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Personal Privacy in the US

Mar 07, 1998 11:17 PM
by M K Ramadoss


Here is an excerpt from Washington Post. Threat to privacy is very real today.

mkr
====================================================

EYE IN THE KEYHOLE
Are Data Firms Getting Too Personal?

By Robert O'Harrow Jr.
Washington Post Staff Writer
Sunday, March 8, 1998; Page A1

CONWAY, Ark.  You've probably
never heard of Acxiom Corp., a giant
information service tucked near the
rolling Ozark foothills. But chances are
that Acxiom knows quite a lot about
you.

Twenty-four hours a day, Acxiom
electronically gathers and sorts
information about 196 million
Americans. Credit card transactions
and magazine subscriptions. Telephone
numbers and real estate records. Car
registrations and fishing licenses.
Consumer surveys and demographic details.

What Acxiom does is perfectly legal  bringing together an array of facts
from scattered sources. But the phenomenon known as "data
warehousing" or "datamining" represents yet another example of how
traditional notions of personal privacy have become obsolete, outstripped
by technology's ability to peer into personal lives.

In a flash, data warehouses can assemble electronic dossiers that give
marketers, insurers and in some cases law enforcement a stunningly clear
look into your needs, lifestyle and spending habits. And without aggressive
action to preempt the companies, individuals have no control over facts
that are gathered and disseminated about them.

The explosion of data warehousing has sharpened the ethical, legal and
political questions about an individual's right to privacy in an increasingly
open society.

Access to minute details about prospective customers was once just a
marketer's dream. Now, privacy advocates believe the fulfillment of that
dream represents an unprecedented intrusion into individual lives.

"The whole thing is scary," said Jim Settle, former supervisor of the FBI's
National Computer Crimes Squad and now a security consultant in
Fairfax. "It's not the government you need to worry about. It's private
industry."

Acxiom often can determine whether you own a dog or a cat, enjoy
camping or gourmet cooking, read the Bible or lots of other books. It
often can pinpoint your occupations, the car you drive, your favorite
vacations. And by analyzing the equivalent of billions of pages of data, it
often projects for its customers who should be offered a credit card or
who is likely to buy a personal computer.

Some believe this new power is fundamentally benign and ultimately
benefits consumers by allowing quicker loan approvals and fewer
annoying direct mail pitches.

"The data has always been there," said Donald Hinman, an Acxiom
executive. "It's just that now, with the technology, you can access it."

Acxiom is a leader among hundreds of companies around the country that
now maintain vast electronic reservoirs. These companies include retailers
like Sears, Roebuck and Co., gift shop chains like Hallmark Cards Inc.
and insurance companies like Allstate.

Data warehouses glean much of their information from consumers
themselves, who often don't realize that the facts they provide in credit
card applications or at the checkout counter are valuable commodities in
this new age of information trading.

Firms like Acxiom are under few obligations to divulge their files to
consumers, and state and federal lawmakers are only beginning to address
some of the privacy questions raised by aggressive data gathering.

Although banks and retailers have long kept files on customers, few have
had the technological capability to sort information from various sources 
everything from government records to magazine subscriptions  to
produce a clearer picture of their patrons.

"Technology has been the enabler," said Hinman, who likens the advances
to the invention of the printing press. "Today it's almost unbounded, our
ability to gather, sort and make sense of the vast quantities of information."

The number of data warehouses, large and small, using faster computers,
the Internet and other networks now exceeds 1,000, a tenfold increase in
five years. Only a few  such as Metromail Corp. and R.L. Polk & Co. 
have grown as large or powerful as Acxiom.

"They have gone on an information collecting binge," said Charles Morgan
Jr., Acxiom's chief executive, describing the datamining explosion.
"There's just this insatiable appetite for more information to make better
decisions."

Privacy anxieties have drawn the attention of legislators and regulators in
Washington and across the country. New federal restrictions on the use of
credit reports and driving records took effect last fall; the federal
Department of Health and Human Services recently made
recommendations about the use of personal health information.

The Clinton administration has pressed companies using the Internet to
disclose more about their information gathering. And last year, the number
of privacy bills introduced in state legislatures topped 8,500, according to
an analysis by StateNet, which tracks legislation.

In Virginia, for example, legislators are considering sharper restrictions on
pharmacies concerning the use of prescription information. And the U.S.
Senate two weeks ago began considering several bills that would reinforce
medical privacy protections.

But privacy specialists say such scattershot efforts lag far behind the race
to build larger, faster data repositories.

"We have witnessed an enormous transformation in information collection
and use, without any of the concomitant political debate," said Joel
Reidenberg, a Fordham University law professor and author. "This stuff
has dramatically increased and changed, largely hidden from public view."

Web of Information
The surge in aggressive data gathering is obvious to anyone who has
cruised the Internet lately, although no one really monitors precisely how
such information is used.

Sites on the World Wide Web now track visitor meanderings, using the
information to target advertising online. Many also solicit names and other
personal information from computer users  details that are sometimes
matched to files kept in data warehouses.

One New York clothing company targets children on the Web, asking for
names, ages, addresses, genders and hobbies in exchange for a "Jet Set
button," according to Shelley Pasnik, director of children's policy at the
nonprofit Center for Media Education, a group pressing for regulation to
control marketing to children. Pasnik said countless Web sites are
"preying on children's desire to fit in and be cool."

Credit reporting is a booming business, but officials at the country's big
three credit bureaus  Experian Inc., Equifax Inc. and Trans Union Corp.
 declined to divulge just how many credit reports they issue. They say
such information could help their competitors.

Associated Credit Bureaus Inc., a Washington-based trade group,
estimates that 600 million reports were sold last year, a 25 percent jump
since 1991. These reports typically contain a person's name, age, Social
Security number, past and current addresses, as well as information on
credit and payment histories.

There also has been an uncharted increase in the number of World Wide
Web sites selling reports with personal data that helps locate individuals,
evaluate them for jobs or bolster legal cases against them. These details
frequently are culled, legally, from credit reports.

Jack Reed, chairman of Information Resource Service Co., estimated that
his firm is one of several thousand  up from several hundred a few years
ago  now making such information available. His company's sales of
reports tied to Social Security numbers have more than tripled since 1990
to 25,000 a month. Like some other large information services, Reed said,
IRSC sells data only to clients who dial in directly.

A newcomer to this field is Discreet Research, a small Tamarac, Fla.,
operation. Discreet's home page on the Internet recently showed an eye
peering through a peephole.

Discreet offers a "disguised free gift packaged" phone card that can be
given to individuals a customer wants to track. The card secretly generates
a report of telephone numbers the user dials.

Discreet also boasts of "fast turnaround" on requests for personal data. In
a demonstration, owner David Muskowitz took about two minutes to find
a caller's Social Security number, including the time required to correct a
typing error.

"We're just trying to do a professional job," said Muskowitz, who gathers
much of his information by paying a modest monthly fee for access to the
files of information brokers. Tina Furlow, an assistant Florida attorney
general, said, "We definitely are looking into this."

There are few laws restricting the collection and sale of most personal
data, and federal agencies have stressed self-regulation and greater
disclosure of data gathering.

The Direct Marketing Association, a trade group whose members rely on
marketing research, recently announced that starting in 1999, its members
will be required to publicly disclose how they gather and use data.

But such disclosure has its limitations. Acxiom officials, for example, will
discuss how the company gathers information. But they say it is technically
impractical to allow individuals to see their files.

Acxiom doesn't typically provide reports on individuals. Rather, it
identifies thousands or millions of people at a time who fit particular
profiles: for instance, people of a certain age or weight who read certain
magazines, drive certain cars or use certain credit cards could all get
personalized promotions from a vacation company.

Acxiom's files also can be used to weed out people who lie when, say,
applying for car insurance. An insurer could send a batch of 100,000
applications to Acxiom, which would then match its store of data about
applicants with what the individuals reported to the insurance company.

The company does allow people to opt out of its databases, but fewer
than 300 people had done so by the end of last year, according to Jennifer
Barrett, Acxiom's group leader in charge of privacy issues. Barrett
believes that is because the company does not abuse information. "The
real issue is not what information is collected on you," she added, "it's how
it's used."

But Leslie L. Byrne, the former director of the U.S. Office of Consumer
Affairs, offered a different explanation. "In my travels," Byrne said, "most
people don't have a clue what's being gathered about them."

That obfuscation is sometimes intentional, according to Maryalice Hurst,
former chairman of the Direct Marketing Association's ethics committee.
Some companies "go behind the customers' back to acquire what they
know the customer wouldn't give them," Hurst said. "Datamining is just
another word for using information the customer doesn't understand you
have."

"The government has to start thinking about the kinds of requirements for
disclosures that should be made by information-collecting companies,"
said Paul Schwartz, a University of Arkansas law professor and privacy
specialist. "Consumers are not getting a voice."

Convenience vs. Privacy
Americans are deeply ambivalent about all of these developments, even as
they have grown to depend on the convenience electronic networks and
databases offer.

Data warehousers contend their techniques already have improved
customer service by insurance firms, banks and department stores. When
a customer calls, a company can "flood" the computer screen with
personal information, offering "one-on-one" service, according to Neil
Mendelson, director of data warehousing for software firm Oracle Corp.
"What we're going for as an industry is 'a segment of one,'" Mendelson
said.

But these benefits haven't quelled public anxiety about privacy erosion. In
a 1996 survey by Louis Harris & Associates for Equifax Inc., a major
credit bureau, almost 9 of 10 respondents voiced concern about privacy
threats. In another Louis Harris survey conducted last year for a privacy
research group, 8 of 10 computer users agreed that "consumers have lost
all control over how personal information about them is circulated and
used by companies."

At Acxiom, officials acknowledge that many Americans are unnerved by
the growing capacity to gather and manipulate personal data. "My mom
says I work for Big Brother," joked spokeswoman Marice Gardner.

But Hinman insists that rigorous self-regulation by companies has
minimized abuse.

Acxiom also touts its prowess. A database query that took six minutes on
a giant mainframe computer in 1994 now takes 19 seconds. Officials just
announced they will soon be able to deliver massive amounts of data to
customers over the Internet in a few hours  something that now takes up
to a week.

The value of such computing power was illustrated in the recent sale of
Experian, a giant credit bureau and information services company formerly
known as TRW Information Systems & Services. It sold for more than $1
billion in the fall of 1996. Seven weeks later, it was resold for $1.7
billion.

Analysts at the META Group estimate that the money spent on building
and maintaining data warehouses will increase from about $2 billion in
1995 to more than $10 billion in the year 2000.

"Our economy is not simply supplied by information, it is fueled by
information," D. Van Skilling, Experian's chief executive, said at a
conference last fall. "I believe we are at the beginning of a great new era."

Industry officials say companies also will find ever more clever ways to
use data. Oracle's Mendelson, for example, predicts that companies will
use databases to court friends and relatives of their most profitable
customers.

Members of a customer's "circle of influence"  perhaps a mother or best
friend  could be targeted by an airline and offered perquisites to build
customer loyalty, he said.

Other predictions go beyond marketing. With improved access, heart
patients will be able to go online to compare track records of heart
surgeons, or drivers will be able to get maintenance records of automobile
dealerships, according to Michael J. Saylor, president of MicroStrategy
Inc. in Vienna, a leading producer of warehousing software.

"There are all sorts of instances like that in which you are mining for some
tidbit of information," he said.

For now, Acxiom, whose revenue has grown from $91 million to $402
million over the past five years, remains focused on compiling information
about people and getting it to companies as quickly as possible.

After more than two decades of gathering facts, it has 350 trillion
characters of consumer data in its computer library. That includes
motor-vehicle registrations from 34 states, real estate records from 41
states, reverse telephone records from 1,100 communities and millions of
credit card transactions.

It has access to legal marketing information from credit reports, including
Social Security numbers and addresses, because it is partly owned by
Trans Union and manages Trans Union's files.

And twice a month, it receives every change of address filed with the U.S.
Postal Service. Acxiom recently bought a share of Bigfoot Partners, a
New York firm that maintains e-mail addresses and specializes in direct
marketing on the Internet.

This spring, Acxiom customers will be able to buy access to its data
storehouse via the World Wide Web.

"It's going to let a lot of smaller companies have access to the same things
the very biggest guys have got," Morgan said. "It's just going to be a
dramatic change."

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