Public Concern About Privacy Still Drives Policy

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Before a story ran in the Washington Post last month about states selling digitized drivers' license photographs to private companies for use in anti-fraud activity, virtually nothing was known about the still-developing practice of using the motor vehicle photos for commercial purposes.


Image Data, Nashua, NH, is seeking to build a national database of photos and other personal information to help retailers prevent fraud. The idea is that a computer system will show a retailer the photo of any consumer trying to pay by check or credit card.


Verification services are nothing new, but the use of photographs is a new wrinkle. Proponents claim the new service will protect consumers by preventing fraud and identity theft. Privacy advocates see the practice as another element of surveillance on law-abiding citizens and as another use of motor vehicle data for unrelated purposes.


Florida, South Carolina and Colorado cooperated with Image Data. In all three states, the sale of photographs was authorized by an amendment that slipped through the legislature at the end of the 1997 session with little public debate or awareness. The New Hampshire legislature, however, refused to cooperate even though Image Data is located in that state.


You might have thought that the sale of photos and other personal information from motor vehicle files was prohibited by the federal Driver's Privacy Protection Act of 1994, which regulates the sale of personal information by state motor vehicle departments. It also requires states to give individuals the right to opt out before the states can sell data to marketers and other users.


But the federal law also authorizes many other uses of motor vehicle records without consent, and one of those applies to legitimate businesses seeking to verify personal information for the purpose of preventing fraud. The proposed new use of photos may fall within this provision, although it is not entirely certain.


Once the story became public, however, the response was immediate and negative. According to press accounts, officials in Florida, South Carolina and Colorado are actively looking for ways to stop the photo programs. Florida put the contract with Image Data on hold. Private lawyers filed a lawsuit to prevent the sale. The legislator who sponsored the amendment was getting 50 calls a day in opposition. The governor intervened.


It is much the same story in South Carolina. The state's Attorney General filed suit to seek to void the contract. The governor condemned the sale of the photos. Politicians are making glowing statements about the importance of privacy in the age of the Internet. The newly elected governor of Colorado also is looking for a way to kill the disclosure of the photos.


The situation in all states is somewhat unpredictable since the issue is new, but the direction seems clear. Politicians everywhere are running for the exit, and new restrictive legislation seems likely. It is hard to envision that other states will jump on board the photo sale bandwagon given the public's reaction. Image Data, which thought it was going to get the South Carolina photo database at a bargain basement price of $5,000, is going to have to spend a lot more in legal and lobbying costs to preserve what it achieved, and it is likely to fail.


Anyone who still thinks that the privacy issue is going to fade away is simply not paying attention. Vocal opposition to perceived privacy invasions is increasing. The Social Security Administration, Lexis-Nexis and Intel can testify on this point. Marketers -- who make some of the most intensive uses of consumer data of any public or commercial institution -- may have the most to worry about. Many data practices familiar to marketers are totally unknown to the public, press and politicians. When these practices are discovered by an enterprising reporter, the cycle of public indignation and political response may start again. The easiest targets for legislatures will be public records, and more restrictions seem certain.


Of course, if the marketing industry had better privacy practices, it might be able to mount a more effective response. In the current environment, nothing hurts the marketers more than their own insensitivity to privacy and unwillingness to address consumer concerns.


Robert Gellman is a Washington-based privacy and information policy consultant and former chief counsel to the House of Representatives' subcommittee on information, justice, transportation and agriculture. His e-mail address is rgellman@cais.com.
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