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This paper was presented at the Association for Education in Journalism and Mass Communication in San Antonio, Texas August 2005. If you have questions about this paper, please contact the author directly. If you have questions about the archives, email rakyat [ at ] eparker.org. For an explanation of the subject line, send email to [log in to unmask] with just the four words, "get help info aejmc," in the body (drop the "").
(Jan 2006) Thank you. Elliott Parker ==================================================================== The Digitized Self as Public Tender: Privacy Laws (or lack thereof) and the Sale of Personal Records Introduction The public outcry generated by ChoicePoint's recent report of the fraudulent acquisition and use of over 140,000 personal records in the company's database is woefully misdirected, due in no small measure the company's framing of the problem, one that was reported uncritically by the media.1 The 'problem' was identity theft, the 'culprits' were scam artists and crooks, and the solution was to catch and prosecute them. What remains largely unaddressed, one with potentially irreversible damage to and far-reaching implications for personal privacy, is the uncurbed growth of the personal records industry chief among which is ChoicePoint Inc., which collects with any regulatory restrictions practically every aspect of individuals' personal records from local, county, state and federal institutions. The records collected are stored into highly sophisticated databases capable of making connections indiscernible to the human eye about the individual, and drawing inferentially-based behavioral and psychographic patterns and predispositions about 1 This Alpharetta, Georgia-based, founded in 1997, originally provided only credit data to insurance companies. By 2004, its database had contained the comprehensive personal record of well over 100 million Americans, its gross income had increased from 500 million dollars to four billion dollars, and its clientele broadened from 5,000 to 50,000 and included corporations, small businesses and parastal agencies, especially federal and state law enforcement agencies. The company reported in early February 2005 that criminals posing as legitimate businesses received the personal records of 30,000 Californians. That number was revised to over 140,000 a week later. At least 750 individuals have been identified as victims of the scam. http://news.com.com/ChoicePoint+data+theft+widens+to+145%2C000+people/2100-1029_3-
5582144.html. Retrieved April 1, 2005. 1 such individual, a process known as data mining (Tavani, 2000). The data and analyses are sold to corporations, small businesses and government law information agencies, who base their transactional and investigatory decisions primarily on such data and reports. The general public is for the most part unaware of the industry's existence, let alone the impact of its activities of their lives. While citizens have no authority over the access and use of their personal records, or of the decisions based on such records, they are legally liable for (trans) actions based on their records: The burden of proof of innocence lies squarely on the shoulders of victims of identity fraud or theft, who have little recourse to redress in some state courts, none in others and none in federal courts. I argue in this paper that this situation in which individuals are stripped of their anonymity and privacy, virtually exposed, in effect sold as a commodity to practically any bidder, and on whose records long-lasting, potentially damaging decisions are made about their guilt or innocence, their financial, ethical and professional worth, is attributable to three main factors. First, to the automation of the personal record management process, which enables archiving, analysis and dissemination with a speed and accuracy before unimaginable. Secondly, to state and federal laws and regulations governing personal record control, access and use, which favor corporations and businesses. I argue that these laws for the most part guarantee corporations unfettered access to such records, institute no regulations governing access and use, impose no penalties for abuse, and provide no legal recourse for victims of inaccurate or stolen records. Third, to the commercial relationship that 2 exists between governments and personal records companies, in which the government is both a service provider and a client. I show that because of this relationship, which generates millions of dollars in revenues and cuts cost for many cash-strapped states and counties around the nation, government policies tend to err in favor of facilitating rather curtailing the exploitation of individuals' personal record. I conclude by proposing four key recommendations for better protection of individuals' personal records. Conceptualizations & Overview First, some clarifications on the use of the terms, 'personal records', and 'personal records industry' (PRI), and an overview of the literature on personal privacy. Personal records refers to any demographic, medical, financial or transactional data that could be used, in part or whole, the identity of an individual. Personal records include but are not limited to addresses, social security number, driver's license, assets, liabilities, judgments and liens, criminal records, employment history, hobbies and lifestyle, marital status, medical records and even genetic predispositions (Frost, 2004; Geilman, 1999). Personal records industry denotes the compendium of businesses who base entirely their activities on, and generate primarily their revenues from, the collection, storage, analysis, sale or rental of personal records. The term is preferred over the more commonly known terms commercial data brokers (CDBs) and information brokers (IBs), because these terms, unlike PRI which refers wholly and solely to personal records, the other terms may also refer to non-personal records, such as 3 financial market data (e.g. the NASDAQ and Dow Jones Industrial Indexes) and nonidentifiable personal data, such as the Nielsen TV Ratings and the Arbitron Radio ratings. For the purpose of issues discussed in this paper, the body of literature on personal privacy could be divided into two periods, namely the pre-automation period (i.e. before the late eighties, the most active period of research starting in the early sixties) and the post-automation period (from the late eighties to the present). Record automation denotes not only the storage of records into computers (a process technically referred to as record computerization, and in which a significant aspect of the data input is still performed by humans) but also, and more importantly, to the automatic process of record maintenance, which includes storage, uploads, downloads, updates, transfer and dissemination, and in which over 99% of the functions are executed, often in real time, by computers and servers. The impact of automation on personal privacy is later discussed2. The pre-automation literature focuses on the means by which individuals achieve and/or guarantee their privacy (Westin, 1967) or the means by which they regulate access to aspects/characteristics of their privacy (Altman, 1975). Here, privacy is generally conceptualized as the protection from surveillance (Pedersen, 1979), intrusion and interference (Moor 1997; ), as well as prevention of unauthorized encroachment into one's secluded space, and prevention of unauthorized sharing of one's personal information (Margulis, 2003). Because of lack of record automation, record gathering was a very time- and energy-consuming endeavor. As a result, 2 In fact, the computerization of personal records is traceable as far back as the late sixties, when some federal government agencies started storing their data into large computer mainframes (Halstuk & Chamberlain, 2001). 4 instances of identity fraud or theft were rare if not non-existent, and discussion on the issue by the literature is virtually absent. A considerable number of the literature pre automation is jurisprudential, addressing tort issues centering on the environmental/spatial rights to privacy, both at home and in the workplace, and remedies for individual recourse to redress for invasions of privacy (Seipp, 1978). But the automation of personal identity records influenced a significant shift in focus on the literature from spatial intrusion and surveillance to use and misuse of personal records (Tavani, 1999). Record automation, combined with existing federal and state laws permitting business access to personal records, led to the centralization and amassing from disparate sources practically all aspects of the individual's identity, with a speed and accuracy before unimaginable. The agents and processes involved in the enterprise, while well known and actively patronized by businesses and government institutions, are virtually unknown to the individual. When some of their activities do become public, they are often phrased in the context of identity theft, one that focuses not on the activities of the industry, which many may consider objectionable, but on those of the criminals. The literature addresses this and other issues, such as individuals' lack of knowledge of their privacy (Hoofnagle, 2004); their inability to gain free and unrestricted access to their records; their lack of authority over the collection and use of their records (Bennet, 1991); the overwhelming burden of responsibility being placed on the individual to correct the accuracy of their records); the lack of effective measures by government or corporations to prevent identity theft (Hoofnagle, 2005); the lack of effective 5 remedial measures for victims of identity theft, and the lack of punitive measures for corporate abuse of personal records. In conclusion, the literature pre automation is in part descriptivist/analytical, delineating our understanding of the nature, characteristics and boundaries of privacy, and part prescriptivist, proposing ways to assert and safeguard one's privacy. The individual is assumed to be omniscient and omnipotent about her privacy. In contrast, post-automation literature, viewing the individual as a powerless and ignorant victim, is in part muckraking ('exposing' the agents, companies, consequences of the process), part critical (denouncing the activities of the individual records industry) and part advocatory (requesting that the federal government pass laws guaranteeing stricter protections for individuals' records, harsher punitive measures for record misuse, and greater remedial measures for victims of record misuse). The Personal Records Industry By any estimate, the personal records industry in the United States generates an annual revenue of at least 20 billion dollars, 70% of which is attributable to the five big personal records companies, namely ChoicePoint, Dun and Bradstreet, Lexis- Nexis, Experian and Axciom (Foust, 2005). Businesses comprising the personal records industry fell into one of three categories: transactional, investigatory and direct marketing. The transactional 6 personal records (TPRI) industry was the most established of the three in terms of its history and net worth.3 These businesses were originally created to verify the credentials and trustworthiness of other corporations, both nationally and internationally (as is the case with Dun and Bradstreet) and of individuals (as is the case with Experian and Equifax). Personal records not directly relevant to business transactions, such as vital and behavioral statistics, were hardly collected or used. The TPRI's clientele was exclusively businesses, particularly big businesses, which subscribed to the use of such records, solely for record verification purposes. Only credit header information were collected from government agencies4. This information was used to match those voluntarily provided by businesses and individuals to other businesses. The investigatory personal records industry (IPRI) consisted mainly of private investigation firms whose activities included verifying the credentials and trustworthiness of individuals considered to be suspicious. Unlike the case with TPRIs, the individual of interest, being unaware of the record verification activity, did not provide information about themselves. The information collected included credit headers and criminal records, which were laboriously collected mostly from county law courts, departments of motor vehicles and vital statistics offices (Tweney, 1998). Direct Marketers, unlike financial data brokers and investigation firms, collected mainly lifestyle records, which they gained from subscriber lists and direct 3 The world's first business information provider, the company was founded as the Mercantile Agency in New York City in 1841 (Kerstetter, 1996). Its gross revue for 2004 was over five billion dollars 4 (Frost, 2004). Credit headers are personal information found at the top of credit reports, and include the individual's name, age, social security number and address history. 7 marketing list. Their clients were other direct marketers, with whom they trade or share subscriber records. The following could be inferred from the objectives and practices of these businesses during the pre automation period. First, no significant coordination or collaboration existed among these companies. As a result, the companies each collected their own information from different sources and collected only those aspects of individual's personal records relevant to the services they provided. Thus, no single company had in possession at any given time all of the individual's personal records. Secondly, the companies saw themselves as record authenticators, not record providers. In essence, they considered records not as commodities in themselves, but as tools required to provide their services. As such, the records themselves were kept as is: No inferences are made about behavioral propensities and potential worth or risks, in effect ruling out the possibility of inference-based "value-added" services. Thirdly, the three industries were mostly business-to-business enterprises (the exception being private investigators, who serve individual clients): They neither served nor solicited government agencies. But these distinctions and differences began to disappear by the early nineties, the period that saw the aggressive automation of personal records by many start-up companies, which took advantages of opportunities provided by sophisticated, costaffordable information technology (notably the Internet), as well as by existing state and federal laws that practically guaranteed unrestricted access to such records with no remedies or punitive measures for abuse5. These start-ups differed from the older 5 Most of the major personal records industries today (e.g. such as Accurint, Accudata and InfoUSA), were found in the early nineties. 8 ones in two very important aspects. First, they perceived personal records not as tools, but as assets and commodities in themselves. Secondly, they collected any and all records available to them. Thirdly, they were willing to sell, mainly via the web, all aspects of personal records in their possession to anyone who needed them. In fact, the public's disquiet (which quickly turned to alarm) over the public sale and display of their records was borne of the unbridled activities and mishaps of these start-up companies6. It may have also brought to attention the endless financial opportunities information technology provides to their business. By the mid nineties, these companies reinvented themselves by expanding their services and their target audiences. They bought over many of the internet start-ups, enabling them to expand their database and clientele. They also started marketing aggressively to law enforcement communities, for whom most of the databases were later designed. Many critics, most vocally Hoofnagle (2004) have pointed out that this move, while beneficial to both parties, was and remains inimical to the interests of individuals. For federal, state, local and law enforcement, it guaranteed them instant and unrestricted access to databases comprehensive enough to contain individuals' medical conditions and sophisticated enough to enable successful queries with as little as the homophonic spelling of only a first name, thanks to Soundex technology. While state and federal privacy laws regulate access to and use of personal records collected by parastatal agencies, no legal or regulatory restrictions are imposed on access to or use of personal records provided by commercial interests. Worse, many government institutions partner with businesses to provide personal 6 Some of the excesses reported included the posting online of the social security numbers of Oregon residents. The numbers were obtained under the state's then public records law. 9 records on a "cost-recovery basis" that is in fact very profitable for state and federal coffers7. The personal records companies for their part are guaranteed of multipleyear contracts worth billions of dollars, of government's disinclination to regulate their practices. Individual Identity privacy Laws (or lack thereof) There exists a popularly held misperception that individuals' personal records are protected by state and federal laws with strong restrictions on access to and use of such records, punitive measures for violations and remedial measures for victims. But despite public outcry over the rise in number of victims of identity theft (over 21 million by FTC's own latest count), no such laws exist8. The federal privacy laws currently on the books are in fact more beneficial to the commercial data brokers than to individuals9. Not only do these laws guarantee unrestricted access to and use of individuals' personal records, they also provide no course of redress to victims of record theft or abuse. The closest the federal government ever came to passing a comprehensive personal records protection bill was in April 1997, with the proposition of the Personal Privacy Information Act by Senators Diane Feinstein of California and Chuck Grassley of Iowa. A similar bill of the same name was proposed in the House in June 1997 by Representative Gerald Kleczka, along with 74 7 Many state agencies across the nation charge considerable fees for public record search and copying, claiming they need they the money for record automation (Munro, 1998). The U.S. Postal Services charges a hefty annual licensing fee for business use of its National Change of Address Server (NCOALink), which allows for real-time, automated updates when individuals report a change of address. The licensing fee could run as high as $145,000 a year. Department of motor vehicles across the nation charge licensing fees for access by any business to drivers' records. 8 9 http://www.the-dma.org/cgi/dispnewsstand?article=3465. Retrieved March 19, 2005. These the Fair and Accurate Credit Reporting Act (FACT Act), an amendment to the 1976 Fair Credit reporting Act, the Gramm-Leach-Blilely Act of 1998. 10 co-sponsors.10 The law would have provided stronger restrictions on the use of individuals' personal records, legal redress for victims, and punitive measures for fraud and non-compliance. But following an aggressive campaign mounted by the personal records industry lobby against the bill, and sessions of hearing held by the Federal Trade Commission (FTC) in early 1998, which was dominated pro-PRI members, the FTC recommended self-regulation over federal regulation. Shortly thereafter, the bills were referred to the Senate Committee on finance and the House Subcommittee on the Constitution, where they died. In place of these bills, series of smaller and far less effective laws 1998 and 1998, namely the Driver's Privacy Protection Act (1998), the Health Insurance Portability and Accountability Act (HIPPA, 1998) and the Gramm-Leach Bliley Act (1999). Each law applies only to a particular aspect of individuals' records, and only in specified contexts. They provide no legal relief or remedy for victims of record abuse and no significant punitive measures for violators. The self regulation proposed by the FTC was less effective. The selfregulatory principles, known as the Individual References Services Group (IRSG), principles, were crafted by 14 members of the Persona records industry and proposed to Congress in December 1997. The principles focus mostly on which aspects of the individual's data will be transmitted and how, depending on the target recipient. The principles were non-binding, devoid of any punitive measures for non-compliance. Though abolished in principle by the passing of the Gramm-Leach-Blilely Act in 1999, the IRSG principles are still being used by many companies as the set of guidelines governing their use of personal data, with modifications being made, 10 http://thomas.loc.gov. Retrieved march 28, 2005. 11 ostensibly in response to public demand for more control and protection, but in actuality to stave off comprehensive federal regulation. Recent public demand for greater control and protection of their personal records has led to industry's introduction of business-to-business protection guidelines, business-to-individual disclosure notices and business-to-individual antiidentity theft services and tool kits. The business-to-business protection guidelines are non-binding, going no further than advising clients how to use and protect client's data. The business-to-individual disclosure policies are every bit as ineffective. They consist mainly of informing individuals how their records will be used and whom it will be shared with, with limited provisions made for Third Party opt-outs. The optout process is vague, cumbersome and at best translucent. For all practical purposes, individuals are required to have an above-average awareness and sophistication to exercise their opt-outs, a requirement that disqualifies many. Those who do exercise their opt-outs are not guaranteed protection from disclosure for several reasons. First, they are required to submit their request in writing to the companies, many of which they may not even know exist. The vague definition of Third Parties allows for a very lose interpretation of the concept, often to the company's advantage: They qualify very few companies as Third Party sources, thereby exempting them from the Third Party exemption clause. Secondly, for most companies, opt-outs apply only to those records they received directly from the individual, and not those about the individual they received from other sources. Thirdly, the opt-out is neither retroactive nor immediately enforced. Individuals are advised that the opt-out will not apply to those with whom 12 their records have already been shared and to expect continued Third Party disclosure for some period, variably six months. The companies' refusal to provide to the individual the list of Third Parties with whom their records have been shared, render the opt-out exercise futile by guaranteeing that they will never fully opt out. An obviously easier and by far more effective disclosure policy would contain the opt-in method, which would require prior permission of the release or use of individuals' records by any institution, irrespective of the company's method of collection or intend use. But, and it would at this point come as no surprise to the reader, the industry has being vehemently opposed to this. The business-to individual anti-identity theft tool kits are mostly software designed to prevent the online user from falling prey to identity theft scams, the most current and frequent of which is phishing11. Some of these are provided free, either as stand-alones or as bundled products by software and Internet Service Providers. But the majority of online anti-theft tool kits are fee-based services offered in the form of downloads. Offline anti-identity theft services, all of which are fee-based and many of which are now provided by the major PRCs, are offered in the form of monitoring individuals' records and notifying them immediately when new or suspicious activities are reported on their credit. Ironically, albeit not surprisingly, not only has the PRI's self-regulated, non-punitive activities facilitated identity theft, 11 Phishing is a scam whereby unsuspecting individuals respond to an email supposedly form their banks or service providers, informing them that their account has expired, and asking them to update it by clicking a link embedded in the email. The email takes them to a site counterfeiting their banks' or service providers' real site. The fake site prompts them to submit their username, password and other personal information. The information, when submitted, goes directly to the scammer's email box, who then uses them for fraudulent purposes. Phishing is made possible by Active X, an adware that takes advantage of glitches in Microsoft Windows XP platform by allowing outsiders to anonymously upload programs to a web-connected server. To combat phishing, Equifax provides a free online toolbar, which detects and blocks fake sites. Microsoft claims its patch, Windows Service Pak2, fixes the problem, though many software analysts are skeptical of the claim. 13 both offline and online, they have also provided new and lucrative avenues for generating more income. Policy Recommendations and Conclusion In short, the industry generates its multi-billion dollar income first from the legal, unrestricted, non-consensual use of individuals' records, then from offering protection from abuse of such records. It is reasonable to assume that with this kind of arrangement, that the Personal Records Industry is neither a satisfactory custodian of, nor a willing advocate for the nations' personal records. It is also obvious that standardized set of comprehensive laws is needed, one that is uniformly applicable in all contexts and to all U.S. States and Territories, providing the individual greater control over access to and use of their records, better protection from and redress for abuse. For a law to qualify as satisfying these conditions, it must contain four core provisions, namely comprehensiveness, transparency, redress and accountability. Comprehensiveness addresses the applicability of the law to any party, condition or context. To achieve this, a federal personal records protection law should be enacted to replace existing relevant but limited federal laws, and should supersede the authority of all other state laws. This will address the unevenness that exists among state laws, some favoring individuals (as is the case with California) and others favoring corporations (as is the case with Texas and Indiana). The law will also address existing loopholes in current state laws, which PRCs have exploited to circumvent compliance, and will make enforcement easier and more effective. Secondly, the law should apply to all parties (individuals, businesses and parastatal 14 institutions) involved in the personal record management process, irrespective of their role, or of the life cycle of the record. The blatant excesses of the PRI is due to that fact that current privacy laws apply only to records in possession of the federal government and only for a limited time. As was discussed earlier, state and federal governments become exempt from federal privacy rules governing personal record use after releasing those records to the public, at which point they are free to acquire and use the records to their whims and caprice. Thirdly, the law should apply to any aspects of one's personal records. To achieve this, the law should contain a detailed, all-embracing definition of personal records, and should cover all aspects of one's personal records, including but not limited to financial, physical, medical, demographic and genetic records, and in all media, including textual, audio, video and multimedia. The transparency provision of the law will require full, quick and free disclosure of all parties and activities involved in the record management process. This will include record use and abuse (such as fraud or identity theft), the means of personal record gathering, storage, analysis and dissemination, as well as the identities of producers, service providers, suppliers and clients. The transparency provision should also include an opt-in clause, which will require individuals' prior authorization for Third Party record sharing or use. For reasons already mentioned the term 'Third Party' should be clearly defined, and its applicability clearly outlined. This transparency provision would facilitate enforcement of the last two provisions (i.e. redress and accountability), in effect an inhibiting factor that would further encourage full compliance with the law. 15 The redress provision will enable victims of record abuse to seek effective resolution to and compensation for the abuse, and/or relief from harm due to such abuse. Finally, the accountability provision will serve as great disincentive for personal record abuse, by meting strict and serve penalties for fraud or noncompliance. Lying at the heart of these provisions is the preservation and guarantee of some of the key tenets of American democracy and jurisprudence, namely protection from violations of one's privacy, protection from harm and right to due process. Given what's at stake, it's the least lawmakers can do. References Altman, I. (1975). The environment and social behavior. Monterey, CA: Brooks/Cole. Bennett, C.J. (1991). Computers, personal data, and theories of technology: Comparative approaches to privacy protection in the 1990s. Science, Technology & Human Values 16 (1), 51-69. Frost, M. (2004). Finding skeletons in online closets. Searcher, 12 (6), 54-60. Foust, D. (2005, March 28). Keeping a grip on identity. Business Week, 3926, 34-35 Geilman, R. (1999). Public records, public policy and privacy. 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