The Controversial World of Data Brokers: What You Need to Know

The Rise of Data Brokers: Navigating the Legal Landscape

In the world of data collection and monetization, the term “data broker” has become a sensitive topic for companies involved in the business. Despite their reluctance to be labeled as such, the legal definition of a data broker is clear – any company that collects consumer data for the purpose of selling it to third parties.

Recent examples of data brokers facing regulatory scrutiny include X-Mode Social and Kochava, both of which have settled or are facing lawsuits from the Federal Trade Commission. Additionally, state laws like California’s Delete Act have further defined and regulated the activities of data brokers.

As regulators ramp up their efforts to protect consumer data privacy, companies in the data brokerage industry are facing increased scrutiny. While some companies, like Experian, prefer to position themselves as “connectivity companies” rather than data brokers, the legal definition remains unchanged.

States like California, Vermont, Texas, and Oregon have implemented laws requiring data brokers to register with the state and disclose their data collection practices. California’s Delete Act, set to go into effect in 2026, will allow residents to request the removal of their personal data from data broker databases.

The push for more stringent governance of data brokers comes as public concern grows over the risks of sharing sensitive personal information. With the potential for consumer harm and the violation of privacy expectations, data brokers are under pressure to ensure their practices align with legal and ethical standards.

As data brokers navigate this evolving legal landscape, the focus on consumer privacy and data protection is paramount. Adapting to a “consumer-first” approach in a “privacy-first” world is essential for companies operating in the data brokerage industry.