which apps to use and which technologies to embrace. so i bring my eight track and i have caught myself sometimes being at a news conference with the own -- and being the only one with a paper and pen. there are different ways that you can be old-school and new school. clearly members of congress had to embrace using some of the social media. some of them do it themselves. chuck grassley is known for tweeting when he sits on his wallet. or those who have staffers that do it. you can tell in terms of the voice of the person coming through. certainly, they have used their facebookpace image -- pages and various outlets to communicate directly with constituents, but there is a utility for reporters as well. --senator grassley quit clearly tweets himself, if you look at his feet you can

conclude that, but a lot of these guys don't. >> i asked them if they do it themselves and you will find some and -- some who dictate. what senatort mccain does? >> i think it is a missive that he hadn't his driver tweak and he was driving. eethe had his driver twe while he was driving. to get the hook here. anyone can jump in. what is a source of news? a columnist, a website, a publication that is the skewer but that you consider essential? >> i would not tell you. >> everyone should follow the iron sheik.

>> who is a good nonobvious tweeter? left, the -- historian. >> he is great. >> he is the chuck grassley of presidential the story and. >> what i love about that is that if he is tweeting and historical photo in for -- from an age where twitter did not exist, you have this clash of the moment. another thing i was struck by, you will see a rope line of times going by where people look the president in the eye and shook his hand, not doing it like this where they tried to take a self he at the same moment. at the same moment. the glow of the people's devices, they are not actually just looking at the leader, campaigner, or politician. it is an interesting social

change. >> you know who is interesting to follow? wonk.set obviously it was very not -- very nasty, i know as someone who followed him for months, but a very knowledgeable insider tank -- i did not know how -- very,t the time very well-informed. obviously, ultimately that cost him his job. >> last question, you can jump in at any order. people in the audience who want to be you. how to your advice for succeed in journalism, d.c., and life? [laughter] toi would not tell them how succeed in life, but the two things i would say our -- learn how to be a print reporter before anything else. before you enter broadcast,

radio. go to a daily or weekly and learn how to write day in and day out and learn how to work really hard and realize that rejection is 95% of the job. are the two things i would say. >> i think that for young people i would say -- enjoy the fact that you have some advantages in knowing the technology, being in the moment, getting a pulse on things, but at the same time have a regard for what experience gives you, lots of mistakes along the way, lots of learning from being there. the experiences i have had over my years, time and again, scenarios i have seen both war, pitfalls i have encountered. you bounce back from it and you keep going. there is so much more to learn, enjoy it in the moment. >> i would say get out of town.

a lot of the talks i have been giving around the book, young reporters have been coming up to me. one of them specifically said they were 25 and impatient. all of these people, 30,000 people following them on twitter -- i want a piece of that, it looks so exciting. i tell them that they live in a community, the stories they see affect the people on the street every day. the ephemeral buzz of having a twitter following and being close to the people is something you can do later, maybe. >> i tell them not to do what i did. the path that i followed and that you followed is no longer the path in journalism, right? paper, go to the times dispatch, "washington post," eventually making your way to national affairs and what have you.

the world is different today. every path is different. what i tell people is to embrace the new technology, the new and different possibilities out there, but hold onto the old value of journalism that we care about today. i still love working at a print paper, but i do not think it matters as much anymore how you get your news as long as what is produced has an essential value. the tragedy chronicled in "the outpost," partly it was leadership failures. what was the leadership lesson from "the outpost," and the reporting you did around ?fghanistan >> obviously there were leadership failures that had to do with placement of the outpost . >> failure to respond. to fix it.

>> there were so many leadership failures, but one of the big ones was that in order to do the job, the soldiers were tasked with doing from 2006 to the end of 2009, they did not have troops or assets. there were not enough helicopters in the country or soldiers on the ground. that is for secretary rumsfeld to discuss at another time. but that is a huge mission failure. i would also say that when it came to the obama administration , there was a lot of focus early in theot just the people white house, but the people across the river in the pentagon about who was going to control the surge, who was going to control the next direction of the war. there was a lot of back-and- forth, and at the end of the day i cannot help feel that all of that wrestling for power, control, resentment over leaks,

this and that, took away from what the focus should have been. not just beginning about policymakers, but in the media i was certainly more focused on the job than of what i should have been focused on, which was ultimately what i wrote about in the book, soldiers on the ground, family at home. huge leadership failures. >> as we say goodbye, kelly, you are the only person on this panel who has been on jeopardy. -- jeopardy -- "jeopardy." what was that like? [laughter] and fabulous. a charity game that we played last year, it was a lot of fun and a great experience. all in the buzzer. >> we are appreciative to the people watching live streaming, to the bank of america for making these conversations possible, all of you for coming out, and our authors on the have been kind enough to

sign copies of their book. so, we have nine visits from santa. if you look in your chair there will be a card hopefully telling you that you are a winner. i want to thank our panelists were a great conversation. thank you very much. merry christmas. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013]

>> coming up in about 20 minutes here on c-span, senate panel consumer personal information and how it is handled, collected, and sold for marketing purposes. the conference committee is holding a hearing live at 2:30 eastern. getting under way over on c- span3 in a few minutes, the senate special committee on aging convenes a hearing about the affordability of long-term care. chairmans on the vice- long-term policy is live at 2:30 eastern. span two right now, the senate continues to debate the two-year budget agreement. isht now on your screen republican senator roy blunt, of missouri. a final vote on the budget agreement is expected at 4:30 eastern time this afternoon, after the chamber cleared a procedural hurdle yesterday in

favor of advancing the bill. you can always watch the live senate coverage of c-span2. afternoon, ben bernanke will hold what is expected to be his final news conference as chairman of the federal reserve. we will have them live for you at c-span.org at 2:30 eastern. >> i am standing in front of the 1905 world's first practical airplane, the for -- third and final experimental airplane of the wright brothers built, surviving as their second oldest airplane today. world's first practical airplane it was constructed and flown in less than six years between the time and they built their kite the success of this particular airplane. this is also an airplane that was built less than two years

after their first flight in kitty hawk, north carolina, 1903. what is interesting to think wright flyer the and kitty hawk flew just four times on one very historic day. for very important flights with the proof of concept powering heavier than air flight. but the airplane behind me, the 1905) or three -- wright flyer three was responsible for multiple takeoffs, fly in for as many as 40 minutes by 1905. it could fly in graceful circles , figure eights, banking and turning, flying very much like a modern airplane. this is very much a modern airplane, capable of being controlled through three independent axis of flight. wrighte is more from the brothers aviation center next weekend as book tv and american history tv look at the history

and literary life of dayton, ohio. saturday at noon on c-span do, sunday at 5 p.m. on c-span3. >> a presidential task force charged with recommending changes to how the nsa collects intelligence data is releasing their report today. the challenge to communications technology was established last august in the wake of a security leak by former nsa contractor edward snowden. monday a federal judge revealed oft they -- the collection phone records likely violates the constitution. this morning on "the washington journal," discussion on the impact of that the sid -- decision. host: we are back with james andrew lewis of the center for strategic and international studies. here to talk about the judge's decision on monday, a district court judge questioning the

legality of nsa's phone data records. what did he say? guest: he said it was a tremendous intrusion into american privacy. it was unconstitutional that the collection of the metadata, phone bills, by nsa, was a great risk to the fourth amendment and not legal. host: what program by the nsa was he referring to? guest: they have a program -- essentially the phone bill of american citizens. it looks at who you call, how long the call lasted, where the call might have been. it lets them identify possible targets for counterterrorism or counterespionage. he objected to the fact that nsa, a foreign intelligence body, is collecting intelligence on american citizens. host: how?

guest: it is your phone bill. you get a phone bill, nsa gets lots of copies of phone bills. do they look at every bill? no. but if they find a number -- one of the most successful techniques has been to capture a cell phone in afghanistan or someplace and look at the numbers. who has this guy been calling. if you find numbers in the u.s., this database let's nsa go back and look. the other thing they can do, they can find patterns. this is an old technique going back to the 19th century. they used to do it with letters. look for who is talking to who. host: this is the opinion section of "usa today," nsa phone records sweep up grows harder to defend. expected to propose restraint and transparency but recommended metadata collection continue. the nsa has yet to prove that it

is necessary or effective. it must do both to justify such a massive intrusion. guest: i do think the administration needs to do a better job. they need to be more transparent. they would have helped if they had told people they were doing this from the start. people would have been more comfortable. the problem i have with that editorial, it uses the word convenience. the government is doing this to protect people. host: what evidence is that? guest: there have been some instances where the ability to put together information and use that to identify potential attack has been able to stop

things and that the u.s. this is not "24," these are teams of people. about one dozen people from different agencies, nsa, cia, fbi, a few others. they put the evidence together. one of the pieces of evidence is collected from these phone systems. host: do the american people know about the successes? guest: know, that would be something you could be critical of. a problem with nsa, they are in intelligence agency. until a few years ago, you could not say their name in public. there is a culture of secrecy. they do not like to tell you what they are doing. i asked a former director of nsa, why don't you just tell people? you could get congress to approve anything that would make america safer. he said we don't want to let our opponents know what we're up to. it is a lonely for that. him coming clean is the way to go. host: have you talked to general

keith alexander who heads up the nsa? what does he say? guest: he thinks it is crucial for defending the u.s. he thinks if we had had this program before 9/11, 9/11 would not have happened. i think he is right. host: what gives him that confidence? guest: one of the problems we had before 9/11 was the difficulty of putting all the pieces together. there was evidence, cia, nsa, fbi had some. if we had looked at the whole picture, you would have seen the attacks coming. we were unable to track people down. we had a vague idea folks were in the u.s. there is not any other way to track people other than communications records. it has to be done under careful review and legal control. we do not really have an option for counterterrorism. host: the judge on monday decides data collection program violates privacy rights.

what happens next? guest: pretty much nothing in terms of collection. even he recognized that the risk to national security was so great it would be to dangerous to stop the program. he said the government can appeal this decision. until that is completed, this will stay in place. host: top democrats reject court ruling. pushing back tuesday against a judge's decision, asking for higher courts to get involved. what sort of legal certainty are they looking for? guest: this is a debate we should have had a long time ago. we should have let people weigh in on the trade-off between giving up privacy and gaining security. i would prefer we did not have

the debate in a court. it would be better to do it on the hill. you will see arguments over the pros and cons. host: didn't congress have that debate after september 11 attacks when it passed and continue to reauthorize the patriot act? guest: one of the problems with this whole case is that the constitution does not forbid the collection of information. it forbids unreasonable searches. the people who decide whether or not the search is reasonable are the president and the congress. they think this search is ok. under our laws, nsa is doing the right thing. people may not like it. host: what about the fisa court? guest: fisa court has gotten a bad rap. these guys, this is not a rubber stamp. more transparency would help. people say cases are rarely turned down by the fisa court. you have gone through so many

lawyers by the time you get to fisa. your own department lawyers, the justice lawyers, they will send the case back if it is not strong enough. they will ask for more information and insight. host: have you ever worked with the fisa courts? guest: indirectly, yes. host: can you explain? guest: i am in another country and i see an american and a funny place. a place where there are not a lot of people, a battlefield. you say i wonder what the american is up to -- gunrunning or drugs. you take a picture of him and you come back and say, hey, can somebody find out about this guy for me? that triggers 11 million protections. you have to go through multiple lawyers who say do you have reasonable grounds?

you say, i just had a bad feeling. a that feeling does not cut it. you need a good strong case to go to fisa. host: talking to john andrew lewis of csis, formerly a foreign service officer. talking about the judge's decision monday saying that the phone record data collection over by the nsa violates party rights. getting your thoughts, our first phone call. san francisco, independent caller. caller: my name is sadat. in 2009, my phone was tapped. i was going through a family dispute. they bring this information to court. when i discovered my phone was tapped, they try to remove this evidence from my files. at the same time, they denied me the right to have an attorney or

a speedy trial. i was not present in court. they do not want the jury to know the story. they said bring him back to san francisco county jail. they bring me back to san francisco county jail and injected my food with poison. i filed a federal lawsuit. the state of california claimed immunity under the 11th amendment under the constitution. they say that california, with their sovereignty to the constitution -- what law gives those gentlemen immunity after they violate our constitutional right and put us in custody for no reason? this is a clear corruption. this type of corruption will leave the whole country to civil war. every word i say, if you think my first and last name, sadat mousa, watch the video on you to.

host: we will leave it there. guest: one of the things people may not know is that all the law enforcement agencies in the u.s. have the ability to go to a judge and ask for permission to wiretap. you can buy your own personal device to do it, although it is illegal under the safe streets act of 1968. wiretapping is not just nsa. it could be local police, which it sounds like it was in your case or it if they follow the law, they could argue they have

done everything right. wiretapping has been a cornerstone of law enforcement since the invention of the telephone -- telephone. host: if they were doing their job as designed, why couldn't they stop the boston murders? guest: that was a coordination problem. a lot of us had been more positives in september 11. interagency cooperation has gotten better, but there is still some gaps and that was one of them. host: what you make of the headlines of these tech company ceos meeting with the president yesterday and pressing him on spying, saying the public does

not trust us, and demanding they have more control over the internet's backbone? guest: people are trying to manipulate the press and public opinion by releasing things that damage the u.s. government and damage u.s. companies. there are people trying to take commercial advantage of this and companies are hurting. this is something the president needs to pay attention to. you need to rebuild trust. the companies were not participants in some nsa effort. they were not helping out in the way you might think from the press, but it is being spun to make them look bad, but the u.s. needs to build trust in those companies, saying they were not willing participants.

control over the backbone of the internet is probably wrong because it is controlled by the private sector. if the companies want the u.s. to say we are going to stop spying, that is not going to happen. everybody collects intelligence. welcome to the world. host: gary. hanover, maryland, the public and caller. guest: i want to put forward the notion that the constitution protects search and seizure. not just search. an individual or a group of individuals is expressly called out with regional -- reasonable suspicion -- the judge says this is valid. to collect someone -- everyone's metadata case at some point i will need this, i think it is grounds for concern. in this case, i think the judge

was right. guest: i agree that that is the thing we have to talk about. they have a threshold cost reasonable, particularly -- articulated suspicion. they collect tens of thousands of records, but they will only look at a few thousand. that is a good question. should they be doing this? i can make a public safety case, and others could make a privacy case. host: from twitter, many do not like the patriot act, it needs to be amended, but until the efforts are constitutional, there are efforts by the original authors of the patriot act including patrick leahy from

vermont. what you think their bill would do to this judges decision? >> -- guest: the first thing i would say is the nsa program is legal and constitutional. there is a challenge in court. i am willing to take a bet at the end of the day the program will stand. the administration is frustrated because they fear they did everything right, with congressmen and everybody saying yes, this was ok. you can see why they are annoyed. that said, the patriot act, the homeland security act, the terrorists and -- terrorism prevention act, we passed a number of bills in the heat of the moment after 9/11 that deserve a second look. parts of the patriot act, they

were around for a long time. i first saw some of the drafts in the 1990's. you have to keep the ability to keep up with technology because the technology changes and you do not change laws, you suffer in enforcement. host: is that what happened with 9/11, we fell behind on technology? guest: it is not what happened with 9/11, but it was an impetus to bring our technology up to date. the solutions that has been developed since 9/11 includes the metadata collection. we built a car that keeps us safe. >> we are going live to capitol hill on a senate conference committee hearing about arsenal information and how it is handled in sold for marketing purposes. right now the street

-- the chairman of the committee and top republican, john thune, are speaking. a couple of the people we expect to hear from, john robert, of the credit ratings agency, and the director of the consumer protection program at the federal trade commission. >> at this point there are two people sitting at the dais, but two more wonderful people, senator blumenthal, center car, senator fisher, and senator warner will all be here, but this is the day that we almost load on the budget, actually. not quite. we always find a way to do it. you have a motion to proceed? to whatever? and tomorrow at some point we vote on a budget. just be grateful you are in private life. [laughter] ok, you are all welcome. the disclosures about u.s.

intelligence activities over the past few months have sparked a very public bait in this country about the kinds of information the government should be gathering and how we protect the privacy of the americans where we have done something -- nothing wrong. these disclosures have harmed the country's national security, but made americans safer than ,sual over how their lives online and off-line, can be tracked, monitored, and analyzed. people are aware of that. not to the extent in great britain, where they are so accustomed to being videotaped while they do everything, but we are still adjusting to that. i am glad that we are talking about these privacy issues in general and today we have all benefited from rapid advancement in computer technology but also there is personal freedom. we always use the word cherished, but we do, and it is

a complicated subject. we want to be able to protect ourselves and loved ones from the unwanted gaze of the , and of our neighbors. what has been missing from this conversation so far is the role of private companies in collecting and analyzing our personal information. a group of companies known areectively as data brokers gathering massive amounts of data about our personal lives and selling this information to marketers. about thehear a lot private sector data broker industry, but it is playing a large and growing role in our lives. last year the data broker industry generated 106 ilya and dollars in weapons, twice the

size of the entire intelligence budget of the united states government. all generated by the effort to learn about and sell, the details about our private lives. whether we know it, like it, or not exceeded difference. one of the largest data brokerage companies, axion, recently boasted to investors that they can provide multi- sourced insight into approximately 700 million customers worldwide. government or law enforcement agencies collect arermation about us, they restrained by our constitution and laws and are subject to the oversight of courts, inspectors, general united states congress intelligence committee, the senate, and the house. i have served on the intelligence committee since he for september 11 and i can tell

you that without a single that nsathe protection provides to security and secrecy is far better than what we will be talking about today. they have rules. they have all kinds of judges, who is that you have to jump through. the fbi is involved. the doj. it is very tight. every day you read the paper in you would think it does not exist, that it is just a government gone wild, but particularly when it comes to 215, it isection very tightly monitored. there is never content, there is never e-mail, and there is never a name. there is never a name. just a telephone number. but data brokers go about their business with little or no oversight. are laws on the

books to protect the privacy of americans health and financial information, they do not cover data brokers marketing activities. collecting consumer information for marketing purposes is not a new business. for decades before the internet was invented, retailers, marketers, and yes, political candidates, compiled many lists that they used to send coupon books, catalogs, and other materials to potential customers, but the data broker industry has been revolutionized theecent years by tremendous advances in computing and data analysis. more and morepend time socializing and shopping online, they are generating rich new streams of personal data to collect and analyze.

these days data brokers do not just know our address, our income level, our political affiliation, most probably, they probably know the weight of everyone in the family. they have collected thousands of data points about each one of us . and we are simply not aware of it. except in hearing. they know if you have diabetes or suffer from depression. they know if you smoke cigarettes. reading habits. your browsing habits. much you and your family members way. igh.eu that numbern know of whiskey drinks you have had in the last several days. we would not reveal that, would

we? >> [inaudible] >> as a mosaic, these are startlingly detailed profiles of consumers. under the current law we have no right to see these pictures of ourselves. that these companies have created. we have no right. committeest year this has been trying to bring some much-needed oversight to the data brokerage industry. where is the copy of the report? under here. we have been pushing them to answer the same kinds of questions that many americans have been asking the government since the snowden disclosures. what information are you collecting about us? how are you using the information? this hearing is the first time we are publicly discussing that

we are learning what we are learning in this investigation. conference committee staff has prepared a report for me and for the ranking member on the progress of this investigation. it is thus. more to come. aask unanimous consent to put copy of this report in the record of this hearing. things we have learned in this investigation is that data brokers engage in many unobjectionable activities. they do what marketers have always done. they help businesses find potential customers. found someo practices that raise serious consumer protection concerns. in particular i am disturbed by the evidence showing that the segment americans, categorize them into categories, name categories based on their incomes, and then they sort

economically vulnerable customers into groups, with names like -- rural and barely making it. not making it up, that is one of their categories. top start, young single parents. rough retirement, small-town and rural, seniors. -- zero member mobility. i want to know how and why data brokers are putting american consumers into categories like these. and i want to know which companies are buying these lists to target their marketing to these groups. maybe it is totally innocuous and benign. i don't start out excepting that, but maybe it is. it is why we are doing this investigation. some companies in the data brokerage industry have responded positively to our oversight efforts. when i became chairman here we went over ago,

to henry waxman and stole a couple of his best people and set up in investigations unit that for some reason we never had and we gave ourselves subpoena power, something we had never done. it is a powerful tool when you are doing investigation, which is what we tend to doing here. want to know which companies are buying these lists to target their marketing to those groups. datacompanies in the brokerage industry have responded positively to our oversight efforts. over the past -- the past year they have provided complete answers to my questions, even the tough ones, but several of the largest brokers, specifically cap salon, action, and experient, are continuing to resist oversight.

today they have not given me complete answers about where they sell and get their customer data on consumers and to whom they sell it. i am putting these companies on notice today that i am not satisfied with their responses and i am considering further steps. i have steps that i can use, that i can take to get this information. have oversight over this activity in american commerce. oversight, to intelligence or this, you do it seriously or with the purpose of getting the truth. i am putting these companies on notice that i am not satisfied and i have further steps i can take to get this information. i want to assure them that oversight efforts in this committee, which we have

started, will continue. i now call on my distinguished friend from a similar urban state. senator john thune. >> that is right. thank you for holding this hearing, thank you also to the witnesses for coming here today. our economy is increasingly data-driven and data brokers lay . go -- growing role data or information brokers are companies that collect data, including personal information about consumers from a wide variety of sources, like public records, retailers, selling the information for the purposes of preventing fraud, marketing products. as the chairman noted in his initial letters to several data brokers in 2012, the purpose of the inquiries to better understand the industry and i look forward to each hearing as we focus cap on how the information collected by the brokers is used for marketing

purposes. without question this can provide greater benefit and convenience to consumers, lowering the cost of business to target more precisely, helping businesses create products that consumers actually want, lowering startup costs for new businesses. data-driven is one reason that many of us are able to use search engines and e-mail accounts for free, allowing search engines to promote the targeting of resources to reduce the amount of junk mail catalogs tailored to a consumers particular interest. at least that is the goal. but as the industry is at the center of something that the commerce committee cares about, commerce, it is data-driven marketing widely used across all sectors of the economy. used by nonprofits, governments, and political campaigns. many media outlets have noted how commercial resources help

the president's reelection campaign in 2012. as we will hear from the direct marketing association, they are also helping to fuel job creation with technical innovation in our slowly recovering economy. while the industry creates many benefits, there are also important questions about the implications of data broker activity, profiling, and concerns about allegations of differential pricing. questions have also been raised about whether consumers are aware of the instances in which their personal information may be sold, resulting in calls for more transparency into data broker practices. advocates of also raised concerns that they create profiles on individual consumers based on the aggregation of sensitive and sometimes personal data, like health conditions. rapidly changing marketplace, the federal trade commission has done important work concerning these brokers privacy issues, including

educational efforts. they have also brought enforcement action under the fair credit reporting act. also completing a study of practices in the data broker industry and will provide recommendations to congress based on their findings next year. i look forward to their testimony. the government accountability office has recently produced report that i understand will be submitted as a part of this hearing as well as something to help inform this committee. i will be asking witnesses how the data brokerage practices may impact consumers positively and negatively and i am he interested in hearing from our witnesses how the industry can work the balance the private industry concerns with the needs of privacy in the economy. thank you to all of our witnesses here today, i wanted to add a special note of thanks to tony from experient. .- experion having one of those companies testify is a good way to keep

the number of witnesses manageable. i am sure that many of the other companies are also grateful for your willingness to testify and advance our understanding of the dater -- data broker industry. i know i certainly am. thank you for having this hearing and i look forward to hearing from our witnesses. >> thank you very much, senator. we have -- i will just do it one by one. jessica? ms. rich is the director of the bureau of consumer protection and the federal trade commission . i will go down the line. could you give your testimony, please? >> [inaudible] a you have got to push button. it is called technology. >> yes, i assure you i know something about technology. my name is jessica rich, director of the consumer of bureau per to -- director of the bureau of consumer protection.

this is a highly opportune time to examine the practices of data and technological developments that allowed for the dramatic increase and collection of consumer information. data brokers collect personal information from consumers from a wide variety of sources and resell it for a wide variety of purposes without any consumers knowing of their existence much less the variety of practices in which they engage. many of these practices, as you noted, fallout side the scope of existing loss. laws.sting chairman rockefeller, we commend you for your leadership on this issue and stand ready to work with the committee in congress on ways to improve the transparency of these practices. the report from today is a key effort, as is the study requested from gao. our work on data broker practices goes back to the

1970s. for decades policymakers have expressed concerns about the transparency of companies that buy and sell consumer data. indeed, the existence of companies selling consumer data for credit and other eligibility determinations, invisibly and behind the scenes, went into the enactment of 1970 of the fair credit reporting act. since then the commission has been examining the preface of data brokers. we used three primary tools in the effort. first, we bring in enforcement actions when company practices violate the law. perhaps our most well-known case involved a choice point, where we obtained 10 million dollars in penalties and $5 million in redress for consumers. it lacks privacy security incedures, resulting sensitive consumer report information winding up in the hands of known identity thieves. more recently we entered into a consent decree with an online data broker.

according to our complaint, they collected personal information from hundreds of online and off- line sources, including social networks, combining the data into detailed personal profiles. we alleged that they marketed resource use by human departments, making the consumer reporting agency subject to the fair credit reporting act, but it was failed to be revived by the accuracy privacy requirements. includes strong belief in the civil penalty. second, the commission conducts research and issues reports addressing data brokerage issues. for example, the 2012 privacy report named best practice conditions for consumer practice -- consumer privacy. among other things, the report reiterated a long-standing commission recommendation that data brokers provide consumers with access to the data that they maintain and depending on

how it is used, the ability to correct it. or recently in order to shine a light on the industry we issued orders requiring nine data brokers to provide information on how they collect and use consumer data. the commission is close to completing a report based on this information and expects to release it in the coming months. in the spring of next year we plan to host a series of privacy workshops, including a seminar on what is called alternative products offered by data brokers , that is products that companies use to predict consumer behavior and shape of a market to particular consumers. , educatingool businesses and consumers on privacy issues and the practices of data brokers. for example, we recently sent letters to multiple data brokers that provided services and warning them about their duty to comply. for consumers we recently produced a video on data brokers

and have published frequent posts and updates on issues related to the industry. in closing, as the collection and use of this data continues to explode, we share the commitment to continue to examine data brokers and we stand ready to work with the committee on this critical issue. >> thank you. >> thank you very much. >> mystic and is the executive director of the world privacy report. you are on. >> she is loading. [laughter] >> chairman rockefeller, members of the committee, thank you for the opportunity to share what i have learned about the data brokerage industry today. i appreciate it very much. moderate in the privacy debate and privacy world, i have come to a troubling conclusion. the data broker industry as it is today does not have

constraints and does not have shame. it will sell any information about any person, regardless of sensitivity. for 7.9 cents per name. of a list ofprice rape sufferers that was recently sold. rape sufferers, victims of domestic violence, police officers, home addresses, people who suffer from genetic illnesses, complete with names, home addresses, ethnicity, gender, and many other factors. this is what is being sold and circulated today. it is a far cry from visiting a website and seeing an ad. what it is is a sale of the personally identifiable

information and highly sensitive information of americans. would like to make three points. first, scoring. scores thatow pseudo- are comprised of factors that are not financial. i should say, non-credit report based. these pseudo-credit scores are used in lou of actual credit scores, because they completely circumvent the fair credit reporting act. so, if a business or an employer, or an insurer can purchase these scores and use them with no ill consequence, or , thisnsequence at all needs to change. secondly, health. ofre are lists of millions people that are categorized by the diseases that they have, ranging from cancer to

alzheimer's -- terrible diseases, some of them benign, some of them relating to mental illness. there are lists of millions of people and what prescription drugs they take. entirelyts exist outside of hippa. >> what? federal data -- federal health data protection. it does not apply. this industry that is selling these lists, there has been a lot of mention made of marketing lists.s for these these lists are being sold without constraint. we do not know if employers are buying them, if insurers are buying them. we do not know who is buying them. but the lists are being sold apparently for billions of

dollars, which suggests to me that we need to find out who is buying these lists. terms of solutions, my third and final point, we need to expand the fair credit reporting act so that when there are consumer scores that are pseudo- credit scores, that this is drop under the fair credit reporting act so that consumers can exercise the same rights that they would have if the credit score had been pulled. if the information is as statistically accurate and has the same effect as a credit score, why is it not regulated under the fair credit reporting act? this should be a bright line here and i do not think that that is too terribly difficult to draw. to be -- actually, there is an urgent need for a national data broker requirement for an opt out. out that isopt

highly granular so that consumers do not always have to take the nuclear option and get entirely off of every list. we favor consumers having the ability to make their own choices. maybe a consumer wants her name and phone number on a list, but nothing else. certainly nothing about her weight, the number of children she has, or maybe she does. the point is that consumers need to know when they are on a list and make choices about what appears on the list. andeed to re-examine hepa decide if health information that is not held by health care providers deserves health care protections in privacy. i believe they do. is going to be the beginning of an important public dialogue that is going to be incredibly important or all of us to engage in. if we have an industry that is by the sale of

names of everyone with highly sensitive information for 7.9 cents per name, then we have not done enough. thank you for this opportunity and i look forward to your questions. >> thank you, and you are exactly right. this is the beginning. the beginning of a dialogue. deeply,eed to pull without fear. without fear of consequence. and then we need to do something about it. that will be a judgment that we will have to make, but as you ,uggested, a change in hippa which is to be sacred, and still is, but not in all cases. i thank you for your testimony. professor? the associate dean for graduate studies at the annenberg school for communication at the university of pennsylvania. >> thank you, chairman rockefeller, members of the

community. i would like to address two key questions about the collection of data for market purposes. first, if we take sensitive -- first, if we take sensitive topics like health unemployment out of the equation, what possible harm could come from using this data for marketing purposes? we are talking about targeting for product advertising. second, had these lessons not been around for a century? what makes it different from the past? let's start with a history question. the compiled list of prospects goes back to the 19th century. the lists became more detailed in the 20th century, but the difference between the lists of 35 years ago and today are extreme. the distinction is the amount of information that brokers have now and how they deal with it. lists from the old a's were static. the number of data points the company had was small.

today data brokers can collect huge amounts of information, tens of millions of people, even hundreds of millions of people. they update the information frequently and they use high- speed computers and advanced to state six to draw conclusions that previous generations could hardly have imagined. consider the recent data catalog. it contains 41 pages of information about individual america and sold to marketers. the information ranges from the amount of money taken to the amount of vacations taken to the number of friends on social media to the value of neighbors to diseases to how tall they are to whether they gamble, to the media uses and much more. they sell any number of items tailored to markets from different industries. in addition, the data broker has created a kind of universal follow people and across desktops, laptops,

mobile, and 10 -- tablets. like axiom, other data brokers continually run programs that connect the dots for marketers and then attach them to other ideas marketers have about us. the brokers bring together pieces of information people did not expect would emerge when they disclosed them separately to various online and off-line entities. the results are buckets of descriptions and stories of our lives and economic value and potential we did not know exists . merges can charge you more than others for products raised on teachers they tagged you with you do not know they shared. by -- buygularly anti-acids. that is great news to travel company searching online for those types of people.

using personalized coupons, the physical and virtualized stores whathange prices based on they know about you. they can add your lifetime value and the results can dictate the kinds of items you see and how much the discount will be. connecticut -- negative data brokers said know how long you wait for customer service and being rejected as a customer and offering coupons for not nutritious foods. with on engagement addressable ads, they can change the news and entertainment offerings you sees. you systematically see different worlds from your friends or work colleagues because of the stories brokers tell about you. many of these examples are already taking place and all of them are quite plausible. they trumpet they often make individuals they sell anonymous. anonymity is not reassuring. if i am followed online and off-

, it doesuckets of data not matter what my name is. and with our full personal information, data brokers are engaging and encouraging a world of data- driven discrimination that is becoming widespread precisely because it comes with all sorts of advertising. surveys i have conducted consistently suggest americans worry about what firms learn and think about them. i have heard people say they will change activities or how they talk about themselves better bybe treated marketers. the difficulty is that it is often impossible to know whether and how that will work. we are only at the beginning of a data-driven century. data brokers will be central to how we think of ourselves and how we lead our lives. for the sake of democratic ideals and relationships, let's limit how much they can collect and share until as a society, we know how to create regimes of data respect, where people have

control over the most important elements of their identity. thank you. >> thank you very much. >> experienced senior vice chair. we welcome you. >> thank you. good afternoon. and i am theny vice president of government affairs and policy. andading provider of data information services that brings significant value to consumers and the economy. committee'she interest and dialogue in the marketing data industry and the to describe how we collect and use data. i have submitted a fuller statement but i will summarize a couple of points. believee truly

responsible information sharing significantly enhances economic productivity in the united states and provides many benefits to consumers. economists have called the manner in which u.s. companies collect and share consumer information among affiliated companies and third parties the secret ingredient to our anductivity, innovation, ability to compete in the global marketplace. we shared data to help make consumers and small-business lending more efficient. help facilitate access to fair and affordable credit. protect consumers from fraud, including identity theft. greaterconsumers gain financial literacy. and to help companies reach consumers with a timely and relevant communications and marketing offers. marketing data in particular brings lower prices and greater consumers byo

strengthening competition. nonprofit organizations and government agencies also depend on consumer data. to serve the needs of people and citizens. important, experienced data allows small companies, including many in the state of west virginia and other states around the nation, to compete with larger companies who maintain very sizable consumer databases. it provides small businesses with the same datasets larger competitors have so they can compete and grow companies. a significant point i would like to make also is that operations of marketing services and the data it collects and uses and shares is completely separate from experience operations as a consumer credit euro. no eligibility of the terminations were able to credit

insurance, employment, housing, or any other decision, is ever made with marketing data. experience has in place strict policies, as well as technological management, procedural controls to make sure there is complete separation. it shares data responsibly by carefully safeguarding compliance with all privacy and consumer protection laws and industry self-regulatory standards. we even for most -- promote new regulatory standards. the committee has also sought for pacific information about clients and data sources. experience provides market data to a wide for -- wide variety in the private, government, and nonprofit sectors, that market to consumers through multiple channels, both online and off- line. sectors we serve are retail, media, and financial services. our products were used i nearly all sectors of the economy.

include the sources for specific products, in which the kitty hat -- the committee has expressed interest. most of our data comes from and publiclys available information, such as zip code level census information, local property records, and telephone directories. added to this, many people voluntarily provide data to experience by filling out surveys and questionnaires. these multiple sources of data are aggregated at the household level and then analyzed and modeled for household preferences and propensities. such methods result in a group of consumers receiving messages in advertising that they are more likely interested in responding to. done, weis said and

help marketers make the best about what messages and marketing solicitations a group mostnsumers may be interested in responding to. finally, i want to emphasize it has made every effort to be forthcoming and cooperative throughout the inquiry launched by the committee this year. we have spends -- considerable time and resources to make sure the information and documents we have provided are helpful to the committee's work in understanding the marketplace. today, the committee has been provided with eight submissions, totaling over 3000 pages. we believe this provides a full description of our products, services, and we are here today as the only one in the -- in this. the role wederstand play in the economy and the lives of consumers, thank you for your attention.

appear invited guests to here. we look forward to continuing to work with you. i will answer any questions the committee might have. thank you. >> thank you very much. i want to get this right. jerry. did i say your name right? >> you did it correctly. thank you. i appreciate it. >> i am thrilled. the senior vice president of government affairs for the direct marketing association. we welcome your testimony. >> thank you. dmaers of the committee, appreciates the opportunity to be here today and to talk about this important subject. on a personal note, i want to say i have testified before this committee many times, testified before other committees before congress, and, today, my last day of work before i retire, i -- i want to thank congress for

the opportunities they have given me to participate in dialogue here before the congress. i appreciate it. senator, i will not be here when you retire at the end of the congress, so i want to say, personally, we thank you for your service to the united states. back to why i am here today talking about data. >> are we allowed to ask you questions? >> you can ask questions. sadly, they know where to find me. to get the questions to me. phone call away and i promised they could call me and i did not promise i would answer the phone. anyway, data. every consumer facing business in the united states uses data today. it is important. it drives our economy, driving our current recovery. it is very important. to our members. in that light, dma has created drivena -- data-

institute. to take a look at the value and -- and uses of data in the american economy. we employed -- we used a professor from harvard business school and a professor from columbia university and they conducted this data study and worth 150 $6 billion a year to the american economy, 675,000 jobs. influence is related to sharing of data i companies. even more importantly, the data sharing helps small businesses and it helps write down barriers to entry so small businesses can come in and compete with the big boys. once they get a foothold, it keys them on a level playing field. it is not new. this has been happening for a long time. i will give you a couple of withles. l.l. bean started

a list of nonresident main hunters. that is that -- that is how they started. of thecover card, one first credit cards, a reward credit card, began with a list of sears treaded caught -- credit holders. without those lists, the companies would not have started. the benefits from the two companies would not have been realized. it is important. it is. personal information that is used. strongted states has privacy laws. the online privacy protection act, hippo, data task, and so forth. those laws are complemented by self-regulation by the industry. i can speak only for dma here. dna has a pure ethics committee that meets monthly and handles complaints from consumers and other businesses brought to it against members and nonmembers. most of them comply with our

guidelines. those that do not, we publicize them on the webpage. if there is a violation of law, we turn it over to the federal trade commission and the postal inspector -- inspection service. as we looked at this, the federal trade commission said they support the complementary effort by self-regulation. we want to continue that. we continually update the today'ses so they meet real world efforts. the things we can talk about, all of this is in fact working. the american consumers are voting with pocket books and feet. e-commerce is growing. it is growing multiple times the rest of the economy, because, they have trust in the process. think about it. they need product -- trust. they are purchasing something theyaying for it before

receive it. they need to have that trust. ins data-driven economy is fact working. think about the great american success story. really great american success story, amazon. on cyber monday, it sold 300 items per second. that shows americans have confidence in this. their needs as american consumers are being met in the data-driven economy. there are clearly concerns. there are concerns about what is happening. you have heard them and it is in the report. we have for them today. the improperus on use of data and figure out how to prevent the improper use of data. one of the things we cannot do and stopway responsible uses of data that are driving the use of the economy. that is something we have to be very careful of as we are part

of the dialogue we are having today. the american economy, small businesses, american workers, and american consumers, rely on responsiblefrom data use. america leads the world in that category and we hope to keep it that way. thank you very much for the opportunity and i look forward to answering any of your questions. >> thank you very much. i will start the questioning and then we will do it according to order of arrival. mr. hatley, one of the products your company sells to marketers is called "choice score." targets under banked consumers. let me read your description of the under banked consumers. new legal immigrants, recent graduates. widows.

followers of religions that historically have discouraged credit. transitoryrs with lifestyles such as military folks. mr. hatley, the populations of this group are very vulnerable to financial scams. we have experienced that in this committee because we have done hearings about that, particularly with near military bases, where people -- these are relatively young people overseas and back for a while. they are very vulnerable because they need cash and people can come in and really clean their and we have testimony to prove that. last month, we held a hearing about companies that target fraudulent financial products to service members. they are honorable because of their financial inexperience.

and their steady paychecks. mr. hatley, what does your company, or why does it single out and sell lists of economically vulnerable groups like immigrants and widows and military personnel? it is a very important question to me. you set the probable response to whom your questions are aimed in your marketing is aimed at, you can fairly well predict the type of product you will get. a nicer vacation, a less nice vacation, etc.. when you put people in categories and they are that is not the l.l. bean model. i would like you to respond to that question. >> thank you. very concerned if

lenders were using that information for scamming purposes. and procedureses in place to ensure nobody gains that purpose. for >> how does it work? >> we have and on boarding system by which we take on a client that gets our information, to know who they are, and we also have a mail piece review process to know what they will offer the consumer. if it is anything that looks predatory,ory, or, we will not provide a list to them. >> this is your self-regulation? >> this is our self regulation under dma standards. if we were to volley -- violate that, we would be under violation of regulation and contractual standards within clients. important is there are somewhere between 45 and 50 million americans outside the marketsam of the credit

in the united states. these are under banked and whorserved consumers financial institutions cannot reach through credit scoring and credit report. they do not have financial identities. or a big enough or even the presence of a credit them intoder to bring the mainstream of financial markets. it does not mean they do not eat -- need access to financial services. this data to try to reach out to consumers, who they can help to empower them and not scam them. we do not want to do business with financial institutions trying to scam people, only to empower them. this is their best way to find those individuals outside the mainstream, immigrants. new to credit like recent college graduates. to give them an offer, and in -- invitation to apply, so then they could make an eligibility

determination regarding that application, under the fair credit reporting act. this is marketing literature, not eligibility determination. >> can i add to that for you? >> not entirely. can you tell he which are the companies that buy this choice score product from you? would be banks and financial institutions and members of the financial community. >> that is a general answer. >> yes. i cannot tell you who are clients are. that is a proprietary list of hours. it is like our secret ingredient. the ones who would want that most are our competitors. our counsel has informed me they do not believe our ability to give that to you can be shielded from disclosure to the rules of the senate. if we thought they could be, for example, under a law enforcement action, where he could be fromded and protected

disclosure us, we can do that, but not under the situation under the rules of the senate. we are sorry about that here and we simply cannot do that. our counsel will not let us. >> there are a lot of councils out there looking for work. keepint is you have got to up with competitors. my point to you would be i am not necessarily approving of what competitors are doing. maybe you want to keep up with them but maybe they are doing exactly what you're doing but on a larger scale. upwe do not want to keep with those competitors. >> a lot of other companies gave us the precise information that i want from you. >> i would hope the focus of the committee and ftc and others interested in these types of uses of data would focus on those data brokers. it is not experience at his doing that. we would not have that within our business model.

>> all right. can you please provide the names of the companies that buy lists of economically vulnerable consumers from experiencing echo >> i can tell you the types of categories. good -- a really >> do you not understand how that does not work appear? the types of categories? buys themtell you who and that -- i can name a few because they are public. reflectsntation system the entirety of the economic range of our economy. we do not leave out low income individuals. economyst within the and need products and services, two. the most frequent users of that segmentation, the economically disadvantaged senator are typically government agencies and public policymakers trying to get a view into them. so that they can deliver them messages and marketing materials

about public services they are eligible to. among the users of those are the west virginia department of health and human services, the services.tts health the new jersey health and human services. they want to reach those people. theyhem know what benefits are eligible for so they can come and get them. they also use this data to for theirress lists clients. >> you will knit that -- you will admit that if a state hhs, so to speak, will use that information, that is quite a from ant kettle of fish for-profit bottom-line oriented -- >> we would put the departments of hhs through the same review of who they are and what you want that information for. we would not want them to use our information to disadvantage

those consumers. only to empower them. they would go through the same review. >> all right. my time has expired. you happily engaged in a process . you selectively named some of your clients. you can selectively do it, you can broadly do it. >> those are a matter of public record. >> that is the point. what you do should be a matter of public record. this is an oversight committee and a serious matter. we have the feeling people are getting scammed or screwed by this feeling. it is up to you to talk us out of that. >> not by experience. i can assure you the experience acted as our watching this right now i'm hearing what you're saying. we respect your point of view. responsive to you. seriously.

thee look forward to dialogue. >> anyway, my time has expired. johnson,ooker, senator then senator blumenthal. hold everybody here. >> good evening and thank you very much for your wrist -- rich testimony. the internet now, the ability for big data to be used is a service to many users. it serves me every time i am going online and shopping. i love the fact i can use this little device and things will be pushed to me that are very valuable. data sharing helps fuel our economy. so many great advantages. i have worries on the backend of that. and senatorhairman rockefeller is making a point. those are the concerns of consumers. .ne quick question what frustrates me, that i know my browser history, these

cookies are on my computer and they are tracking and tracing what i am doing, and i understand the upside and the benefit of it. that is a little problematic to me. >> sure. there is a group that we are part of, the digital advertising alliance online, following where people are. we have created an icon and a to allow consumers to ,pt out, totally or selectively from any cookies used to track their browsing activity across unaffiliated websites. that icon is a little triangle with an eye.

>> usa the industry is trying to and find a way because you recognize this is a problem. >> i am a tech savvy guy and i never heard of this peer that is problematic to me. i am in fair -- i am very engaged in tech. so the industry is trying to correct what they know is a problem. >> you give consumers a choice, absolutely. >> ok. i am curious. there is so much positive year. the opportunity for big data to enrich our lives gets me excited about the future. these businesses have a wonderful public purpose but i worry about the darker side in the way my chairman is

discussing. as sayingas simple chance heresy. this is -- transparency. how were you planning on using act tothority under ftc study and stay abreast of the industry and see if there are needs and opportunities like in this one where the industry is or selfecting regulating where we can get them to the point where we are balancing all of these incredible positives of big data with obvious downsides? >> we think about this every positives but the also protecting consumers. in this case, i think the first step is pretty simple. there is very little transparency about data brokers. transparency, it

is pretty basic. it is not a technological issue. circumstances, the way we balance is we engage in a constant learning process and we do workshops and are always learning about industry and we meet with consumer groups and business groups. we areything we do, always trying to develop flexible standards. we are thinking about, what about 20 years from now, especially with the orders we get, will this last and will this be able to grow with innovation? we make a lot of effort in that regard. i want to bring it back. we have got basic steps to bring about some transparency that should not undermine the data- driven economy and, there is nothing in that study, that how privacy would

undermine the data-driven economy. >> so much of what i am doing for free on the internet is made free. you are saying there is a chairman this and larger degree of transparency that needs to be given to the public. >> and we think, transparency, and we were talking about this a few minutes ago, is completely consistent with the growing economy. consumers are increasingly demanding more information about how their data is being used. when you give them information, they often develop more trust. we think it is in both consumer and business interest to provide more information. >> i would love to see -- to hear if they have any resistance to the increased transparency. i am the new kid on the block. i will yield. >> you are always on the good side of the chairman.

you can charge right ahead. you would love that opportunity. we will go to senator johnson, followed by senator blumenthal. >> thank you, mr. chairman. an excellent discussion. a very good hearing. i appreciate senator booker's good questioning. up ont -- i want to pick transparency. i want to know exactly what the ftc wants to do in terms of, what is your fix and what is transparency to you? context, we recommended the data brokers allow consumers to access to the kind of information they maintained. >> how? >> we recommended in a privacy report last year, possibly through some centralized

website, where consumers can go. dma has something like that. daa has developed a centralized website for online tracking and we have recommended that. >> will be on the information plaything? what would be on their? >> the names of data brokers. and then he would be able to find out what kinds of information they collect and would be able to potentially opt out of the use of their data. >> can you tell me what that sounds like to you and what problems you have with that and how restrictive that would be e >> first, we want to be responsive and be more transparent. we are trying to figure out more of what that means in a meaningful way to consumers. regarding an opt out website, here is the problem as i see it. datanot know how to define broker. i have never seen a definition of data broker that would not

sweep in tens of thousands of companies. everyone exchanges data and shares data and sells data with in the echo system. that is how the business model of the echo system is. would we have a website with an entire industry on it? be would that really meaningful to a consumer? if you throw the those companies up? of course it would be on that but so would 10,000 other companies. it is not a meaningful way of providing transparency. what we are trying to ask for is, how can we make the exchange and sharing of information responsibly, more meaningful to consumers. we think one of those steps .ould be working with the users >> let me stop because i have limited time. get aailing lists, you one-time use. i was following what you are talking about. it sounds like

you have a system where you are making sure this material is not misused because that is the real problem. of misuse and improper use that information. for every time you sell data, is that restricted to a one-time use that you have already determined is not a misuse? or do you sell the data and they can use it for years? a it is sold pursuant to contract in some cases one time and in some cases as a license over numerous times, but we always have procedures in those situations so we know how they're using the data and what they are it for. it is strictly limited to marketing purposes. >> information, you were saying it is from public records, sometimes, surveys. is it also from cookies and are you also getting it from the other internet applications and you have agreements with different people who gather all of these cookies?

much larger data gathering than what we were talking about earlier? >> we collect information online in that realm. aggregated and anonymous data. there is no personally identifiable information attached. where might -- we might be able to know what type of consumer is visiting x website versus another website, so we can share that for the industry. macy's might want to know what nordstrom's shoppers look like. so that they can compete against one another and vice versa. >> there are incredible benefits by people using the internet. we take a look at, do you agree to look at the website? most people agree and they do not really read 300 pages of all of

the information saying, hey, we will share this information. if you want to use this phenomenal free application, you subject yourself to a certain lack of privacy. is there anyway to get around it? >> there is. i think the icon i was says to add choices and click on and it tells you what is happening following red there is ad then link about ads and info. a website where you can opt out. is how we are looking at mobile apps and small screen and how do you let people know what type of information you're collecting. list, one not call time, and you are covered? or is

this application after application. >> it is one time and you are covered and it 96% ofy affects about targeted ads. we have that many people who have signed up for it. >> the icon is located where? >> usually right around the ad targeted. we have contracts with canada and eu. australia,ing on starting with latin america, to try to make that worldwide. >> thank you. good questioning. senator blumenthal? >> thank you, mr. chairman. thank you for having this meeting. thank you for pursuing this issue withimportant such a far ranging consequences for both good and ill in our society. staff for thise

truly remarkable study for to define doubts how a data broker. i recommend the report. a review of the data broker industry, collection use, and sale of consumer data for marketing purposes. there is now an industry in this very far- reaching and far ranging collection use and marketing of data. one is almost every day, in the news, we, and in the read about what the nsa is doing in the collection and use of data about citizens in this country protected by the fourth amendment. one of our justices once defined the right of imc as the right to be let alone. that samedo not have right against this industry because it is not the government. privacy interests may be just as

as theyrisk and abused are by the government and that is what brings us here today. not only the vast potential for good, but also the downside and the dark side and the danger of collection and use. i did not expect anybody to come here today and say, we are using this data to exploit people. i am not that naïve. but i think you need to recognize that others could use it for that purpose. all you need to do is turn to page 24 of this report and see the categories sometimes used for marketing purposes. let me give you two very concrete examples of why i think people ought not to be compelled to surrender privacy as the price of admission for the use of the internet. that is what we are talking about. as therifice of privacy

price of admission to the internet. in december 2012, the wall street journal ran a story entitled, "websites, very prices and deals taste on the users information." it stated in part, "websites art adopting techniques to glean information about visitors to their sites in real time and then deliver different versions of the web to different people. prices change. products get swapped. wording gets modified and there is little way for the typical website user to spot it when it happens. ,o, if you prefer hilton hotels and the wrong company gets its hands on the information, you could be charged more for staying at one hotel then another then a person walking in off the street. i assume, mr. hadley, that you such join me in feeling marketing practices and pricing practices would be offensive and

should be made illegal, perhaps? >> i would agree that should not be happening. >> i am not asking about experience and i'm not expecting you to tell us that is involved in these kinds. >> dynamic pricing does exist. you have to look at the hotel and airline industry. they have variable pricing. we do not provide products and services to allow them to undertake dynamic pricing. it is their choice because they are marketing their product or service. >> do you think it is fair to the consumer? wouldi would not it -- i not want it to happen to me but i know it does. >> the fact it does is why we are here today. >> i am not sure it is illegal. >> i'm not asking for -- i am not asking for your legal opinion. what do you think about the practice? >> dynamic pricing, changes in price all the time. frequent flyers get different

prices. grocery stores. people have different prices. part of where we are today, i think if it is his crematory and so forth, it goes back to what i said. you want to look at use and not the data itself or the collection of it, but use. if there is improper use. >> you would agree with me discriminatory pricing that charges people more because they are regarded as more vulnerable, and without their knowing it, would be, at best, unethical. >> yes. i believe there are laws on that. >> i am rushed for time and i will use my last four seconds to about aa question second area where i think discrimination, the prospect of discrimination, and exploitation, is raised. postingsn terms of job

and screening of job applicants. i do not mean to tell anybody in about theing devastating impact of long-term unemployment in this country. i have joined senator warren in a bill that would prohibit the use of credit scores of job seekers in a discriminatory way during the hiring process. let me ask you whether an employer could buy information from your company, for example, postingit to target job in a way that discriminates against certain job applicants, using the information that might be attainable from your company. >> marketing data cannot be used for employment screening and job eligibility. under the fair

credit reporting act. they would have to obtain a credit report and all of the consumer rights would accrue to that marketing. >> what would prevent an from asking for information from your company, and then, on its own, using it in a discriminatory way. ? leslie would know who they are and why they were asking and we would know what they are going to use it for and we would forbid them in our contract with them for using it for any purpose under the fair credit reporting act, including employment purposes. what if is a violation, they said to you, it is not a violation? class we would disagree with them. -- >> we would disagree with them. it is a standard practice among those who practice good standards. i cannot vouch for all of them.

we know the bright line between those. >> what your company does, but from the information provided to my office, not all companies do. class than it is a violation of law and the ftc should take action. our guidelines. >> it is unethical, but maybe the law would be clarified so everybody understands it is illegal. i apologize for exceeding my time. i tried to move quickly. i want to apologize the witnesses for perhaps interrupting you, mike senator booker. i am still a new guy on the block. i did not say at the outset i would show -- stop when i should've. i know i am on your bad side now. >> you are clearly just sort of settling into this role of being a licensed lawyer. [laughter] from --ttorney general attorney general.

lawyer.a recovering i apologize. thank you. >> senator booker can learn from you. >> thank you. bottom line is digital dossier or is being collected on every american right now. companies represented at the table, and, there is a lot of promise on that. compromise, families can go on sale across the country and across the world. companiese is no should be allowed to do that if the individual does not want the compromise. they should have a right to control the data. no company should be allowed to cap -- play fast and loose with

the information they have gathered. i had a caucus meeting in congress on the house side this year and we had some of the gentlemen here today over there for that. we began to talk about propensity scores. oft is the practice attaching a propensity score to individuals, hundreds of thousands and millions of americans. the scores are created without the consumer's knowledge and without the consumers consent. for then become the basis targeting offers, benefits, products to certain consumers. high prep -- high- value products may receive discounts,etails and while others may not. they may be dismissed as low value. dangers attached

to? millionst upon tens of of americans. >> the real problem with propensity scores is that, unlike a credit score told. these scores are not covered under the act. if they are healthy scores, they are not covered under it the and not being held under the provider. you can be tagged with these characteristics in these characteristics are not under any regulation. there is no law that says there is an employer to determine jobs eligibility. orlaw that says an employer an insurer cannot use these scores to determine rates. these are not regulated scores. the propensity scores are of great concern.

do not have the opportunity to learn about these scores. they are secret scores. the consumers do not have the opportunity to opt out, as they would if the scores were recovered under the act. >> we have got to do something about that. we are entering language about, that might not be illegal. we can actually pass a law and make it illegal. that is what this committee is all about. now, let me go back to you again. thank you for that. we know data brokers categorize people into market segments. seniors, suffering burdened by debt singles, credit crunch city families, and these are the real labels that actual data brokers used to describe who they will be talking to. that categorization can cause

harm, including racial discrimination. the fact is, actually a term not just redlining, but web lining. we use the web for the wrong income and racial group and , whatever. -- sex there are enough laws on the books to protect people. can you talk about that and what the need is to fill in that document as well? >> there is an interesting situation going on. the dma report came to the conclusion off-line information and online information are now thoroughly merged. as a result, web lining is real life lining as well. what happens on the web now happens in real life. if there is a discriminatory problem, we will experience it elsewhere. it is a circular process. we cannot just go online and block our cookies. any reasonable consumer

shredding social security number and blocking cookies and surfing the web responsibly, they can aill not evade being put on list of data brokers according to their health condition. >> let's go to the blurry line that has been allowed to create -- be created and what is responsible for consumers. let's go to a line between credit reporting agencies and data brokers that market financial products. an atmosphere of ambiguity and what some fraudsters could do real harm to people. alk about that a little bit. >> the pseudo-score, they are made up of about 1500 factors. -- noncredit file factors. they do not fall under the act. they could include factors that could be prohibited under the equal credit opportunity act. this is deeply troubling. we do not know everything that goes into these scores.

we need to. we need to know how the scores are being used and we do not want them being used to target underserved americans with predatory offers. >> let's just move on to the next category. sale of talk about the people with particular diseases. listsst circulate those so market its -- marketers know who not to get anywhere near. we will get all the different people with these different diseases we were able to compile and just make a list of it and make sure they are over here. talk a little bit about that and what it means for our country. >> i was stunned when i found lists of people who were rape sufferers, people who were people aziz sufferers, who were victims of domestic violence. it was deeply troubling to me and i was shocked. happening is through

survey instruments operated online and other methods typically consumer generated, people will volunteer this information to websites, thinking they are getting help from a website. they will volunteer and they have no idea this information is going to be attached to not just a cookie, but their name, their home addressed, and the phone number. lawyer, but i never had any clients. i will be careful on how i rule here. it seems to me it is kind of on its face a violation of the federal trade commission act. over there at the federal trade commission, what can you do about it? i think, for all of these scenarios you describe, especially the particular disturbing ones involving discrimination, we would obviously, if we had specific targets, we were looking at

taking a close look to see if it violated the credit reporting act, we would not give up on that. , ourhing i want to say laws are limited, as i mentioned in my opening statement. for the reporting act, the data has to be collected and used and the ftc act has to allow us to go after deceptive practices. there is nothing in our laws that would require the entities .massing that is the limitations of our laws. >> thank you. nothing like a little section five action. , weare saying beyond that have got a real issue here. a real invitation for us to act.

we have put on the books the language. >> i have stretched it to a point where we are very unhappy but she will be more unhappy , -- i call on the senator >> it is terrific to have the senator on this committee. he has obviously worked on this issue in the house. we will benefit from the amount of time and effort. i want to hone in on a couple of things. , you purchased the company, court ventures. in the spring of 2012. for more than a year after the time you purchased the company that had all this data, you are wire transfers

from singapore. your company did nothing. transfersut the wired were coming from a man in vietnam specialized in identity theft and was marketing the toormation you owned criminals, to ruining people's lives. so my first question to you is, you were quoted as saying, we would know who is buying this. you were getting wire transfers from singapore on a monthly basis and no one bothered to check to see who that was? >> i want to be clear this was not marketing data. this was experienced authentication data. a different company.

i want you to know. class i do not understand it -- that distinction. it is a distinction without a difference. it is data you owned. you purchased this data. toy had, in fact, sold it someone else. >> let me clarify for you. response toa full that question to the committee and it is part of the eight submissions we have given. i have to say it is an unfortunate situation. the incident is still under investigation by law enforcement agencies. i am extremely limited in what i can say publicly about it. but i want to say this. obtainsect in the case data controlled by a third party. that was u.s. info search. not an experienced company. bought, courty we ventures, prior to the time we acquired that company. no data was ever access.

>> i understand what you're saying. you had u.s. info search. >> no. >> u.s. info search existed and courts existed. they decided for commercial combine-- reasons to their information. they had a sharing agreement. these two companies had a sharing agreement and then you bought one of those companies. so now you owned it and you stood in their place. are you a lawyer? >> i understand what you stood -- what you said. this lawyer will back me up. there.u are now, you said in your earlier testimony that we would know who is buying this. you are now part of their transactions. you were receiving the benefit of the monthly wire. >> during the due diligence process, we did not have total access to all information we

needed in order to completely event that. by the time we learned about the malfeasance, nine months had expired. the secret service came to us and told us of the incident and we immediately began cooperating with the secret service to bring this person to justice. we are continuing to we were a victim and scams by this person. we will make sure they are protected. there was no allegation that any harm will come. we close that down. we modified our process. >> let's talk about that process. this person, this man they and is to guam to arrest now facing criminal charges in they posed as an american private investigator.