The Unseen Threat of Data Brokers: A Call for Comprehensive Federal Regulation

By Rahul Guhathakurta

Cover Image Attribute: Image by Jensen Art Co from Pixabay

In today’s digital age, personal information has become a currency that fuels the modern economy. Every click, purchase, or step we take with a smartphone generates data that someone, somewhere, is collecting. Data brokers—little-known companies operating behind the scenes—quietly amass, analyze, and sell this information, often without our knowledge or consent. From basic details like our names and addresses to deeply personal data like our health records or exact locations, these entities create intricate profiles of our lives. Yet, in the United States, this sprawling industry operates with minimal oversight, leaving individuals vulnerable to privacy invasions, discriminatory practices, and even national security threats. The patchwork of state laws and limited federal efforts are no match for the scale of this challenge. Drawing inspiration from Europe’s robust General Data Protection Regulation (GDPR), the U.S. urgently needs a comprehensive federal framework—such as a strengthened American Privacy Rights Act (APRA)—to regulate data brokers, bolster cybersecurity, and protect citizens from the unseen dangers of unchecked data practices. 

The Invisible Web of Data Brokers 

Imagine receiving an advertisement for a rewards card from your favorite coffee shop, tailored perfectly to your morning routine. It feels convenient, maybe even flattering, but how did that company know you’d be interested? The answer lies with data brokers, the shadowy middlemen of the digital world. These organizations collect personal information from a wide range of sources, both online and offline, and sell it to businesses for purposes such as targeted advertising, financial services, or insurance underwriting. Their methods are as varied as they are invasive. They acquire companies, apps, or websites that collect user data, embedding software development kits (SDKs) in apps to siphon off information when users grant permissions. They comb through public records—voter registrations, birth certificates, or property deeds—analyze online behavior through browser activity or app interactions, and even use algorithms to infer sensitive details about people who’ve never shared such information directly. 
Government databases, like those from the U.S. Postal Service for address changes or the Census Bureau for demographic data, provide another rich vein of information. Commercial sources, including retailers and even other data brokers, further expand their reach. The result is a sprawling, opaque ecosystem that touches nearly every American, often without their awareness. For most of us, the idea that a company we’ve never heard of holds a detailed dossier on our lives—our habits, preferences, and vulnerabilities—is unsettling, to say the least. 

The High Stakes of Unregulated Data Trade 

At first glance, personalized ads might seem like a small price to pay for a connected world. But the consequences of this unregulated trade go far beyond a few targeted promotions. Consider this: a data broker might use geolocation data to note that someone frequently visits race tracks, labeling them a “car enthusiast.” A car dealership could use this to offer a tailored deal, which sounds harmless enough. But an insurance company might interpret the same data as evidence of reckless driving, jacking up rates without the individual ever knowing why. This kind of profiling can lead to discriminatory outcomes across industries, from higher insurance premiums to biased hiring decisions or restricted access to financial services. 
More alarming are the cybersecurity risks. Data brokers’ databases, filled with sensitive information, are prime targets for hackers. A single breach can expose millions of personal records, from Social Security numbers to health histories. Recent reports of the China-linked hacking group Salt Typhoon exploiting vulnerabilities in U.S. telecommunications infrastructure highlight the stakes. These incidents show how data brokers can inadvertently create backdoors for foreign espionage, surveillance, and influence operations. Military personnel, journalists, activists, and marginalized communities are particularly vulnerable, as their data can be weaponized to intimidate, manipulate, or harm. 
The national security implications are chilling. Imagine a foreign adversary purchasing detailed profiles of U.S. service members or government officials from a data broker, using that information to target them with disinformation or worse. The unregulated trade in personal data isn’t just a privacy issue—it’s a strategic blind spot that threatens the nation’s security. 

The Limits of Current Oversight 

The Federal Trade Commission (FTC) has sounded the alarm, calling commercial surveillance “out of control” and warning of its risks to cybersecurity, civil liberties, and national security. The FTC has taken action in some cases, such as its January 2025 settlement with Mobilewalla, Inc., which collected over 500 million unique consumer identifiers, including precise, non-anonymized location data. Similarly, in June 2024, the FTC penalized Avast Limited for selling browsing data without consent, despite claims of blocking tracking cookies. These companies tracked individuals near sensitive locations like military bases or religious institutions and even created audience segments—such as pregnant women based on visits to pregnancy centers—for sale to third parties. These violations are egregious, but the FTC’s response is reactive, stepping in only after harm has occurred. 
Federal efforts to address the problem are fragmented and inadequate. Executive Order 14117, effective April 8, 2025, and its associated Final Rules, published December 27, 2024, aim to prevent the transfer of sensitive U.S. data to “countries of concern” like China or Russia. The Protecting Americans’ Data from Foreign Adversaries Act (PADFA), effective June 23, 2024, prohibits data brokers from selling sensitive data to foreign adversaries, with hefty fines of up to $50,120 per violation. While these measures tackle cross-border risks, they do little to address the domestic data broker ecosystem, where most vulnerabilities originate. A brief attempt by the Consumer Financial Protection Bureau (CFPB) to extend the Fair Credit Reporting Act (FCRA) to require informed consent for data sales was withdrawn in 2025, deemed redundant, underscoring the lack of cohesive federal action. 

A Patchwork of State Laws 

In the absence of federal leadership, states have stepped in, but their efforts create a fragmented landscape. California’s Delete Act, set to take effect on August 1, 2026, will allow consumers to request data deletion through a single mechanism, requiring data brokers to comply within 45 days and report on their handling of requests. Oregon and Texas mandate registration renewals and disclosures about opt-out policies, while Vermont prohibits fraudulent data collection for purposes like stalking or discrimination. Texas and Vermont also require robust information security programs, and Texas mandates clear notices on data brokers’ websites or apps. 
These state laws are a step forward, but they vary widely in scope and enforcement. Oregon, for example, allows exceptions for collecting publicly available data without registration, potentially undermining oversight. California’s focus on deletion doesn’t address proactive cybersecurity measures. For businesses operating across state lines, navigating this patchwork is a compliance nightmare, and for consumers, the uneven protections leave significant gaps. A Californian might have more control over their data than a Texan, but neither is fully shielded from the risks of data broker practices. 

Learning from Europe’s GDPR 

Europe’s GDPR offers a compelling model for how to tackle these challenges. While not specifically aimed at data brokers, GDPR governs all personal data processing, requiring brokers to notify individuals when their data is obtained from third parties, provide opt-out options, and adhere to strict transparency and consent standards. Guidance from the UK’s Information Commissioner’s Office and Lithuania’s Data Protection Inspectorate ensures clarity and accountability. GDPR’s proactive approach—mandating data minimization, consent management, and regular assessments—has reshaped global norms, proving that strong regulation can protect privacy while enhancing cybersecurity. 
For the average person, GDPR means knowing when your data is being collected, having the right to say no, and trusting that companies face real consequences for violations. In the U.S., where data brokers operate in the shadows, this level of transparency feels like a distant dream. But GDPR shows it’s possible—and effective. 

A Path Forward: Strengthening the American Privacy Rights Act 

The proposed APRA, introduced in 2024, could serve as the foundation for federal regulation. It aims to require data broker registration, limit sensitive data collection and sales, and establish baseline security standards. But as it stands, the act falls short, particularly in addressing cybersecurity comprehensively. To make APRA a true game-changer, two enhancements are essential. 
First, APRA should integrate standards aligned with the National Institute of Standards and Technology (NIST) cybersecurity framework, already widely used across critical infrastructure and federal agencies. NIST outlines clear protocols for identifying, mitigating, and responding to threats—specific, enforceable benchmarks that go beyond APRA’s vague call for “reasonable” security measures. By mandating NIST standards for data storage and transfer, the U.S. could shift from reactive enforcement to proactive prevention, reducing vulnerabilities before breaches occur. 
Second, APRA should require mandatory third-party audits, similar to GDPR’s data protection impact assessments. These audits would scrutinize technical safeguards like encryption and access controls, as well as compliance with privacy requirements like data minimization and consent management. Unlike the current model, where enforcement follows violations, audits would embed accountability into data brokers’ operations, ensuring ongoing adherence to high standards. For consumers, this would mean greater confidence that their data is handled responsibly. For national security, it would close critical gaps that foreign adversaries exploit. 

The Human and National Imperative 

Public sentiment is clear since 2014: 91% of Americans want stronger oversight and clear notifications when their data is acquired. This isn’t just about frustration with creepy ads—it’s about a growing sense of powerlessness in a world where personal information feels like it’s slipping through our fingers. From a national security perspective, the stakes are even higher. Data brokers operate in a strategic blind spot, exploited by foreign adversaries like the Salt Typhoon hackers. The unregulated trade in personal data doesn’t just threaten individual privacy—it undermines digital civil liberties and opens backdoors for surveillance and influence operations that no firewall can fully block. 
The urgency of this issue cannot be overstated. Without comprehensive federal legislation, the U.S. risks falling behind in defending against commercial surveillance and foreign espionage. A strengthened APRA, incorporating NIST standards and third-party audits, would align the U.S. with global leaders like the EU, protecting consumers and fortifying the nation’s cybersecurity infrastructure. Failure to act invites continued exploitation of American data, systems, and citizens. The time for a unified federal response is now—before the unseen threat of data brokers becomes an even greater danger. 

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