the easiest, is to contact individual data brokers. Journalist Yael Grauer has created a handy guide with detailed information on how to contact the most prominent data brokers on the market and opt out of their data collection practices. There are also companies like DeleteMe and PrivacyDuck that provide this type of service, doing the tedious work of chasing data brokers on behalf of users in exchange for a set fee or a recurrent, ongoing subscription. Additionally, registering with DMAchoice will get one's name off direct marketing and telemarketing lists, and joining the Consumer Credit Reporting Industry’s OptOutPrescreen.com will make it possible to opt out of prescreened offers for credit cards or insurance products.

A VPN helps obscure some personal information

And of course, making one's web fingerprint as anonymous as possible is always a good idea to limit the information data brokers can collect at the source. This can be done, among other things, through the use of a web browser that blocks trackers, surfing the internet via the TOR network, and signing up for a VPN.