A data broker is a company or individual that collects, aggregates, and sells or licenses personal information about consumers to third parties. Also known as an information reseller or data provider, these entities primarily source data from public records, social media, and purchase histories to build detailed individual profiles. Marketers use this data to target specific audiences, while financial institutions use it for fraud detection and risk assessment.
Key Concepts and Entities
- Data Broker: A business that aggregates info from diverse sources to enrich, analyze, and license it to other organizations.
- Acxiom: A major data broker that [claims to have data files on 2.5 billion people worldwide] (Wikipedia).
- Federal Trade Commission (FTC): The US agency that regulates data brokers and recommends transparency regarding consumer data collection.
- GDPR (General Data Protection Regulation): A European Union law that regulates how data brokers collect and process personal information.
- DELETE Act: A California law that led to the creation of a centralized platform for residents to request data deletion from all registered brokers.
- DROP (Delete Request and Opt-Out Platform): A service launched on January 1, 2026, allowing California residents to [submit a single deletion request to every registered data broker] (Privacy Rights Clearinghouse).
- Association of Independent Information Professionals (AIIP): A professional association representing primary and secondary researchers in the information industry.
What is a Data Broker?
Data brokers serve as intermediaries in the information economy. They do not typically have a direct relationship with the individuals whose data they collect. Instead, they harvest data from census records, court reports, motor vehicle records, and web browsing histories to create comprehensive dossiers.
The industry has grown alongside advances in computer processing and declining storage costs. [By 2018, American companies spent $19 billion acquiring and analyzing consumer data] (Wikipedia). These brokers range from massive corporations like Experian and Oracle to small, independent "stringers" who find and sell specific data points.
Why Data Brokers Matter
- Audience Targeting: Marketers use broker profiles to reach specific demographics based on income, marital status, or product preferences.
- Fraud Detection: Financial institutions license data to verify identities and prevent credit card fraud.
- Risk Mitigation: Insurance companies and lenders use "scored society" metrics to evaluate eligibility and interest rates.
- Operational Efficiency: Clients save time and money by hiring brokers who have specialized skills in retrieving complex information.
- Secondary Research: Brokers provide competitive intelligence on markets, products, and competitors for business planning.
How Data Brokers Work
The data brokering process generally follows these steps:
- Collection: Brokers harvest data from public sources (e.g., social media, voter registration, property records) and private sources (e.g., credit card companies, loyalty programs).
- Aggregation: Independent data points are linked to a single individual profile. [Some profiles include over 3,000 data points per person] (Wikipedia).
- Enrichment: Brokers cleanse and analyze the data to create categories, such as "financially vulnerable" or specific health-related interests.
- Licensing: Instead of selling the data outright, many brokers license it for limited, specific uses like targeted advertising or identity verification.
Types of Data Brokers
| Type | Focus | Primary Use |
|---|---|---|
| Marketing and Advertising | Consumer profiles and categories | Targeted ads, microtargeting, and list building. |
| Risk Mitigation | Identity verification and credit scores | Determining mortgage rates or insurance eligibility. |
| Fraud Detection | Transactional and behavioral patterns | Preventing financial theft and unauthorized account access. |
| People Search | Public records and contact info | Background checks for employment or housing. |
Best Practices
Screen all data providers. Use only reputable brokers to avoid purchasing data obtained for nefarious purposes. Major breaches have occurred when brokers failed to properly vet their own clients.
Ensure regulatory compliance. If operating in the EU, verify that the broker has a legal basis for data processing under GDPR. In the US, stay updated on state-level laws as federal oversight remains limited.
Verify data accuracy. Data broker information is often inaccurate or negatively biased. Use multiple sources to confirm critical data points before making decisions on credit, housing, or employment.
Provide opt-out transparency. If your company acts as a data intermediary, use clear language to describe your info-sharing policies and offer a user-friendly way for consumers to opt out.
Common Mistakes
Mistake: Treating data broker information as 100% factual. Fix: Use broker data as a tool for broad targeting or verification, but expect a margin of error in individual profiles.
Mistake: Ignoring state-specific registration laws. Fix: Register your business if it meets the legal definition of a data broker in states like California, Vermont, Oregon, or Texas.
Mistake: Confusing "buying" with "licensing." Fix: Review Gartner’s distinction that data is often licensed for limited use rather than sold, meaning you may not have permanent rights to the information.
Examples
- Marketing Scenario: An advertising agency licenses data from a broker to identify households with a net worth over $1 million and an interest in luxury travel for a high-end cruise campaign.
- Verification Scenario: A bank compares a loan applicant’s provided address against a data broker’s property records to verify the individual’s identity and detect potential fraud.
- Government Scenario: A law enforcement agency purchases "open source" cell phone location data from a commercial broker to facilitate an investigation without requiring a warrant.
Data Broker vs Information Professional
| Feature | Data Broker | Information Professional |
|---|---|---|
| Primary Goal | Selling/Licensing data for profit | Performing research for clients/libraries |
| Data Source | Aggregated databases and public records | Primary and secondary research materials |
| Common Output | Consumer profiles and data lists | Synthesis, reports, and curated information |
| Regulation | Subject to GDPR and state data laws | Governed by professional ethics and library science |
Rule of Thumb: Use a data broker when you need massive volumes of consumer records for targeting or scoring; hire an information professional for specialized, high-level research and data synthesis.
FAQ
Are data brokers legal in the United States? Yes. There is currently no federal law that prohibits the collection and sale of consumer data. However, state-level regulations are increasing. For example, [California, Vermont, Texas, and Oregon have enacted laws requiring data brokers to register with the state] (EPIC).
How do data brokers get my information? They collect data from multiple touchpoints. Sources include census records, change of address forms, social networking sites, consumer purchase histories, and even motor vehicle records. [In 2025, researchers identified 750+ data brokers] (Privacy Rights Clearinghouse) that aggregate this data to build dossiers.
Can I delete my data from a broker's database? It depends on your location. California residents can use the DROP platform to submit a single request to all registered brokers. Outside of California, consumers often must contact each broker individually. While DROP launched in early 2026, [brokers are not required to process those deletion requests until August 1, 2026] (Privacy Rights Clearinghouse).
How much do companies spend on this data? Investment is significant and growing. In 2018, American companies spent $19 billion on acquiring and analyzing data. This spending covers various needs, from background checks to psychological profiling. For instance, [the Interactive Advertising Bureau reported this $19 billion figure specifically for consumer data acquisition] (Wikipedia).
Are there privacy risks associated with data brokers? Yes. Data brokers have faced legal charges for security breaches due to poor data security practices. Additionally, sensitive lists containing info on seniors with dementia, rape survivors, or police officers have been reported in congressional testimony as being available for sale.
