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Court
delivers a victory for privacy
By Holden
Lewis • Bankrate.com
A federal judge has handed a victory
to consumers who want to fend off telemarketers, stalkers and identity
thieves.
U.S. District Judge Ellen Huvelle upheld federal
regulations that restrict the sale of consumers' names, Social Security
numbers, dates of birth, addresses and phone numbers.
The judge's ruling April 30 in the District of Columbia
helps consumers who help themselves.
It means that consumers should tell their financial
institutions not to share information about them to outside companies,
consumer advocate Edmund Mierzwinski says.
"Opt out," is the succinct advice of Mierzwinski,
consumer program director for U.S. Public Interest Group.
Now is the time to opt out. Financial institutions
are sending privacy notices to consumers now, spelling out how they
intend to use information about customers. Banks can sell information
about you unless you withhold permission -- in the lingo of the
biz, unless you opt out.
"First of all," Mierzwinski explains, "if you
just opt out, you're protecting your information from being shared
with telemarketers who use deceptive scripts to trick you into ordering
junky products. If this decision is upheld, you're also protecting
your Social Security number from being shared with information brokers
and that might protect you from identity theft and stalking."
Credit headers under wraps
In her ruling, Judge Huvelle sided with the Federal Trade Commission
and six other regulatory agencies that wrote rules restricting the
sale of "credit header" information. A credit header is the identifying
information atop a credit report -- name, address, Social Security
number, phone number and date of birth.
To implement the Gramm-Leach-Bliley banking reform
law of 1999, the federal agencies restricted the sharing of credit
header information. Credit bureaus and the data-selling industry
didn't like the rules at all. They sued the federal agencies, saying
that the rules misread the law and violated their First Amendment
right to free speech. Judge Huvelle didn't buy any of their arguments.
Plaintiffs were the credit bureau TransUnion and
the Individual References Services Group, an organization representing
credit bureaus and information brokers such as the little-known
Acxiom Corp., which boasts that it has a dossier on almost every
American consumer.
Credit bureaus collect and sell credit headers to
direct marketers, detectives and information brokers. Those information
brokers turn around and resell the data to everyone from landlords
(who want to confirm your identity so they can check to see if you
have ever been evicted) to genealogists to journalists to bail bondsmen
to people searching for long-lost loves.
Buyers prize credit headers for their timeliness
and accuracy. Those qualities draw the occasional identity thief
and stalker, Mierzwinski says. Direct marketers use credit headers
to make sure that they're calling or mailing to the people they
intend to reach.
Opt-out deadline
The most accurate and timely credit header information comes from
financial institutions. That's why Mierzwinski says you should opt
out -- in other words, tell your bank, credit card issuer or insurance
company not to share your personal information with outside companies.
Financial institutions have been mailing privacy
notices for a few months now, and those notices are the ones that
allow you to opt out of information sharing. As Bankrate.com counseled
in this
article, make sure you follow directions -- and don't mistake
the privacy notice for junk mail.
The privacy rules go into effect July 1. Starting
that day, credit bureaus can't sell the credit headers of people
who told their financial institutions not to share their information.
Could credit bureaus send out their own opt-out notices?
No, Judge Huvelle ruled, writing that "it is the responsibility
of the financial institutions to protect the privacy and confidentiality
of their customers' personal information" -- not the responsibility
of credit bureaus.
This puts credit bureaus at the mercy of financial
institutions, which almost surely would refuse to rewrite and resend
privacy notices to their customers by July 1.
Harming consumers?
A spokesman for TransUnion says the judicial decision is a loss
not only for the credit-header industry but also for consumers.
"It could increase the costs for many facets of marketing across
the entire economy," spokesman Clark Walters says.
A spokesman for the Direct Marketing Association
echoed Walters' comments. "Our members would have used that data
to make sure they were sending things to accurate addresses," Louis
Mastria says. "Consumers will see increases in the costs of goods.
Direct marketers are going to be sending more and more to incorrect
addresses, and that will cost more money and result in increased
cost of goods."
Over time, Mastria says, marketers' data about you
will become less and less reliable, so they won't be able to target
you as effectively as your life circumstances change.
If this is a vital concern of yours, you always have
the option of telling your bank, credit card issuer and insurance
company to share your personal information with marketers.
Walters says TransUnion is "carefully evaluating
our legal options." The company could appeal the court ruling, urge
Congress to take action or both.
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