Judge Upholds Tough Credit Data Rules

Share this content:
A federal judge has upheld the government's contention that under the Gramm-Leach-Bliley law, consumers can opt out of the sale or trade of header information on their credit reports.


In a decision dated April 30 but released yesterday, Judge Ellen Segal Huvelle upheld federal regulators' interpretation of the 1999 law restricting disclosure of "personally identifiable financial information." The Federal Trade Commission and other government agencies interpreted that restriction to include basic consumer data, such as name, address, telephone number and Social Security number, available through the header of credit reports.


An industry group made up of heavy hitters in the data industry -- including Trans Union LLC, Acxiom Corp., Equifax Inc. and First Data Solutions -- challenged the interpretation in federal court. List firms and direct marketers commonly use such information to confirm consumer addresses.


If Huvelle's decision survives possible legal appeals, credit header information would not be permitted to be sold or otherwise disclosed unless consumers receive notice of their right to opt out. The rules will go into effect July 1 unless Huvelle or an appeals court grants a stay. However, appeals of Huvelle's ruling could extend the case many months past that date.


Emilio Cividanes, an attorney representing the Individual References Services Group, the group of data firms that issued the challenge, said the group is considering its options.


FTC attorney John Daly said federal regulators are prepared to defend against any appeals. The federal agencies believe that their interpretation of the law reflects what Congress intended when it drew up Gramm-Leach-Bliley.


"The statute represents a congressional compromise based on what consumers care about," Daly said.


But Cividanes said the government overstepped its authority in its interpretation. Information in credit report headers is not financial in nature and thus is outside the bounds of the restrictions, he said.


Industry watchers said the new rules, once they take effect, could have an immediate impact on direct marketers.


"In terms of information sources, they're beginning to tighten the noose a little bit," said Robert Gellman, a privacy attorney in Washington. "You're really cutting off the information sources these companies rely on."


Huvelle's decision eventually could result in increased cost for both direct marketers and consumers, said Lou Mastria, spokesman for the Direct Marketing Association. The ruling will lead to an increase in the amount of direct mail materials sent to incorrect addresses, causing an increase in marketing costs that eventually will be passed on to consumers.


"We really haven't had a chance to digest this," Mastria said. "But preliminarily I will tell you that this will have an impact on the direct marketing industry."


Data collectors have suffered recent legal setbacks that have damaged their ability to gather consumer information. In April, a federal appeals court upheld an FTC order for national credit bureau Trans Union to cease sales of specific credit data to unauthorized marketers.


close

Next Article in Marketing Strategy

Sign up to our newsletters

Company of the Week

Brightcove is the world's leading video platform. The most innovative and respected brands confidently rely on Brightcove to solve their most demanding communication challenges because of the unmatched performance and flexibility of our platform, our global scale and reliability, and our award-winning service. With thousands of customers and an industry-leading suite of cloud video products, Brightcove enables customers to drive compelling business results.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above