Ways to protect your privacy are hidden in the fine print

Talk about the fine print: A scarcely noticed court ruling in August 1999 said that your privacy is not as important as corporations' constitutional right to sell you things based on sensitive information that they gather about you.

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This federal appeals court ruling could jeopardize any future effort to require companies to seek your permission before using or selling your personal information to sell goods and services.

Get out the magnifying glass
Instead, if you want to limit the use of your personal information for marketing purposes, you'll have to scrutinize the fine print of all the letters and brochures you get from credit card companies, banks, insurers and other businesses, find the privacy provisions, then check the proper boxes, write the appropriate letters, meander through voice-mail mazes, hike to your mailbox and maybe even leap through flaming hoops.

This court ruling, if broadly applied, could mean that the onus of protecting your personal information would continue to fall on you, permanently. Businesses could use your personal information unless you took the time to tell them not to -- and in a manner acceptable and convenient to the company.

Should you worry?
Should consumers worry about the court ruling?

"Yes, they should, because the amount of additional junk mail that consumers can expect to receive, the amount of information that is transferred to third parties, will hinge on the goodwill of companies," says Anita L. Allen, a professor at the University of Pennsylvania School of Law and co-author of Privacy Law: Cases and Materials.

Dr. Allen is among dozens of scholars and privacy activists who have asked the U.S. 10^th Circuit Court of Appeals to reconsider its Aug. 18, 1999 decision ruling in the case of U.S. West vs. Federal Communications Commission, in which U.S. West and other phone companies successfully challenged an FCC rule designed to protect customers' privacy.

Although the Denver court's decision applies only to phone companies in the Rocky Mountain states -- for the time being, at least -- the implications are wider ranging. The ruling could affect laws protecting the privacy of financial, medical and other personal information, according to privacy activists.

They've got the goods on you
Phone companies have a lot of sensitive information about you. They monitor who you call, when you call, how long you talk and whether you use a cellular phone or land line. So in response to telecommunications reform in 1996, the FCC drafted rules requiring phone companies to get customers' permission before using that information to sell other services. In privacy parlance, it was an "opt-in" rule.

Under the opt-in method, a company can't use or sell information about you, a customer, unless you give the OK. Under the less-stringent "opt-out" approach, companies can use information about you unless you take the time to call or write to tell them not to.

When the FCC adopted an opt-in requirement, the phone companies challenged the new rule on the grounds that it violated their right to free speech and constituted a taking of property without compensation.

On Aug. 18,1999, a three-judge panel of the appeals court sided with the phone companies. The judges ruled that the FCC's opt-in provision violated the phone companies' First Amendment right to free speech. In other words, your right to be left alone ranks lower than a phone company's free-speech right to call and sell you stuff based on its analysis of your calling habits.

Wider implications
"If you let that stand and that reasoning is accepted, it's hard to explain why we should have financial privacy or medical privacy," says Ethan Preston of the Electronic Privacy Information Center, or EPIC.

EPIC has joined the American Civil Liberties Union and other organizations in asking a larger panel of the appeals court to reconsider its decision. The FCC, too, has asked the court to reconsider.

"What the case is really about is how much control do consumers have over their own records," Preston says. "The way the FCC sees it, consumers have absolute control until they give it away."

On the other hand, the phone companies say information on your calling habits is their property because they compile it, so they can use the information as they wish unless you tell them not to.

Besides U.S. West, other phone companies that challenged the FCC opt-in rule were Airtouch, Sprint, AT&T, SBC, Southwestern Bell, Pacific Bell, Nevada Bell, MCI and BellSouth.

Data they can use
The phone companies have said that they want to use information about customers' calling habits to market their own services, such as Caller ID. But Preston says the appeals-court ruling has much larger implications. If it stands, it wouldn't necessarily apply just to phone companies or to in-house marketing campaigns.

"Once you go from saying you can use this data to target your own users, there's no limit to how they can use the data," he says. "They can use it however they like, including selling to third-party marketers."

And then a company "can throw as many procedural barriers as the law will permit" in the way of consumers who don't want their information to be sold, he says. A company could require you to write and sign a letter on your own paper and send it using your own stamp, or to call a long-distance number and go through a voice-mail system.

Another setback for privacy
The appeals court ruling preceded another setback for privacy advocates in the banking reform bill. The Financial Services Modernization Act, which is expected to become law, will abolish legal barriers separating banks, insurance companies and securities dealers. (See Bankrate.com's story about the bill.) When drafting the bill Congress rejected attempts to impose opt-in privacy policies.

The financial industry argued successfully that it would cost too much money and time to abide by strict privacy policies that would, for instance, require a bank to get a permission slip from you before giving your name, address and account number to a check-printing company.

An opt-in requirement would have meant less income for financial institutions that sell information about their customers to outside companies such as telemarketers.