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Count Senator Ted Stevens (R-Alaska), a feisty foe of Big Government, as a new believer in federal action to thwart identity theft. In advance of a Commerce Committee hearing last May on the ever-expanding assault on high-tech privacy, panel staffers did some Internet snooping and surprised Chairman Stevens with a dossier of sensitive data, including an offer to sell his Social Security number, his unlisted phone numbers, cell phone calling records, and reports on his daughter's property rentals. That's info online scammers could use to hijack a person's identity, a form of e-crime that is growing so pervasive that even laissez-faire Republicans want tighter controls.
"This is a very serious thing," Stevens says. His committee has already approved legislation that directs companies overseeing Americans' personal files to take stronger steps to secure them, and a raft of other Hill panels are crafting similar bills. The catalyst: a wave of hacker attacks and "lost" databases that have exposed millions of Americans to potential ripoffs. Sensing an issue with legs, the White House may weigh in with a Justice Dept. and Federal Trade Commission strike force to crack down on data theft.
Consumer advocates are hoping for new legislation by yearend, and financial industry lobbyists see tighter data controls as inevitable. But business reps are working hard to block costly compliance rules or new legal exposure. "Do we want a bill with all the bells and whistles? Probably not," says one banking lobbyist.Horror stories galore
Business has beaten back tough new privacy rules for years. But this time, horror stories about rampant ID theft may have turned the tide. "It's hard for a member of Congress to go home and say, 'We couldn't get this done,"' reckons Evan Hendricks, editor of the Washington-based newsletter Privacy Times. "The issue will be whether industry lobbyists can derail this."
Insiders say emerging legislation could include the following elements:Specific Safeguards. The FTC would be directed to give companies clear standards, akin to those used by bank regulators, on storage and protection of sensitive data.Consumer Notice. The feds could adopt rules, like California's law, requiring companies to inform customers about data breaches. Banks fear they'll be required to send millions of notices -- and alarm customers -- about routine glitches.Credit Freeze. Stevens' bill would let individuals order temporary freezes on their own credit, a move that would block applications for new mortgages and credit cards if consumers suspect their ID has been filched.Social Security Numbers. The law could limit use of Social Security numbers as primary financial identification. Sale of others' SSNs would largely be banned.
Why would financial outfits go along with such new sanctions? Largely because new federal laws would preempt a patchwork of conflicting curbs that are sprouting in the states. "Our guys are playing whack-a-mole in state legislatures," says a banking lobbyist. "Even if [Congress adopts] a costly standard, it's better for us to have one [law] across the board."
Washington lobbyists say that data protection has so much momentum that new legislation has a good shot at passing. Make that chance about 100% if another lurid tale about pilfered personal files hits the airwaves this fall -- or if the victims include Washington lawmakers. The Greenspan Era really must be ending. After 18 years with a staff of top-flight economists at his beck and call, Federal Reserve Chairman Alan Greenspan is figuring out how to fetch his own data. Fed staffers say the 79-year-old chairman has been peppering them with questions on how to use the Internet and financial news terminals to track the economy. Greenspan, who has long celebrated technology's power to fuel growth, is also using e-mail, which he has avoided like an inflation spike. No word yet on whom he'll call when his computer crashes. Sugar farmers helped lead the opposition to the Central American Free Trade Agreement, which squeaked through the House in late July after heroic Administration arm-twisting, and Administration officials are in no mood to forgive. Luther Markwart, CEO of the American Sugarbeet Growers Assn. and a vocal CAFTA foe, has been bounced from the Agricultural Policy Advisory Committee for Trade. "No industry group has a safe seat," said an Agriculture Dept. official. The Federal Communications Commission has brought anti-smut crusader Penny Nance on board to battle sex and violence on TV. As president of the Kids First Coalition, Nance helped generate nearly 7,000 complaints to the FCC over a 2003 Victoria's Secret (LTD
) lingerie show on CBS -- a record response for a single program.