Hearings on Credit Privacy Begin Today
For years, Orange-based TRW Credit Data and a handful of other credit reporting giants have earned a good living generating detailed reports on the ability of millions of Americans to pay their bills.
More recently, however, the credit companies and their parent firms have found a new way to turn a profit by selling sophisticated mailing lists and related services drawing, in part, on credit information stored in their massive data banks.
It is not an innovation that pleases everyone.
A congressional subcommittee, in a hearing today, will be examining the 19-year-old federal credit privacy law and the degree to which TRW and its competitors keep faith with both its letter and spirit.
‘War Already Lost’
“Credit information is being used for secondary purposes--purposes different from the one for which the information was gathered,” said Robert Ellis Smith, publisher of the Washington-based Privacy Journal, which covers the credit reporting industry. “This violates the intent of the Fair Credit Reporting Act.”
Selling credit data for use in direct-mail marketing efforts “is a privacy intrusion,” said Janlori Goldman, Washington staff attorney for the American Civil Liberties Union. “That is where we think the act needs to be strengthened.”
“The war (for) privacy has already been lost,” added Steve Hamm, past president of the National Assn. of Consumer Agency Administrators and administrator of the South Carolina Department of Consumer Affairs.
The consumer affairs subcommittee of the House Banking, Finance and Urban Affairs Committee is particularly interested in the issue of using credit information to generate mailing lists and consumer profiles, one staff member said.
So far, the Federal Trade Commission, which is responsible for enforcing the Fair Credit Reporting Act, has found no grounds to halt the practice.
‘Not Discussed Directly’
“It’s something that is not discussed directly in the act at all,” said the staff member, who asked not to be named. “I think it’s a growing concern of people.”
Along with TRW, other major credit reporting services that sell information to be used in direct-mail solicitations are Equifax Inc. of Atlanta and Trans Union Corp. of Chicago. Together, the firms maintain some 400 million credit files on about 180 million Americans. All three will be represented at the congressional hearing.
A spokesman for TRW said the company has gone to extraordinary lengths to protect the privacy of the 150 million or so Americans on which it maintains credit files.
“I believe we are absolutely the industry leader . . . in protecting privacy,” Michael M. Van Buskirk, vice president of TRW Information Systems Group, said in a telephone interview from his Orange County office.
