Senator Jay Rockefeller, IV (D-W. Va.) is conducting an investigation of nine data brokerage companies that collect information about internet-using consumers, assemble profiles of them, and sell the profiles to media, advertising and retail businesses. - 

The Senate Commerce, Science and Transportation Committee holds a hearing today titled “What Information Do Data Brokers Have on Consumers and How Do they Use It?”

Committee Chair Jay Rockefeller, IV (D-W. Va.) is already conducting an investigation (launched in October 2012) of nine data brokerage companies that collect information about internet-using consumers, assemble profiles of them, and sell the profiles to media, advertising and retail businesses. He expanded the investigation this fall with inquiries to twelve websites popular with consumers in the areas of personal finance, health and family life (including About.com, Self.com, Ehealthforum.com and Finance.youngmoney.com) asking how those companies collect and share user information with other businesses.

The following scenario will likely be familiar to many consumers:

You log onto Facebook, and an ad appears along the right-hand side for a dating service -- right in the age-bracket you’re looking for. Or it’s for ski-jackets, and you just searched for lift tickets online. Or, an herbal remedy for a slightly embarrassing medical condition you just found out you might have.

These are just some of the ways that so-called "data-brokers" might help deliver your eyeballs to online marketers. But they’re largely invisible to most of us who use the web, says internet privacy activist Adi Kamdar at the Electronic Frontier Foundation. “As a consumer, you pretty much never have a direct interaction with a data broker,” he says.

But companies like Acxiom, Rapleaf, Datalogix, Epsiolon, Spokeo and perhaps hundreds of others, have a lot of interaction with us. Based on the websites and stores we visit, DMV and mortgage records, Tweets and Facebook-likes, hundreds of data points on each one of us—they assign us marketing profiles. Examples Sen. Rockefeller has publicized from his investigation include "Rural and Barely Making It" and "Ethnic Second-City Strugglers."

Chris Calabrese is legislative counsel for the ACLU in Washington, and advocates for consumer rights in this burgeoning business. “There are marketing lists of people with Alzheimer’s, bipolar disorder, people who like to play the lottery,” says Calabrese. “They can use that to serve you ads, to try to interest you in projects, to target people who are vulnerable on the basis of their weakness.”

Calabrese backs more regulation to let consumers check and correct the data, to prevent its use in employment screening, and to allow consumers to opt out of data collection and sharing by brokers and marketers altogether. He thinks controls on data gathering and use should be similar to what already applies to credit-reporting bureaus under federal law.

Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association, will testify at the Senate hearing. Cerasale says the DMA represents both marketers and data brokers. He argues the industry’s self-regulation has largely worked to police the behavior of data brokers and online marketers. He believes any government regulation or enforcement should be narrowly targeted to bad actors in the industry, and that a broad expansion of government regulation could make targeted advertising less helpful to consumers, as well as less efficient and effective for those selling products and services to consumers.

Follow Mitchell Hartman at @entrepreneurguy