NEW YORK (MONEY Magazine) -
None of the businesses collecting your data want you to be a victim of ID theft. Crime is bad for business, after all. The industry simply has different priorities from yours.
"They look at it like trading futures, trading oil, trading gas, trading corn -- pick a commodity," observes Rep. Joe Barton (R-Texas). So naturally they fight efforts to make their trading more difficult or less profitable.
The states, not the federal government, have been at the forefront of efforts to give consumers more privacy protections. Those advances have often come despite fierce opposition from business.
North Dakota Banks fought a referendum requiring them to get permission from customers before sharing information with other businesses.
The campaign featured dramatic TV ads depicting a wall going up around North Dakota, keeping out all sorts of businesses if the ballot measure passed. But the referendum won with 73 percent of the vote.
"It's not their information," says Republican state legislator Jim Kasper today. "It's ours."
Vermont Beginning July 1, the state will let residents put a freeze on their credit reports if they are victims of ID theft.
The idea: No one can issue credit to you -- or someone pretending to be you -- until you contact the credit agencies and turn off the freeze. Financial services groups lobbied hard against the bill, recalls former state senator John Bloomer.
"They were able to fly people up here," he says, "which for Vermont is a big step."
California Here you'll find the nation's toughest collection of privacy laws. Indeed, California allows all residents -- not just identity theft victims -- to freeze their credit. And we might never have learned of what happened at ChoicePoint or LexisNexis without California's law requiring that companies with data breaches notify the people affected.
But another major privacy law, requiring bank customers to give their advance approval (or "opt in") before banks can share their information with other companies, was nearly squashed by industry opposition, says state Sen. Jackie Speier.
Privacy advocates collected enough signatures around the state to qualify for a referendum, forcing the industry back to the table -- and a bill passed.
Not long after, however, bank groups sued in federal court to overturn a provision that allows Californians to tell banks never to share info with their own affiliates, such as insurance companies or brokerages. The banks lost but are appealing the decision.
Washington State Lawmakers in Olympia have passed a security breach law similar to California's. But there's a key difference: Banks successfully fought for language that lets the company decide if a breach is serious enough to warrant a mass notice.
"What does 'serious' mean?" asks Robert Pregulman of the consumer group WashPIRG. "You could spend years in court arguing about it."
What's the case against more consumer control? Industry types say such measures not only crank up their cost of doing business but can make life tougher for the very consumers the laws are supposed to help.
Take the credit freeze. Mortgage brokers fight it because it can take several days to "thaw" your credit again -- so if you have a freeze on yourself, forget about house hunting in a hot market.
"It's a seller's market, and in a seller's market you have to be ready to bid immediately," says Pat Naselow of the Washington Association of Mortgage Brokers.
Maybe. But unlike some parts of the world, the U.S. hardly suffers from restrictions on credit; consumers here are loaded with debt. And the reforms being proposed would have a negligible effect on costs -- credit cards charging 17 percent or more a year ought to be able to figure out how to make a profit somehow.
C'mon, shouldn't consumers be the ones to weigh the trade-off between spur-of-the-moment loans and lasting peace of mind?
Trade groups correctly note that federal law already gives you some important rights. And since the market for credit is now national, rules and protections should be too.
Data-intensive businesses often support federal laws that pre-empt states from making their own hodgepodge of rules. But the question here has to be: Would the federal rules undercut tougher state rules?
"A lot of times," observes Rep. Ed Markey (D-Mass.), "industries attempt to use Congress to wipe out good work being done at the state level."
ID Theft: How to fix it all
Recovering from ID theft? Click here for one woman's story.
Click here for tips on what to do if your employer loses your information.