What is a Data Broker?

A data broker is a business that collects, processes, and sells data, including consumer information, to third-party entities for various purposes, such as marketing, research, and analytics.

Data brokers gather personal information from various sources and sell or share it with other parties. They compile and transfer this data to third parties—such as their clients—for purposes like targeted advertising, enhancing customer experiences, or combating fraud.

Typically, data brokers operate in two ways. In the first scenario, they serve as intermediaries between clients who want to monetize their data and those looking to enhance their databases, acting on behalf of their clients. In the second scenario, data brokers collect, aggregate, and enrich data independently and then sell the refined information to other parties.

There are four US states requiring data brokers to register with the relevant authority in order to practice.

Source: European Data Protection Board

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