No More Secret Dossiers: We Need Full FTC or CFPB Investigation of “Fourth Bureau” Reputation Intermediaries
There is a superb article by Ylan Q. Mui on the growth of new firms that create consumer reputations. They operate outside the traditional regulation of the three major credit bureaus. Mui calls this shadowy world of reputational intermediaries the “fourth bureau.” The Federal Trade Commission should conduct an immediate investigation of the “black box” practices described by an industry leader in the article. This should be part of a larger political and social movement to stop the collection of “secret dossiers” about individuals by corporate entities. The Murdoch scandal now unraveling in Britain is only the most extreme example of a wholesale assault on privacy led by unscrupulous data collectors.
Once a critical mass of data about a person has been collected for a commercial purpose, she deserves to know what the data is and who is gathering it. Once an educator, employer, landlord, banker, or insurer makes a decision based on that data, the affected individual should be able to challenge and correct it. I have made a preliminary case for such reforms in my chapter Reputation Regulation, in this book. I now think this agenda is more urgent than ever, given the creeping spread of unaccountable data mining in the internet sector to a wild west of reputational intermediaries.
From a Fair Credit Reporting Act to a Fair Reputation Reporting Act
To understand why, it’s helpful to take a step back and look at how poorly regulated even the established credit bureaus are. As Shawn Fremstad and Amy Traub have noted in the Demos report Discrediting America, ample empirical evidence has confirmed that a vast number of traditional credit bureau files are erroneous: