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 THE STAT 26Percentage of wireless customers who use their cell phones to take picturesMore Vitals
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JULY 22, 2003
Privacy: For Every Attack, a Defense Yes, it's a grueling battle. However, as threats pop up constantly on fronts old and new, concerned citizens and like-minded legislators quickly parry Chris Larsen may seem like an unlikely privacy advocate. But then, as the CEO of online lending firm E-Loan (EELN ), Larsen has seen the murky underworld of personal data collection. As a player in a business that thrives on information, Larsen knows how easy it would be to use a consumer's credit score to manipulate the auto insurance rate the person pays or to track a consumer's buying trends to concoct a risk profile that could be used to justify a less-favorable mortgage rate. "Profiling is fast getting to the point where it crosses the line of efficiency in business to the dark side," says Larsen. "We're going to see a technology train wreck unless we can get it under control." And so Larsen, in an atypical move for a business leader, is donating $1 million of his own money to help get a financial privacy initiative on the March, 2004, ballot in California. Not only that, the measure Larsen is backing is far stricter than the bills, introduced by Democratic state Senator Jackie Speier, that lobbyists have blocked in each of the past three years. Larsen's proposal would require financial institutions to get explicit consent from consumers before selling or sharing their personal information with another company or even a sister subsidiary (see BW Online, 7/11/02, "Will Voters Opt for Opting In?"). Since May, Larsen, Speier, and a coalition of consumer groups, privacy advocates, and senior citizens have collected in excess of 400,000 signatures -- more than the 373,000 required to put the measure on next year's ballot. PUSH AND PULL. It sounds like a case of strange bedfellows -- CEO supporting advocates in regulating his own industry -- or at least an odd contradiction. And that's precisely where the debate over privacy policy finds itself right now. Even as new threats to privacy are arising from the war on terrorism and from the mere nosiness of Corporate America, so is pressure from the public, frequently expressed in legislation, to keep threats to privacy in check. Since 1996, Congress has passed three major -- if imperfect -- privacy laws: The Health Insurance Portability & Accountability Act (HIPPA), which regulates health data; the Children's Online Privacy Protection Act (COPPA), which mandates how companies sell and represent themselves to children online; and Graham-Leach Bliley (GLB), which requires financial institutions to inform customers about their data-sharing policies. California, Minnesota, and Hawaii have each established a state office of privacy protection. And in testimony this month, Federal Trade Commission Chairman Timothy Muris called for credit agencies to provide free credit reports to every consumer. "THIS ISN'T RIGHT." Privacy advocates have raised alarms for years that the Big Brother of the George Orwell's novel 1984 was just around the corner -- and indeed, "the technology is there to do everything Orwell dreamed of," says Robert Gellman, a privacy-policy consultant and former general counsel to the House subcommittee on government information. "Industry is using it. The government is using it." But now, he adds, "there are voices that say, this isn't right. At long last, we're seeing the institutionalization of privacy" protection. That's at least partly because more citizens understand more clearly how their personal information can be used. And once they do, they worry that the doomsday scenarios painted by privacy advocates aren't necessarily farfetched. As computers become more powerful and more data go digital, credit companies could track, say, whether you buy unhealthy foods or load up on liquor on weekends -- and sell such information to your health and auto insurers. Beyond that, the U.S. Patriot Act, passed in the wake of the September 11 terrorist attacks on New York and Washington, would require companies to hand over such information to the federal government. Certainly, 100 years after Orwell's birth, the technology for doing surveillance and controlling individual communication equals anything in 1984. That fact was driven home by the Bush Administration's 2002 proposal, which was just squashed in Congress, to create a Total Information Awareness program. TIA would have empowered the government to comb through every American's bank records, tax filings, driver's-license information, credit-card purchases, medical data, and phone and e-mail records for evidence of suspicious activity.
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