Consumers See Privacy Taken Away Bills Regulate Business Use Of Personal Information
The pizza parlor employee asks for a phone number, the music store clerk wants a zip code and the credit card application requires a Social Security number.
The numbers are necessary for the transactions, they explain. And consumers hastily surrender personal information to perfect strangers.
That information can be more valuable to a company than the money you spend. Many companies compile consumer data to use or sell for a variety of marketing purposes.
Some consumers are upset about that, and Washington legislators are listening. This session, dozens of bills are calling for more regulations on the use of personal information.
Some people say businesses should not be allowed to share any consumer information without a person’s consent. Others think tighter restrictions on companies would cripple their marketing strategies.
Still others are not confident any legislation would help, because current consumer protection laws are being enforced loosely.
Paula Selis, senior counsel of the state attorney general’s Consumer Protection Division, said since last summer about 200 consumers have called her office with complaints about privacy violations.
This number is significantly higher than it has been in past years, Selis said. She said she receives more complaints about privacy than about anything else.
Concerns range from people who have had their identities stolen and used for fraudulent purchases to those who worry their information is not safe with their banks. Some simply are being solicited for products or services they don’t want.
Several witnesses testified in favor of stricter consumer protection laws at a recent hearing of the House Committee on Financial Institutions and Insurance.
“People have only recently learned that their information is being sold,” Selis said.
She cited a Minnesota case last year, when U.S. Bancorp allegedly sold customers’ credit card numbers to an outside marketing company. Minnesota officials claimed this action violated federal and state consumer protection laws. Last June, U.S. Bancorp settled the case, but it never confirmed or denied the allegations.
One reason for growing consumer unrest is new federal legislation that allows banks and security firms to merge, said Rep. Jim Kastama, D-Puyallup.
“When you start combining huge financial institutions, you’ll see information is the gold of the future,” he said.
A large bank, for example, can now house smaller businesses, called affiliates, which offer loans, mortgages and credit card protection. Under federal law, these affiliates can share customers’ personal and financial information.
The law also directs states to place more stringent guidelines on what companies can and can’t do with consumer information.
“We’re in the infancy of all of this,” Kastama said, adding that Washington is leading the nation in researching stricter guidelines for businesses that use consumers’ personal information.
He said Washington consumers are also expressing valid concerns about the role of technology and the ease of acquiring personal information.
“As we pass into the new millennium, people saw where we came from,” Kastama said, citing several technological advancements. “People are fearful of the future.”
Legislators are addressing several privacy issues this session.
A variety of bills would bridle telemarketers, restrain banks from sharing information with affiliates, require the Department of Licensing to tell drivers who is looking at their files and protect patients’ DNA from being examined without consent.
Proposals that cover the most ground came from the Consumer Privacy Work Group, appointed by Attorney General Christine Gregoire.
House Bill 2361, sponsored by Rep. Roger Bush, R-Spanaway, and Senate Bill 6513, sponsored by Sen. Margarita Prentice, D-Seattle, aim to place some restrictions on what businesses can do with their customers’ information.
The identical bills would require businesses to draft privacy policies to be given to all customers. Consumer information would be separated into two categories - “personal” and “sensitive.”
The work group considers anything that could reasonably be used for target-type marketing “personal” information. The category includes a customer’s buying practices, business relationships, assets, name, address, telephone number and e-mail address.
Businesses would be able to share this information with marketing agencies unless the consumer asks them not to.
“Sensitive” information includes account numbers, access codes, account balances and Social Security numbers. Businesses would not be able to release this information without the consumer’s consent. Affiliates would not have access to this information without the consumer’s permission.
The bills would also restrict the information businesses may ask for to only that which is necessary to carry out a transaction. For example, a music store clerk would not be able to require phone numbers from customers who wish to make purchases in cash.
Legislators have expressed mixed reactions to the proposal. Kastama said it would not do enough to protect consumers.
“I like the attorney general’s bill,” Kastama said. “But I would like to see protections go further in financial institutions.”
Scott Gaspard, president of the Washington Savings League, questions whether the provisions are necessary. He said many savings banks already protect privacy.
“Many in the banking industry were surprised that they needed a policy like this,” he said. “They’re doing it regardless of whether there’s legislation in process.”
Bush said his bill will need to be reworked over the next few years if legislators make it a law.
Kastama agrees, adding that the most important thing is to get some privacy protection legislation passed this session, so lawmakers can start fine-tuning it.
“For the next 10 years, we are going to be plugging up the holes in the dike,” Kastama said.