Personal Finance
For privacy, opt out
May 16, 2001: 7:04 a.m. ET

Protect your private information from stalkers, telemarketers, identity thieves
By Holden Lewis
graphic graphic
NEW YORK ( - A federal judge has handed a victory to consumers who want to fend off telemarketers, stalkers and identity thieves.

U.S. District Judge Ellen Huvelle upheld federal regulations that restrict the sale of consumers' names, Social Security numbers, dates of birth, addresses and phone numbers.

The judge's ruling April 30 in the District of Columbia helps consumers who help themselves.

  If you just opt out, you're protecting your information from being shared with telemarketers who use deceptive scripts to trick you into ordering junky products.  
  Edmund Mierzwinski
consumer advocate
It means that consumers should tell their financial institutions not to share information about them to outside companies, consumer advocate Edmund Mierzwinski says.

"Opt out," is the succinct advice of Mierzwinski, consumer program director for U.S. Public Interest Group.

Now is the time to opt out. Financial institutions are sending privacy notices to consumers now, spelling out how they intend to use information about customers. Banks can sell information about you unless you withhold permission -- in the lingo of the biz, unless you opt out.

"First of all," Mierzwinski explains, "if you just opt out, you're protecting your information from being shared with telemarketers who use deceptive scripts to trick you into ordering junky products. If this decision is upheld, you're also protecting your Social Security number from being shared with information brokers and that might protect you from identity theft and stalking."

Credit headers under wraps

In her ruling, Judge Huvelle sided with the Federal Trade Commission and six other regulatory agencies that wrote rules restricting the sale of "credit header" information. A credit header is the identifying information atop a credit report -- name, address, Social Security number, phone number and date of birth.

To implement the Gramm-Leach-Bliley banking reform law of 1999, the federal agencies restricted the sharing of credit header information. Credit bureaus and the data-selling industry didn't like the rules at all. They sued the federal agencies, saying that the rules misread the law and violated their First Amendment right to free speech. Judge Huvelle didn't buy any of their arguments.

Plaintiffs were the credit bureau Trans Union and the Individual References Services Group, an organization representing credit bureaus and information brokers such as the little-known Acxiom Corp., which boasts that it has a dossier on almost every American consumer.

Credit bureaus collect and sell credit headers to direct marketers, detectives and information brokers. Those information brokers turn around and resell the data to everyone from landlords (who want to confirm your identity so they can check to see if you have ever been evicted) to genealogists to journalists to bail bondsmen to people searching for long-lost loves.

Buyers prize credit headers for their timeliness and accuracy. Those qualities draw the occasional identity thief and stalker, Mierzwinski says. Direct marketers use credit headers to make sure that they're calling or mailing to the people they intend to reach.

Opt-out deadline

The most accurate and timely credit header information comes from financial institutions. That's why Mierzwinski says you should opt out -- in other words, tell your bank, credit card issuer or insurance company not to share your personal information with outside companies.

  It is the responsibility of the financial institutions to protect the privacy and confidentiality of their customers' personal information.  
  Judge Ellen Huvelle  
Financial institutions have been mailing privacy notices for a few months now, and those notices are the ones that allow you to opt out of information sharing. As counseled in this article, make sure you follow directions -- and don't mistake the privacy notice for junk mail.

The privacy rules go into effect July 1. Starting that day, credit bureaus can't sell the credit headers of people who told their financial institutions not to share their information.

Could credit bureaus send out their own opt-out notices? No, Judge Huvelle ruled, writing that "it is the responsibility of the financial institutions to protect the privacy and confidentiality of their customers' personal information" -- not the responsibility of credit bureaus.

This puts credit bureaus at the mercy of financial institutions, which almost surely would refuse to rewrite and resend privacy notices to their customers by July 1.

Harming consumers?

A spokesman for Trans Union says the judicial decision is a loss not only for the credit-header industry but also for consumers. "It could increase the costs for many facets of marketing across the entire economy," spokesman Clark Walters says.

A spokesman for the Direct Marketing Association echoed Walters' comments. "Our members would have used that data to make sure they were sending things to accurate addresses," Louis Mastria says.

"Consumers will see increases in the costs of goods," he said. "Direct marketers are going to be sending more and more to incorrect addresses, and that will cost more money and result in increased cost of goods."

Over time, Mastria says, marketers' data about you will become less and less reliable, so they won't be able to target you as effectively as your life circumstances change.

If this is a vital concern of yours, you always have the option of telling your bank, credit card issuer and insurance company to share your personal information with marketers.

Walters says Trans Union is "carefully evaluating our legal options." The company could appeal the court ruling, urge Congress to take action or both. graphic