Privacy Rules Challenged

By Robert O'Harrow Jr.
Washington Post Staff Writer
Tuesday, November 7, 2000 ; Page E01

URL: http://washingtonpost.com/wp-dyn/business/specials/privacy/A27373-2000Nov6.html

Date accessed: 17 January 2001

Some of the nation's largest information services want a federal judge to overturn new privacy regulations that they say could disrupt the growing market for people's names, addresses, Social Security numbers and other personal information.

Last week's request by the Individual Reference Services Group (IRSG) is part of a legal battle over the meaning of privacy provisions Congress wrote into the financial services deregulation bill it passed last year.

At the center of the dispute are "credit header" reports containing personal data that credit bureaus sell to information brokers, who then resell them to private investigators, law enforcement authorities, newspaper researchers and others.

Such reports--made up of details that banks and other financial services companies provide--are increasingly available on the World Wide Web. They're used for marketing and fraud prevention and to locate people such as debtors, deadbeat parents or the subjects of news investigations.

Concern about the easy availability of personal information caused Congress to act, drawing praise from privacy advocates. The Federal Trade Commission followed up this spring with regulations saying any information gathered by a financial institution is "financial data" subject to the law's privacy protections. That means insurers, banks, retailers and other businesses that issue credit will have to give people a chance to say no, or "opt out," before allowing credit bureaus to resell their names, addresses and Social Security numbers. The rules are set to take effect July 1.

The IRSG filed its suit in July. In legal papers filed in federal court in the District last week outlining their arguments, credit bureaus and information services that make up the IRSG said the FTC overstepped its authority in issuing the regulations.

Ronald Plesser, a lawyer who is coordinator of the IRSG, said the group worries that banks and other financial institutions will be unwilling to tell customers about their information-sharing practices and will thus undermine a crucial source of data.

Plesser said the FTC misinterpreted the intention and wording of the financial services legislation. He said the agency ignored the industry's long-established practice of selling credit headers under the Fair Credit Reporting Act, which regulates credit bureaus. The agency's decision also raises First Amendment issues by restricting the companies' dissemination of information, he added.

The FTC defends its interpretation of the law. "We are following the will of Congress . . . regarding the desire to protect consumer privacy," spokesman Eric London said.

The IRSG includes credit bureaus Equifax and Trans Union, as well as Lexis-Nexis, Acxiom Corp. and others. Trans Union and Experian, another credit bureau, have filed separate lawsuits.

"We've got very strong arguments on our side," said Plesser, arguing that many benefits will be lost to society if the market for credit headers is curbed.

It's not just the information sellers who worry. Private investigators say they could lose a crucial tool for locating and tracking people. Media specialists said the FTC ruling could cost reporters a source of information that helps them find and properly identify people in news stories.

Brant Houston, executive director of Investigative Reporters and Editors, a journalism association, said: "It's one more impediment to doing a good or better job. That information helps journalists really get it right." Reporters are also losing access to a variety of public records, he said, as state and local officials cut off some files because of privacy concerns.

Many legislators and privacy advocates praise the FTC, saying the rules represent an important legal victory for the protection of personal information. "It is a major step forward. It's a major victory," said Edmund Mierzwinski, the consumer program director at U.S. Public Interest Research Group, a nonprofit advocacy group. "It gives consumers greater control."

Category: 48. Privacy