Earlier this month, the Federal Trade Commission (FTC) issued its first-ever bans on the sale of sensitive user data by data broker companies. In orders released on January 9 and 18, the agency prohibited digital marketing firms OutLogic (formerly known as X-Mode Social) and InMarket Media from sharing, selling, or transferring their users’ precise location data.
These actions by the FTC highlight growing concerns over the use of personal data in advertising. Prior to the bans, OutLogic and InMarket were using location data from their users to categorize them into demographic groups—such as “low-income millennials,” “blue-collar workers,” or “well-off suburban moms”—which were then utilized to create targeted advertisements. By restricting these companies from using this information without explicit consent, the FTC emphasized that precise location data could reveal sensitive details about a person’s life, including visits to domestic abuse centers, reproductive health clinics, or places of worship.
The FTC’s orders also indicate a stance against the use of broadly worded consent forms for obtaining user data. In a statement following the order against OutLogic, FTC Chair Lina Khan stated that the Commission rejects the common premise that vague disclosures grant a company free license to use or sell individuals’ sensitive location data.
These recent orders may signal the possibility of more regulations in the future, given the rapidly increasing use of personal data in advertising. Major companies like Oracle, Equifax, and FICO dominate the emerging data broker industry, and researchers estimate that the industry—valued at approximately $300 billion in 2021—could surpass $500 billion by 2028. As privacy concerns continue to create tensions among consumers, corporations, and regulators, the rules and frameworks governing these relationships are likely to become increasingly important moving forward.
