Personal details from property deals are allegedly being used to target vulnerable people and push them into selling their homes at below-market rates.
A state budget estimates hearing was this week told the data, from government agency Valuation NSW, was being matched against court lists after being sold to authorised data brokers.
Animal Justice Party MP Emma Hurst said information provided to her office suggested third parties were purchasing datasets and using them to target emotionally or financially distressed individuals.
The information includes vendor and purchaser names.
In one example raised with Ms Hurst, a former lawyer was allegedly running courses to teach people how to find "distressed assets" using data from a property information service.
That data was matched against court lists to find people who were involved in divorce, repossession or family law proceedings.
Those individuals would then be contacted and pressured to sell their homes for below-market prices.
The Australian Competition and Consumer Commission is currently investigating the case based on allegedly false and misleading claims made by the ex-lawyer running the courses.
Ms Hurst said other jurisdictions such as Victoria, South Australia and the Northern Territory did not require personal information for property transactions and valuations.
Valuation NSW chief executive Stewart McLachlan said his agency was working on combating the problem and an internal probity and privacy team had been set up.
He said licensing agreements had been introduced aimed at halting information abuse and ensuring compliance after consultation with the privacy commissioner.
Mr McLachlan said the property industry required the personal information to properly assess lending, particularly for transactions where parties were related.
"That information is entirely critical to underpin a variety of things in NSW, specifically the mortgage industry," he said.
But Ms Hurst questioned the utility of the changes as people could still access the datasets and personal information, leading to possible abuse and privacy concerns.
"It is unclear why Valuation NSW is continuing to risk this personal data being put into the public domain, when most other states and territories keep this information confidential," she said.
"We're aware of those concerns," Mr McLachlan replied, pointing to measures that banned the on-selling or disclosure of data to non-licensed parties.
"I would say the view taken was that the approach that we have taken balances the needs of both industry and the people," he said.
