How California’s Delete Act could impact the business of data brokering

Do you ever feel like your digital life is being tracked? Your web searches, all that stuff you buy online? Well, it totally is. There’s an entire industry built around making money off personal information that’s gathered online. Companies known as data brokers collect it, then sell it to other parties.

California tried to tackle this problem a couple of years ago, giving consumers the right to ask that companies delete their information. But actually doing that is tedious. Consumers have to make the request one company at a time.

A bill passed by California lawmakers this month aims to change that by allowing one request to apply to all data brokers. SB 362, also known as the Delete Act, would additionally require brokers to register with the state. At this point, the legislation needs Gov. Gavin Newsom’s signature to become law.

Jessica Rich is a senior policy adviser for consumer protection at the law firm Kelley Drye and a former director of the Federal Trade Commission’s Bureau of Consumer Protection. She laid out the stakes of the issue for Marketplace’s Lily Jamali.

The following is an edited transcript of their conversation.

Jessica Rich: One key concern has been that data brokers operate behind the scenes, collecting and selling data about consumers without consumers knowing about it. Meanwhile, the data can be used to determine who gets certain offers and prices, who’s labeled a fraud risk, who qualifies for government benefits, etc. There’s also been instances where stalkers have purchased this data to locate their victims.

Lily Jamali: So how would the Delete Act, this legislation in California, help consumers who are worried about their data being used in that way?

Rich: This will give consumers significant new rights. A consumer is going to be able to go to this one-stop shop and tell all data brokers operating in the state to delete their information and not collect it anymore. On the other hand, it will also cut off the use of data that can often be very productive, allowing businesses to verify consumers, allowing government to verify consumers and figure out who qualifies for various benefits.

Jamali: So stepping back, when you look at the Delete Act as it looks right now, who are the winners and losers?

Rich: I think that consumers often don’t know that these companies exist, and more accountability and rights for consumers is certainly in order. But data brokers believe this act is a blunt instrument that goes too far in potentially cutting off all services that data brokers provide. And in that way, there could be some losses here.

Jamali: And this is a bill that if it becomes law affects California. But what would its enactment mean for consumers outside of California?

Rich: Well, it generally affects California consumers. However, it can be very hard for a business to configure its operation so it’s different in different states. So it is conceivable that these could have spillover effects in other states. This also comes at a time when we’ve seen moves on this issue from the White House, from Congress, from the FTC and the [Consumer Financial Protection Bureau], among others. So, this could be the beginning of a longer trend.

More on this

For more of Jessica Rich’s take, here is her analysis of the bill and of data brokers’ argument against it. You can also read more about the federal government’s efforts to rein in the data broker industry, which she mentioned at the end of our interview.

The Electronic Frontier Foundation, a digital rights group, is a key supporter of the Delete Act. The organization recently published an article that highlights how the legislation could potentially protect consumers from data brokers.