maybe not swiftly enough, but my own feeling was that was a necessary risk to take. because the gains from the bilateral contact, from what i understand, were so significantly larger than the had tory hiccups that we go through despite the fact that they got a lot of publicity, that we have to do that. now, the challenge is, how can bilateral contacts and multilateral negotiations be syncopated a little better? thatotion of the fact bilateral contacts doesn't have to be hidden any longer. even if there are not direct reports over all of the tv stations right away as to exactly who said what to whom. we will get it on your program. i think that is the way to proceed, and they have to be some thought given to it. but my own feeling was that they

did exactly the right things, and man -- in many ways managed it as best they could under the circumstances. >> would a more dramatic move like that be helpful in iran, or not? >> of course areas we should recognize that without direct talks between iran and the u.s. we would never have reached a deal. progress -- progress with direct talks, again, it would fail. however, we should not limit talks to nuclear. we need to enter a broader dialogue. we have a crisis in afghanistan. the u.s. is a big player. iran is a big player. we have many common interests. we have a crisis in iraq. the u.s. is a big player. iran is a big later.

to it is really interesting and the u.s.,iran in spite of all hostilities, they are supporting the same government. allies are opposing these governments. in syria, the major threat is really extremism and terrorism spilling over. iran and the u.s. can play a big role in controlling extremism and terrorism. they have good experience already in afghanistan, 2005, 2001. it was really great that the countries cooperated. this background can be used for the current problems. talksgh the nuclear

should be followed between iran one, we wouldus need iran-u.s. dialogue, not on the nuclear. broader issues. it does not mean that the syrian crisis can only be resolved by iran and the u.s.. we need to engage saudi arabia. we need to engage turkey. we need to engage russia. we need to engage egypt. definitely. but without the presence of iran and the u.s., talks between iran and the u.s., none of these issues would be solved. >> hossein just implicitly, endorsed one of donald rumsfeld's rules. is he right? >> i don't think that is right right now. there are those that believe this is not just nuclear.

this is about long-term rapprochement in the region. , there are good hopes for that in the long-term. but there is an interesting symmetry between the u.s. and iran in the short term. both countries say, nuclear first, we must do nuclear first. the domestic and political reasons are on both sides for making nuclear first. for iran, the name of the game is getting the sanctions lifted and getting the economy back on track. you don't do that by enlarging and complicating the problem and delaying a deal. are really strong opponents in iran of engagement with the west. many who still call the united states the great satan. engaging with the united states on a broad range of issues is not very popular in a certain quarter.

similarly, in the united states the name of the game, the initial name is stopping iran's advance to a more sophisticated nuclear program closer to nuclear weapons. and there are those in the u.s. who are terribly distressful about enlarging the agenda. also, there are concerns among u.s. partners in the region about enlarging the agenda. the saudi's in particular. but there are others who have concerns as well. they think the u.s. is going to cut a deal that says in exchange for iran's nuclear concessions united states will give iran a free hand in the middle east. that is not going to happen. but that is a concern. that is why in the first instance both the u.s. and the iranian leadership wants to combine this -- confine this to nuclear. if this can be done, a final deal can be concluded. that can open doors to do more things.

starting off with the areas of obvious it -- obvious common interest, such as afghanistan. then broadening from there. i think the first step has to be the nuclear one. >> let me differ with bob a little bit here. committed have both to do the nuclear deals as rapidly as we can. sequence before we tried to solidify and concretize other deals. but i think there's no question in my mind that in some core doors, in some corners, in some discussions, other issues come up. and it is much more important to have the iranians know what we think about these questions then to have them presume the worst in terms of how we go ahead. it is much more important, i think, to talk to the saudis

about these questions, and the qataris, and the turks, and others. with respect to syria, it is a hard case. as a minimum, participation in syrian talks has to involve at least some knowledge of and some commitment to what is already on the table, which iran, as i understand it, has not done yet, which is the plan put together by kofi annan as a kind of starting price for moving -- lace for moving ahead. that is a minimum but necessary quotients to move ahead. i think we are already seeing some potential to move syria ahead. now, iran may not be there at the first meeting, but i cannot conceive of having a syrian deal without iran in at the end, if we can put that in. had the president follow through with initial threats to

, wouldearlier this year there have been an interim agreement? if there had been religious syria,-- a strike in definitely there would have been no interim agreement. let me agree with you on iran's overture on syria. >> we could stay here for a few more minutes and make this very exciting. [laughter] >> to mention, the only positive development since the beginning isthe syrian crisis dismantling chemical weapons. in theian crisis, even last two years, this is the only serious positive development. this is only due to cooperation with iran, russia, and the united states. cooperation between

washington, moscow, and tehran made the deal possible. therefore, there is already one big step on syria taken. iran has been constructively engaging, pushing assad to give up chemical weapons. >> but that is not the solution. that is the entry point for getting to the solution. around eveni think, president assad opposed giving up weapons, at least not in the public way. but that doesn't establish the basis for trying to move ahead with an approach to resolving syria. on an a broad racist -- broad basis, russia, china, turkey, saudi arabia. is there any reason why, as part of their interest in becoming

admitted, they are reluctant to agree to something put together by the former secretary-general, which seems to me a perfectly apparent basis for trying to make the next step. that is the only point i was making. i totally agree on the dismantlement, but the dismantlement was a particular step that opened the door to these other questions. and it is very important, i think, to stop radicalism, to stop all of the dislocation taking place in the region. certainly jordan and lebanon, to some extent iraq. turkey. they are all feeling the effects, to say nothing of 6000 deaths a month as being a horror. there is an important step has to be taken. it will take time. i would warmly welcome i ran into those steps. i would warmly welcome iran if it agreed that there was a common basis to go on. >> there is another step already underway. iran-u.s., other countries,

multilateral cooperation on humanitarian issues. how many examples do you want? >> another basis. we will need a cease-fire for that. >> the bases should be two. one, democracy. second, no extremism and terrorism. , iran would be cooperative on both. if we agree that syria has no military solution -- >> totally agree on that. >> if we agree that for democracy we need a peaceful transitional period. >> that's right. >> if we agree we should pave the ground to decide about the next president and constitution, you would have the iranian hand in definitely. >> we need them backing a cease- fire. we have to get chemical weapons out. that is a precondition.

>> we already have a lot to make a deal here. >> it will not be a cease-fire. it will not be a solution to the civil war as long as assad is head of syria. everyone understands that. >> having a pre-commitment to get rid of it. mind.n has a good only the people of syria can decide. that is a truism. but it has got to be clear that the transitional machine can't involve the current head. because you are not going to have a transition under those circumstances, and it makes sense to recognize that upfront, whether subtly or sending signals diplomatically or something like that. new --believe that these nuclear negotiations have to be isolated from whatever is happening in geneva and syria,

happening with the israeli- palestinian process. if that is possible. >> i think they are separate. separate.an wants it the united states once it separate. they are not going to be trade- offs. iran, if we will say, ok, you may concessions on the nuclear and we will cut you slack on syria. that will not happen. i think there is a relationship in the sense that if this is successful, a final deal on iran , the iran nuclear issue, that is going to facilitate cooperation on syria. , public all public around the world, will be more supportive of engagement on syria if iran diplomacy has worked. >> one final question from the audience for hossein. responding to your comments about mr. netanyahu. i think mr. netanyahu's position is based on survival of their

country. if iran publicly withdrew their desire to "wipe israel off the map" would the israeli decision change? >> this is something netanyahu misled leaders -- misled the public opinion for eight years. a year ago, the deputy prime minister of israel publicly said that from the beginning we knew the iranian president never said israel he should desk -- israel should be wiped off the map. >> ahmadinejad never said that? >> never said that. if you google it, you would see the deputy prime minister of israeliith an newspaper. this is online. you can find it. from the beginning, we knew he did not say it. it was misinterpretation. he denied holocaust or questioned holocaust, but he

never said israel should be wiped off the map. it was a misinterpretation recognized by israeli officials. but look, the tone and the language after the election 100% has changed. the foreign minister, the president, they condemned the holocaust. the foreign minister congratulated the jews for their new year. >> what about the rabid dog rhetoric? >> i am against the rhetoric, definitely. my point, bob, is this. you have not had any rhetoric from the new administration. >> the good news is that ahmadinejad is not around anymore. [talking over each other] >> if an administration questions the holocaust or this administration condemns the holocaust, the netanyahu

opposition is the same. attack iran, sanction iran. difference.ake a clearlyhe president say that israel has the right to exist? >> the problem is not with iran. we have 57 muslim countries. 50 of them do not recognize israel. you are talking about iran. saudi arabia does not recognize israel. that is your ally. 50 countries, they do not recognize israel. you are fighting with iran? all of your allies, a majority of your allies in muslim countries do not recognize israel. israel's problem is not with iran. the peace process is with netanyahu. everybody knows who has blocked a solution. this is not iran. this is netanyahu. [applause]

>> gentlemen, this was fascinating. [laughter] on that point, i think you gave a lot of insight into the deal and what could come next with some moderate reasons for hope. thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] kneweryone thought they irma. and they did, pretty much. she laid the lice out for everyone to see. she told us about what life was ine in suburbia for women the 1960's through the 1990's. one of the wonderful things about her, she wrote mainly humor.

humor that was acceptable to everyone. it was humor that happened in everybody's lives, but they might not recognize it until they saw it written on the page or in the newspaper. because of funny things happen to us all the time, but we have to be out on the lookout for them. she was the one who focused our attention on the funny things that happen in a family. at the moment seem like craziness, driving you nuts, but when you look back, that was really funny. that is a real gift. that is a literary gift. >> the life and times of erma bombeck. and weekend as both tv history tv look at the history and literary life of dayton, ohio. sunday at 5:00 p.m. on c-span three. >> if you are a middle or high school student, c-span's student

cam video competition wants to know what is the most important issue congress should address next year. make a five-minute to seven minute video for a chance to win the grand prize of $5,000. with $100,000 in total prizes. the deadline is january. more information at studentcam.org. >> looking live on the senate floor, where they are expected to remain in session overnight with votes on the defense bill and executive nominations. a final passage vote on the defense authorization bill is likely this evening. senator grassley of iowa, speaking on the floor. a bit on the potential amendment on the iran sanctions that was not allowed in the debate. the white house said today that the amendment, that bill which has bipartisan support, would be vetoed by the white house. they do not support it. interesting to see later on how many republicans are in the

chamber. an article in "the hill" this afternoon says "senate gop to skip town, leaving democrats working the weekend shift." senate republicans will let rank-and-file members leave town for the christmas break, leaving democrats to vote around the clock to confirm the latest batch of president obama's nominees. publicans angry over last month's gutting of the filibuster decided in a meeting today they will not yield back any time on the defense authorization bill or expedite any consideration of obama's nominees. one of those nominees we may see later on or into the weekend, we will get a final passage bill, is janet yellen. at the schedule goes out, on saturdayter evening. you can follow all the senate debate on our companion network, c-span 2. current fed chairman ben bernanke held his last news conference, his last federal open market committee meeting yesterday. we talked about that meeting and the fed chair on this morning's

"washington journal." >> thanks for joining us this morning. tell us a little bit about what this announcement meant. >> the tapering announcement was an important end to ben bernanke's tenure. the sense in the last five years has been putting the foot on the gas pedal as far as it can go to try to stimulate the economy. we went through an incredible recession in 2007-2008, 2009, and in the late stages of that they wanted to arrest the decline, in part through an initial round of bond buying, essentially printing money out of thin air so we could go out and purchase bonds and lower interest rates. as a result, we try to stability economy by leading people to buy houses, cars, other assets, on credit. the fed is seen as having done a reasonably good job of arresting declined after failing to catch the crisis in the first place.

it has been a long road since that time in december 2008, when the fed first low-interest rates -- lowered interest rates down to almost zero and started bond buying. now in the third round of bond buying, qe3, quantitative easing is what is called. the fed has been doing this since december 2012. a long time to be printing $85 billion a month, to go out and buy bonds. it was not completely clear when this would end or how this would end. bernanke, six weeks before the end of his tenure, he had been with the central bank from a state years in his current role as chairman, he was able to forge a consensus and pullback the bond buying program just a bit. that means the fed is lowering -- slowing the pace of purchases. they will by $75 billion. they planned over the course of eight meetings to gradually scale back by $10 billion a month, eventually getting down

to zero at the end of 2014. the fed is going to keep interest rates very low. that is the other half of the decision it came out with yesterday. he will keep the interest rate target near zero, at least through 2014. most likely through much of 2015. that is one thing that helped boost the stock market and send the dow up to a record on wednesday after the decision came out. concernwas a lot of heading into that decision, when the tapering announcement was going to come. "the wall street journal" showing the dow jones industrial average at 2:00 p.m. when the announcement happened, starting to shoot up. also reaction in the 10-year treasury yield. explain the 10-year treasury yield line. >> the 10-year treasury yield is the borrowing cost for the government, the benchmark rate for all sorts of loans across

the economy. very closely connected to mortgage rates. get a good sense directionally of what will happen with mortgage rates. the 10-year yield was below 2% in the spring when the fed was buying allg on qe3, these bonds with no end insight. when they started discussing that in april and may, discussing publicly, the 10-year yield spiked up. we are now close to 3%, as you can see from that chart. 3% is still a very historically low level for treasury yields, bond cost -- borrowing costs. it is certainly higher, and there has been a fairly rapid adjustment to go a full percentage point in a matter of months. that is one of the things that scared the fed quite a bit, that the rapid run-up in rates. you can see the housing market .n a bit over the summer

some potential homebuyers decided to weigh on the sidelines to see how this played out. some businesses were wondering, along with others, what this might mean. what ben bernanke was able to do was delay the process by time, and- buy some thet the scaling back of program. it will be up to his successor, who will likely be janet yellen, up to her to actually carry out the full scaling back of the program over the next two years and eventually start raising interest rates, which will be a whole other level of drama. >> i was a donor to martha's table, like so many of your viewers. theichael and i would do annual consideration of the things that we care about. because they were important to us as we grew up. issues we cared about because they matched our broader beliefs. but also, the players in our

community that we saw doing good work every day. martha's table delivered hot meals to the little park outside of the bill and melinda gates foundation washington dc offices. at mcpherson square. i would see that van every night and see the lines of people there every night, and i knew that it was being volunteer- driven, 10,000 volunteers, 80 hard-working staff. they had enormous influence in the community they were serving, and it was a great brand. i thought, why wouldn't i join that organization, see if i can put my skills to work, but also see if i can understand better why we have this issue, persistent child poverty. what we have so many children that aren't graduating high school, going on the college, being able to attach to careers the way i was able to? >> the president and ceo of martha's table, patty stonesifer, on leading the

washington dc-based nonprofit. "q&a." n's attemptwas a deliberate by the government to blame benazir bhutto. that was always the perspective of the musharraf government. in other words, she was the one who stood out. she was responsible. idea, that she should have been protected. an eilte -- elite force of policeman that would have accompanied her to the rally where she was killed, they were not there. we saw videos, pictures. we talked to 150 people.

elite formation, no police protection. that was the duty of the government, of ms. are off -- musharraf7 heraldo m investigation of former prime minister benazir bhutto. >> coming in january, in-depth with mark levin. he will take your questions for three hours beginning at 12:00 p.m. eastern sunday, january 5, part of both tv, weekends on c- span 2. online for this month's book tv book club, we want to know what your favorite books were in , jointhroughout the month other readers to discuss notable books. booktv.org. >> the government report shows

marketing the police are gathering a lot of information, including medical information. the senate commerce committee investigates this. the chairman is jay rockefeller of west virginia. >> this hearing will come to order. at this point there are two people sitting at the dais, but two more wonderful people, senator blumenthal, senator pryor, 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? then the motion 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 debate 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 nothing wrong. these disclosures have harmed the country's national security, but made americans safer than usual 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 in everything they do, 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 we also cherish our personal freedoms. 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 government, 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 collectively as data brokers are gathering massive amounts of data about our personal lives and selling this information to marketers. we do not hear a lot about the private sector-data broker industry, but it is playing a large and growing role in our lives.

last year the data broker industry generated $156 billion in revenues, 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 it makes no 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. when government or law enforcement agencies collect information about us, they are restrained by our constitution and our laws and are subject to the oversight of courts,

inspectors-general, and united states congress through the intelligence committee, the senate, and the house. i have served on the intelligence committee since before september 11 and i can tell you that without a single thought that the protection that nsa 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, hoops that you have to jump through. the fbi is involved. the doj. it is very tight. every day you read the paper you would think it does not exist, that it is just a government gone wild, but particularly when it comes to domestic, section 215, it is 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. while there are laws on the books that 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 in recent years by the tremendous advances in computing and data analysis. as consumers spend more and more 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 theory. they know if you have diabetes or suffer from depression. they know if you smoke cigarettes. they know your reading habits. your browsing habits. they know how much you and your family members weigh. they may even know that number of whiskey drinks you have had

in the last 30 days. we would not reveal that, would we? like the pieces of a mosaic, like the pieces of a mosaic, data brokers have 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. for the past year this committee has been trying to bring some much-needed oversight to the data brokerage industry. where is the copy of our report? under here. got it. we have been pushing them to answer the same kinds of questions 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. the commerce 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. i ask unanimous consent to put a copy of this report in the record of this hearing. one of the 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. we have also found some practices that raise serious consumer protection concerns. in particular, i am disturbed by the evidence showing that the data brokers segment americans,

categorize them into categories, name those 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. and zero 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 accepting 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 several years ago, we went over to henry waxman and stole a couple of his best people and set up an 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 do in here. i want to know which companies are buying these lists to target their marketing to those groups. some companies in the data broker industry have responded positively to our oversight efforts. over the past year they have provided complete answers to my questions, even the tough ones, but several of the largest

data, brokers, specifically -- 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 three 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. we have oversight over this activity in american commerce. if you do oversight, whether 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, that we have started, will continue. i now call on my distinguished friend from a similar urban state, senator john thune. [laughter] >> 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 play a 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 producets because business to target more precisely, helping businesses create products that consumers actually want, lowering startup costs for new businesses. data-driven marketing 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 consumer's particular interest. at least that is the goal. but the industry is at the center of something that the commerce committee cares about, commerce, data-driven marketing widely used across all sectors of the economy.

it is even used by nonprofits, governments, and political campaigns. many media outlets have noted how the use of commercial resources help the president's reelection campaign in 2012. as we will hear from the direct marketing association, the industry is 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, including 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 have also raised concerns that they create profiles on individual consumers based on the aggregation of sensitive and sometimes personal data, like health conditions.

in a rapidly changing marketplace, the federal trade commission has done important work concerning data brokers privacy issues, including educational efforts. they have also brought enforcement actions under the fair credit reporting act. the ftc is 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 a 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 interested in hearing from our witnesses how the industry can work the balance the private industry concerns with the needs of business in the economy. thank you to all of our witnesses here today, i wanted to add a special note of thanks

to tony from 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 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? jessica rich. 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] >> you have got to push a button. it is called technology.

>> yes, i assure you i know something about technology. my name is jessica rich, director of the bureau of consumer protection. this is a highly opportune time to examine the practices of data brokers as 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 most consumers knowing of their existence much less the variety of practices in which they engage. many of these practices, as you noted, fall outside the scope of existing laws. chairman rockefeller, we commend you for your leadership on this issue and stand ready to work with the committee and congress on ways to improve the transparency of these practices.

the report from today is a key effort, as is the study you requested from gao. at the ftc, our work on data broker practices goes back to the 1970's. 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 led to 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 enforcement actions when company practices violate the law. perhaps our most well-known case involved choice point, where we obtained $10 million in penalties and $5 million in redress for consumers.

we address privacy security procedures, resulting in 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, the company collected personal information from hundreds of online and off-line sources, including social networks, combining the data into detailed personal profiles. we alleged the company marketed these for use by human resource departments, making the consumer reporting agency subject to the fair credit reporting act, but it was failed to abide by the accuracy privacy requirements. it includes strong belief in the civil penalty. second, the commission conducts research and issues reports addressing data brokerage issues. for example, our 2012 privacy report named best practice

conditions for 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. more 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 scoring products offered by data brokers, that is, products that companies use to predict consumer behavior and shape of a market to particular consumers. our final tool, educating businesses and consumers on privacy issues and the practices of data brokers. for example, we recently sent letters to multiple data brokers

that provide services and warning them about their duty to comply. for consumers we recently produced a video on data brokers and have published frequent blog posts and updates on issues related to the industry. in closing, as the collection and use of consumer 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. >> the next witness is the executive director of the world privacy report. you are on. >> she is -- [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.

as a 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, which is the price of a list of rape sufferers which was recently sold. lists of 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. senators, i would like to make three points. first, scoring. there are now pseudo-scores which are comprised of factors that are non-financial -- i should say, non-credit report based. these pseudo-credit scores are used in lieu 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 any consequence

at all, this needs to change. secondly, health. there are lists of millions of people that are categorized by the diseases that they have, ranging from cancer to bedwetting, 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. these lists exist entirely outside of hippa. >> outside of what? >> hippa, the federal data health protection. it does not apply. this industry that is selling these lists, there has been a lot of mention made of marketing purposes for these lists. 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. in 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 brought 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 statistically as 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. there needs to be -- actually,

there is an urgent need for a national data broker requirement for an opt out. we favor an opt out that is 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, nothing about 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 those lists. we need to re-examine hippa and decide if health information that is not held by health care providers deserves health care protections in privacy. i believe they do. this is going to be the beginning of an important public

dialogue that is going to be incredibly important for all of us to engage in. because if we have an industry that is not curtailed by the sale of names of anyone 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 of a dialogue. and we need to probe deeply 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 suggested, a change in hippa, which is to be sacred, and still is, but not in all cases. i thank you for your testimony.

the next witness is 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, haven't these lists 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 brokers have now and how they deal with it.

lists from the old days were static. the number of data points the company had was small. today data brokers can collect huge amounts of information, about 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. they contained 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

cookie to find and follow people across desktops, laptops, mobile, and tablets. like axiom, other data brokers continually run programs that connect our 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 be merged 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. merchants can charge you more than others for products raised on teachers they tagged you with you do not know they shared. say you regularly buy anti- acids. that is great news to travel

company searching online for those types of people. using personalized coupons, the physical and virtual stores can change prices based on what they know about you. brokers can add your lifetime value and the results can dictate the kinds of items you see and how much the discount will be. 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. based on engagement with addressable ads, firms can change the news and entertainment offerings you receive. the result 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.

anonymity is not reassuring. if i am followed online and off- of data, it is not a matter what my name is. anonymously and with all personal information, aid workers are engaging in a world dangerous social discrimination. become widespread because it comes in all sorts of advertising. surveys since 1999 suggest americans worry about what firms worry and think about them. i have heard people say they will change activities or how they talk about themselves online to be treated better by 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

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. my name is tony and i am the vice president of government affairs and policy. a leading provider of data and information services that brings significant value to consumers and the economy. we welcome the committee's interest and dialogue in the marketing data industry and the opportunity to describe how we collect and use data. i have submitted a fuller new statement but i will summarize a couple of points. first, we truly believe

responsible information sharing in responsible information sharing significantly enhances him and economic productivity in him 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 is productivity, innovation, and ability to compete in the global marketplace. we shared data to help make consumers and small-business lending more efficient. we share it to help facilitate access to fair and affordable credit. to help protect consumers from fraud, including identity theft. to help consumers gain greater financial literacy. and to help companies reach consumers with a timely and relevant communications and marketing offers.

and marketing data in particular brings lower prices and greater convenience to consumers by strengthening competition. nonprofit organizations and government agencies also depend on consumer data. who to serve the needs of people and citizens. just as 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.

him andim and him and him and him and him and him him him him him 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. the largest sectors we serve are retail, media, and financial services. our products were used i nearly all sectors of the economy. uses include the sources for specific products, in which the kitty hat -- the committee has expressed interest. most of our data comes from public records and publicly 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.

when all is said and done, we help marketers make the best guess about what messages and marketing solicitations a group of consumers may be most 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.

and what duration. -- in the spirit of cooperation. to better understand the role we play in the economy and the lives of consumers, thank you for your attention. and for invited guests to appear 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. you are the senior vice president of government affairs for the direct marketing association. we welcome your testimony. >> thank you. members of the committee, dma 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. they say i am a 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 us and to our members. in that light, dma has created the ava -- data-driven 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 found it is worth 150 $6 billion a year to the american economy, 675,000 jobs. 70% of that 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. it sees them, 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. 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. what is your vetting process? court ventures would have added this. >> i'm talking about now. about you. >> let me say that this person would not have gained access to experian data. >> what would've stopped them? >> we would've had a on-site inspection. we would have known that business and its record, and why they wanted that data and to what purpose. that would have been enshrined in our contract. we would have known the kind of systems they have in place to protect the data that they gained. that is incumbent upon us under

the act. >> i understand that this was not a crime that began under your watch of stop but you did by the company and you got wire transfers in singapore. the secret service knocked on your door. i do not know how long those wire transfers would have gone on. i do not have confidence that it would have stopped at all. my point is that i do not feel as strongly about others on this panel that behavioral marketing is evil. i believe it is a reality and frankly the only reason we have everything we have on the internet for free is because of behavioral marketing. i do not see that evil unto it felt. what i do see is in desperate need for congress to look at how consumers can get this information. what kind of transparency is there. and whether or not companies that allow wire transfers from singapore from a