Big Data, Big Problems
Big Data Means Big Opportunities and Big Challenges for Real Estate
Federal Data Privacy Discussions are Showcasing the Pivotal Role of Data in Americans’ Lives
By Sarah Friedmann
Online data plays an almost inextricable role in American consumers’ lives. Following a host of large-scale data breaches and subsequent questions about corporations’ use of consumer data, Capitol Hill has been abuzz with talk of creating federal data privacy legislation. Amidst calls for federal data privacy protection laws, many industries that handle sensitive consumer information – including the real estate industry – are expressing their support for data privacy and offering further insights into how data is used in their operations. As the national discussion on data privacy continues to take shape, taking a closer look at how data and the real estate industry are intertwined further highlights the intrinsic role of consumer data in many aspects of Americans’ lives — and emphasizes why it urgently needs to be protected.
Background: Big Data, Big Problems
As Fortune reported in November 2018, data privacy has captured congressional attention in recent years because of issues related to large-scale data collection and protection. Without comprehensive data protection laws in place, big technology companies can generally make consumers’ data available for use in targeted advertising, among other activities. Targeted ads are those that seek to appeal directly to an individual based on their unique traits – traits which a company has gathered from analyzing an individual’s online data, like their social media profile. All different types of data, including some that aren’t so obvious, are used to inform this targeted advertising. For example, on the social media platform, Facebook, “messages you send to your friends, posts you share on your personal page, even the metadata of the files you upload — for instance the location data saved in images — all provide data for Facebook to use,” Alexander J. Martin, Sky News’ Technology reporter, wrote in March 2018.
Targeted advertising is problematic for a host of reasons, the New Republic reported in April 2018. First, it doesn’t give consumers agency in how their personal information is used, which many people find disconcerting. It also often causes even bigger problems, like the perpetuation of discrimination and fraudulent activity, including in the housing industry. For example, “advertisers armed with big data [large datasets that help inform targeted ads] can ensure housing or employment advertisements don’t reach African-Americans or Hispanics [by targeting their ads to non-minorities], discriminating on the basis of race,” David Dayen of the New Republic wrote. In fact, this alleged discriminatory use of big data in housing and employment ads is the subject of a March lawsuit filed by the Department of Housing and Urban Development (HUD).
Furthermore, targeted advertising and the use of big data places Americans’ personal information at risk and makes it vulnerable to hackers. “The capture and storage of personal information itself creates a target, prone to data harvesting and breaches,” Dayen noted. The recent breaches of multiple large, international companies illustrate this point. In these breaches, troves of highly personal consumer information, including social security numbers, drivers’ license numbers, and copies of passports, were accessed by hackers in 2017 and 2018, the Washington Post explained. The paper noted that these incidents put millions of consumers at risk for identity theft and other illicit uses of their personal information.
An Important Responsibility — And a Call for Action
Whether it’s data obtained by big tech companies for targeted advertising or data housed by consumer services businesses (like hotels, banks, the real estate industry, credit card companies, and more), it’s clear that collecting and storing consumers’ personal data is a significant responsibility — one that must be taken seriously. During a March Senate hearing examining recent private sector data breaches, Senator Maggie Hassan of New Hampshire suggested that the aforementioned high-profile data security incidents, along with other recent consumer data breaches, mean that federal action establishing data protection standards should be taken to ensure that consumers’ information and privacy is better protected.
“… I want to make sure that Americans — whose information is in the custody of an entity they may not even know anything about — don’t have to wait for there to be a breach before companies start doing what they should responsibly do … This is an ongoing threat,” Hassan said at the hearing, per The Washington Post. “It’s been an ongoing threat for a while. And we need to make sure there are standards in place, just the way we have safety standards for other industries …
A Cross-Cutting Issue
As these breaches reveal, addressing data privacy is a major concern for all types of businesses and consumers, including those in the real estate industry. In fact, because of the highly sensitive financial and personal information that the industry regularly handles, ensuring that consumers’ data is protected is a top priority for real estate brokers. Indeed, the National Association of REALTORS® (NAR) highlights the importance of this issue in an overview of data privacy and security on its website:
REALTORS® strongly support efforts to protect consumers' sensitive personal information. The REALTOR®code of Ethics and Standards of Practice explicitly acknowledge a REALTOR's®obligation to preserve the confidentiality of personal information provided by clients in the course of any agency or non-agency relationship — both during and after the termination of these business relationships. REALTORS® support for data protection measures is also bolstered by their day-to-day business activities where they see firsthand the damage that identity theft can do to a family's ability to rent an apartment or buy a home.
In addition to handling consumer data, real estate brokers also often use big data to help clients navigate the home buying and home selling processes. “REALTORS® may use consumer data to allow them to advise their selling clients on how to price their home and how many potential buyers will be interested at different price points,” Nina Dosanjh, or member of NAR, and the 2019 Vice Chair of the NAR Federal Technology Policy Committee, said in her March 2019 testimony before the Senate Subcommittee on Manufacturing, Trade, and Consumer Protection for a hearing on small business perspectives on a federal data privacy. “It [consumer data] can also be used to give buyers a better sense of what types of properties competing home buyers are looking at, as well as their buying ability …”
Taking A Stand, in Real Estate and Beyond
Because consumer data plays such an intrinsic role in the real estate industry, both from a client protection perspective and a business perspective, industry-specific organizations like NAR are deeply involved in advocating for consumer data protection measures. Notably, the organization developed its own Data Security and Privacy Toolkit to educate those in the real estate industry about the importance of data security – and to provide some suggestions for best practices when it comes to protecting consumer data. Moreover, NAR generally supports federal initiatives to protect consumer data, and believes that these initiatives should be cognizant of ensuring that small businesses, like those of many real estate brokers, can comply with data protection requirements without an undue burden.
On Capitol Hill, there are ongoing discussions regarding what a federal data privacy law might entail. Since late last year, a variety of proposed legislation has been introduced to protect consumers’ data and penalize companies and individuals if they do not ensure that these protections are in place. For example, in November 2018 Senator Ron Wyden introduced a discussion draft of the Consumer Data Protection Act, which allows the Federal Trade Commission (FTC) to enforce data privacy regulations and heavily penalizes corporate executives, including with jail time, if they do not adhere to these regulations. In December 2018, Senator Brian Schatz also introduced the Data Care Act, which prioritizes fines over jail time for companies that fall afoul of proposed data privacy protections. These constitute just some of the multiple bills that have been introduced to address a generally-established need for federal data privacy protections.
As Fortune reported, many technology companies have become increasingly supportive of federal data privacy legislation, a stance which further improves the possibility of a nationwide data privacy law passing Congress. Moreover, following the implementation of the European Union’s data privacy legislation, the General Data Protection Regulation, in May 2018, it seems even more likely that the United States will pass its own legislation in due time. Indeed, many U.S. businesses that work online, including those of many real estate brokers, already have to comply with the European legislation.
According to NAR, a uniform federal privacy law makes sense for the real estate industry and for consumers more broadly. “NAR supports a single federal standard [with no exemptions] for data privacy and security laws in order to streamline and minimize the compliance burden,” the organization notes. NAR is also in favor of the FTC enforcing these regulations, except in the banking industry, which would undergo separate enforcement.
While lawmakers seek to come to a consensus about federal data privacy protections, consumers and business owners throughout the United States will be paying close attention to these conversations. As this examination of the real estate industry and data privacy reveals, consumer data plays a role in Americans’ lives in myriad and unexpected ways. Therefore, ensuring its protection is increasingly crucial for safeguarding consumers’ rights and for guaranteeing a fair and equitable data standard to which all businesses must adhere.