How ‘data brokers’ are striking gold – By Kate Tummarello – 05/31/14 08:38 AM EDT

A growing number of “data brokers” are raking in profits by scouring through the Internet to build profiles of consumers.

By looking at purchasing histories, social media pages and more, the brokers can piece together pictures of individual consumers that can help companies target their advertising with great precision.

Privacy advocates fear the information could be used for more nefarious ends, and the industry has caught the attention of federal regulators.

This week, the Federal Trade Commission issued a long-awaited report on the data broker industry that highlights how the companies collect and use data about consumers. The agency called on Congress to pass legislation requiring “transparency and accountability” in the industry.

The report comes on the heels of a similar report from the Senate Commerce Committee last year, and a call from the White House for a new privacy law.

The reports from the FTC and the Senate Commerce Committee both said data brokers group consumers together into categories for the use of marketers.

The FTC said the categories include “Plus-size Apparel,” “African-American Professional,” “Biker/Hell’s Angels,” “Allergy Sufferer,” “Exercise – Sporty Living” and “Working Class Mom.”

The Senate Commerce Committee report cited categorizations such as “Burdened by Debt: Singles,” “X-tra Needy,” “Credit Crunched: City Families,” “Ethnic Second-City Strugglers,” “Fragile Families” and “Small Town Shallow Pockets.”

The companies build the profiles based on publicly available information on social media platforms, retailers’ records of offline and online purchases made with credit and debit cards and information that consumers volunteer online, such as online surveys, warranty forms and sweepstakes entries.

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