HOME
DV NEWS
SERVICE ARCHIVE SUBMISSIONS/CONTACT ABOUT DV
by
Ralph Nader
September
22, 2003
Congress
has been slow to enact airtight protections for individuals' privacy. When
there is trade off between the demands of corporations versus citizens' right
to privacy, our national legislators almost always come down on the side of
financial institutions and their affiliates. Congress putted around the edges
of the privacy issues when it passed the Financial Modernization Act in 1999.
But, the privacy provisions have done little to halt the wholesale access to
financial records and other personal data of consumers.
A
shocking report just released by the Federal Trade Commission (FTC) should
disabuse everyone-and hopefully Capitol Hill-of the notion that the right to
privacy is some nice esoteric concern with little real economic impact.
The
FTC found that 3.3 million U. S. consumers had been victimized last year in
identity thefts made possible by the easy access to personal information. The
thefts were used to open fraudulent bank, credit card or utility accounts and
to commit other crimes.
The
cost: $3.8 billion to consumers on top of losses of more than $32.9 billion to
businesses, many of them small merchants.
In
addition to these "identity thefts," the FTC found that 6.6 million
became victims of a closely related crime, "account thefts" which
involved the use of stolen ATM cards, or financial records to steal from a
victim's existing accounts.
These
"account thefts" created $14 billion in business losses plus $1.l
billion in losses to consumers. The "account thefts" are outstripping
the "identity thefts." FTC found a 71 percent increase in this type
of theft last year.
In
most cases, the thefts were used in purchases by the thieves. But, about 15
percent of the thefts were used in other schemes including the utilization of
stolen information to obtain government records. FTC cited cases where the
thieves used the identifying information when stopped by law enforcement
officers or caught in the commission of a crime.
Privacy
is now before the Congress again. This time in the form legislation to extend
the override of state laws which in any way control how credit information is
gathered, disseminated and used by credit reporting agencies which maintain an
estimated 600 million files on American consumers-a gold mine of data for the
credit industry and a dangerous minefield for citizens wanting to protect their
privacy. The preemption expires at the end of the year unless Congress acts.
The
preemption of state laws involving the Fair Credit Reporting Act (FCRA) has
passed the House of representatives. It is now under consideration in the
Senate Banking Committee. The financial industry had appeared likely to get
what it wanted from the Senate without broader issues of privacy becoming a
front burner item.
In
the interim, California, led by a spunky privacy rights advocate, State Senator
Jackie Speier, has succeeded in passing a stronger state privacy law which
allows consumers to block sharing of their information with affiliates. That's
changed the equation. Now the Privacy proponents want the California law to
become a national standard and they are pushing the issue with the Senate
Committee.
Complicating
the issue is the fact that financial institutions in California agreed to the
Speier bill this summer to head off stronger privacy provisions which were
about to go on the California referendum ballot. That has made it tougher for
financial lobbyists in the Senate and has given consumer organizations at the
national level new leverage to bring privacy-not just extension of FCRA-to the
forefront. They want the affiliate sharing provisions in the FCRA bill brought
up to California standards California's two Senators-Diane Feinstein and
Barbara Boxer-have written the Committee urging that the FCRA provisions be
comparable to the tighter standards of the California law. Without that
assurance, Feinstein and Boxer are expected to oppose the FCRA preemption
extension.
Both
Senate Banking Chairman Richard Shelby and the Committee's ranking Democrat
have long been advocates of greater financial privacy. Will Shelby and Sarbanes
support the California initiative and put it the FCRA legislation? The
financial industry has spent a ton of advertising and campaign on extending the
Fair Credit Reporting Act. The stakes are large.
As
the FTC report on identity and account theft highlights, lax laws on privacy
costs consumers and businessmen-- small and large--billions of dollars. Looking
the other way on privacy is not cost-free. Write your U. S. Senators and tell
them to support the California privacy provisions as part of the FCRA
legislation.
FOR
MORE INFORMATION:
Privacy
Rights Clearinghouse http://www.privacyrights.org
U.
S. Pirg www.pirg.org/orgconsumer/credit/index.htm
Ralph Nader is America’s
leading consumer advocate. He is the founder of numerous public interest groups
including Public Citizen, and has twice
run for President as a Green Party candidate. His
latest book is Crashing the Party: How to Tell the Truth and Still Run for
President (St. Martin’s Press, 2002)
* How
About Using A “People” Yardstick to Rank States?
* Physicians
for a National Health Program, Cable De-regulation
* The Corporatist
Democratic Leadership Council
* Citizen-centric
E-Government
* Has the American
Enterprise Institute Lost Contact with Reality?
* Tax
Cuts While Problems of Homeless Grow
* Giving Our
Airwaves to the Media Moguls
* Let
Technology Work for People