High Court Upholds Driver Data Case
The Supreme Court's decision involved the case Reno vs. Condon, in which South Carolina had challenged the Driver's Privacy Protection Act of 1994. South Carolina argued that Congress' power to regulate interstate commerce didn't give it authority to govern the release of such state records. Other states had challenged the law, and the 4th U.S. Circuit Court of Appeals agreed in 1998 and blocked the law's enforcement in South Carolina, Maryland, North Carolina, Virginia and West Virginia.
The act, which went into effect in 1997, bars states from releasing personal information from motor vehicle records, including names, addresses, telephone and Social Security numbers and photographs. The law required states to either keep their data confidential or to allow people to opt out. Currently, 32 states offer opt out. In addition, states incur a liability if they don't do one or the other.
In writing the Supreme Court's opinion, Chief Justice William H. Rehnquist said the law was a proper exercise of Congress' authority to regulate interstate commerce. The law "does not require the states in their sovereign capacity to regulate their own citizens." The decision, however, leaves intact a mandate signed into law by President Clinton last fall that requires state motor vehicle departments to set up opt-in programs on license and vehicle data by June 1.
The provision to the Senate Transportation Appropriations Bill, which was presented by Sen. Richard Shelby, R-AL, says drivers must opt-in in order for states to disclose their personal information and would cut off highway funding to states that fail to comply.
"If the Supreme Court had ruled another way, Congress would have probably gone in and taken another look at the Shelby Amendment and may have watered it down," said Robert Ellis Smith, publisher of the Privacy Journal. "The fact that Court upheld the Shelby Amendment probably means that the Shelby Amendment will be the law of the land."
Steven Hamilton, director of marketing of the transportation business unit at The Polk Co., Southfield, MI, said the ruling will have a devastating effect on the entire direct marketing industry.
"Almost all marketing research companies will not have access to information that will allow them to put together a good sample that they can use to make good marketing decisions," he said. "They will not be able to draw from vehicle registration data, which represents a huge lifestyle indicator - your vehicle. As a result, marketers, regardless of whether they are in the auto business or not, will not be able to pull samples on the cars that people drive."
Hamilton said the decision will increase the amount of junk mail.
"Before, we were able to put together specific lists of vehicle owners so car companies could conquest or maintain loyal owners," he said. "Now, on the conquest side, companies are not going to be able to draw from a database that will allow them to pull together a group that they want to send a message of a new car launch to because they meet a certain lifestyle criteria. Now, they will have to shoot in the dark to reach their target audience and, as a result, will end up sending out mass mail pieces - as opposed to highly targeted mailings."
Since these companies will have to do more mass mailings, their marketing costs will increase, which, ultimately, "may be reflected in the cost of cars," he said.
Congress still can make changes to the Shelby Amendment before it is implemented, and officials at the Direct Marketing Association are pressing for a full airing on the matter this spring.
DMA president/CEO H. Robert Wientzen said an array of marketers - from the armed services, which relies on motor vehicle information for recruitment, to the huge auto accessories mail-order marketplace - will be severely hurt if the Shelby Amendment takes effect.