TRW Sale of Mailing Lists Called Invasion of Privacy
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.
“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. “It’s up to Congress to determine whether or not we’re going to try to reclaim a small portion of that privacy.”
Smith, Goldman and Hamm are among 15 witnesses scheduled to testify today before a congressional subcommittee 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.
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.
“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. They get a lot of junk mail, and they wonder how they are being solicited.”
Information Is Sold
Along with TRW, which has the nation’s largest credit reporting service, other major credit-check companies 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 about 400-million credit files on about 180 million Americans. All three companies 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.
Four-year-old TRW Target Marketing Services, based in Richardson, Tex., draws on a broad mix of information to develop mailing lists closely tailored to the needs its direct-marketing clients, Van Buskirk said.
Included in that mix is information purchased from TRW Credit Data on the number and type of credit cards held by potential direct-mail customers and the customers’ available credit balance.
Request List
For example, a firm could ask TRW to develop a mailing list of all Latinos in Orange County who carry bank cards and whose available credit balance tops $3,000.
Van Buskirk said the company’s credit unit does not make negative credit information available to its credit-marketing subsidiary. He said TRW has developed procedures to protect the privacy of everyone whose name turns up on the list. For example, he said, the actual mailing is handled by a independent company that is not told of the financial criteria used to build the mailing list. The firm that paid for the list never receives a copy, he said.
In addition, credit information sold by TRW Credit Data to TRW Target Marketing is passed on in a form that makes it virtually impossible for employees of the marketing company to learn the details of an individual’s credit history, the spokesman added.
But Smith of the Privacy Journal said that argument misses the point.
Prepared Testimony
“Personal information is now freely flowing from a regulated environment (consumer credit reporting) to nonregulated environments (target marketing, direct mail, commercial credit-reporting, insurance),” Smith said in testimony prepared for delivery at today’s hearing.
Smith, Hamm and Goldman said they will argue for tighter controls on the dissemination of credit information without the specific consent of the individuals whose records are involved, especially to companies selling through the mail.
The Fair Credit Reporting Act, signed into law in 1970, forbids credit agencies from sharing their credit data with anyone but an authorized customer. The law grants consumers the right to review their credit records and to receive notice of credit investigations. But it allows the agencies to authorize sales to any customer who, in the agency’s opinion, has a “legitimate business need” to review the credit information.
“We have no problem with the idea that the Fair Credit Reporting Act should evolve to more explicitly and specifically address this whole question of . . . direct mail marketing,” Van Buskirk said.
