Assaulting Our Privacy: Nowhere to Hide

Open up in there. The census taker wants to know what time you leave for work. Giant marketing firms want to know how often you use your credit cards. Your boss would like your psychological profile, your bill-paying history and a urine sample. Is that enough to make you feel like hiding in a corner, muttering to yourself about invasions of privacy? Forget it — the neighbors might be videotaping.

Though the word privacy does not appear in the Constitution, most people would probably agree with the great Supreme Court Justice Louis Brandeis, who once identified “the right to be let alone” as the prerequisite of a tolerable life. But the fundamental instinct to shield one’s personal affairs from the eyes of outsiders is always under pressure from the no less venerable human urge to pry — and the snoops just may be getting the upper hand these days. Items:

— In June executives of the Procter & Gamble Co. in Cincinnati complained to police that company information was being illegally leaked to a reporter. To identify the source of the leak, Cincinnati Bell, acting in response to a grand jury subpoena, searched the phone records of every one of its 655,000 customers in the 513 and 606 area codes. P&G executives later conceded that the investigation was an error in judgment.

— Public uproar forced Lotus Development, a software manufacturer, and Equifax, a company that compiles financial information about individuals, to shelve their scheme to market a data base that would have allowed anyone with a personal computer to purchase a list of names, buying habits and income levels of selected households. The system would have permitted small businesses such as dry cleaners, pharmacies and pizza take-out restaurants to get a bead on their local customers.

— The Employers’ Information Service, a company based in Gretna, La., is creating a massive data bank on workers who have reported on-the-job injuries. For a fee, employers can request a report on prospective employees, including a history of prior job injuries and a record of worker’s compensation claims and lawsuits. To keep from being added to other data banks, workers in Idaho are suing that state’s industrial commission to prevent it from releasing such records.

It may be customary to think of threats to privacy in Orwellian terms, with an all-seeing Big Brother government as the culprit. But lately the threat comes no less from private companies, private citizens — and from our own imperfect notions of how to define which matters are properly kept confidential. The powers of government are fashioned under the pressure of society’s own values and expectations. Lately those values have been in flux.

From the quiet frontiersman to the modern urban loner, the archetypal American is someone whose most sacred territory is the portable enclosure of the self. But if “Mind your own business” has long been a prime tenet of the national philosophy, “Let it all hang out” is now running a close second. It’s hard to find a national consensus on confidentiality in a nation of tell- all memoirs, inquiring pollsters and talk shows — not to mention televised Senate hearings — whose participants air explicit sexual details that would have caused earlier generations to blush and turn away.

As the bounds of privacy dissolve under the demands for frankness, they also bend before the pressures for AIDS testing, drug testing and now even genetic testing, which promises to predict each person’s inherited susceptibility to certain illnesses but could also create a pariah class of people that employers would regard as too prone to cancer, heart disease or other ailments. Into this volatile mix of half-formed attitudes and sharply felt anxieties, technology has arrived with a host of unprecedented temptations. Many new answering machines are equipped to surreptitiously tape whole conversations. Video-surveillance cameras quietly scan many workplaces. Neighborhood retailers now stock hardware that used to be the stuff of spy novels. But by far the most important high-tech threat to privacy is not an exotic surveillance device but a familiar storage system: the computer. Computers permit nimble feats of data manipulation, including high-speed retrieval and matching of records, that were impossible with paper stored in file cabinets. They have turned data collection into a $1 billion-a-year industry — one in which nearly every American supplies the data, often without knowing it.

To get a driver’s license, a mortgage or a credit card, to be admitted to a hospital or to register the warranty on a new purchase, people routinely fill out forms providing a wealth of facts about themselves. Little of it remains confidential. Personal finances, medical history, purchasing habits and more are raked in by data companies. These firms combine the records with information drawn from other sources — for instance, from state governments that sell lists of driver’s licenses, or the post office lists of addresses arranged according to ZIP code — to draw a clearer picture of an individual or a household.

The repackaged data — which often include hearsay and inaccuracies — are then sold to government agencies, mortgage lenders, retailers, small businesses, marketers and insurers. When making loan decisions, banks rely on credit-bureau reports about the applicant’s bill-paying history. Employers often refer to them in making hiring decisions. Marketers use information about buying habits and income to target their mail-order and telephone pitches. Even government agencies are plugging in to commercial data bases to make decisions about eligibility for health-care benefits and Social Security.

“In the not too distant future, consumers face the prospect that a computer somewhere will compile records about every place they go and everything they purchase,” says Democrat Bob Wise of West Virginia, who heads the House subcommittee that oversees the government’s use of data. “I’m not sure this is the vision of the future that will make Americans comfortable.”

Because computer information is stored on small disks, it tends to be more enduring than paper records of old, which had to be discarded from time to time to make room for new files. As a result, long-ago personal setbacks can now embed themselves in the permanent record. Two influential trade groups, the American Business Conference and the National Alliance of Business, have even joined with the Educational Testing Service, which conducts the Scholastic Aptitude Tests, in creating a pilot program for a nationwide data base of high school records. It would give employers access to a job applicant’s grades, attendance history and the ancient evaluations of teachers. Just like Mother warned you — a ninth-grade report card could follow you for life.

Privacy watchdogs are warning that the combination of invasive technologies and lax laws threatens to make the U.S. a nation of people who live in glass houses, their every move open to scrutiny by outsiders. “I see no reason why McDonald’s needs to know my Social Security number or my previous job title,” complains New York Law School professor E. Donald Shapiro, a privacy specialist. “The danger is not that direct-marketing companies will clog your mailbox or call you during dinner to hawk commemorative coins,” says David Linowes, former chairman of the U.S. Privacy Protection Commission. “The danger is that employers, banks and government agencies will use data bases to make decisions about our lives without our knowing about it.”

At the same time, privacy is not an absolute value. With U.S. banks being used as a conduit for drug money, for example, law-enforcement officials have pressed them to report any suspicious movement of cash. Though that may involve a conflict with traditional notions of banker-client confidentiality, many banks have been willing to comply. “The social value of helping to fight drugs outweighs, at least to some extent, the privacy issue,” says Jack Kilhefner, senior vice president at Wells Fargo Bank in San Francisco.

Business groups also argue that banning the sale of their customer data violates property rights. “The agenda of the privacy types is anti- technology, anti-free speech and anti-business,” says Robert Posch Jr., vice president of legal affairs for Doubleday Book & Music Clubs and a leading defender of data collectors. “They’re trying to play on the public’s fear of computers and having their names on lists. But a computerized data base is only a file cabinet that’s faster.”

In the same sense, a car is just a buggy that goes faster — and yet the automobile revolutionized society. Data collection is doing the same. A number of catalog retailers and financial companies now make use of a business version of Caller I.D., a service offered by some phone companies, that lets them see the name, phone number and credit history of customers who call them. Once a company possesses a caller’s name and address, it can dig up even more by linking with hundreds of data banks that also have the name on file. A phone number alone is so valuable to telemarketers that some companies advertise free phone-information lines as bait to gather numbers.

Three giant credit bureaus — TRW, Equifax and Trans Union — dominate the consumer-data industry, which also includes about 450 smaller outfits. Every month the Big Three purchase computer records, mostly from banks and retailers, that detail the financial activity of virtually every adult American. TRW and Equifax each have 150 million individual files. According to a report in the Wall Street Journal, anyone who applies for a credit card is listed on Equifax’s “credit-seekers hot line,” a popular buy for marketers, while the Bankcard hot line at Trans Union lists all credit-card purchases.

The Big Three credit bureaus argue that their products do not disclose truly confidential details. But until recently, for instance, Equifax sold lists of consumers who used their credit cards more frequently than the average. Combining that with census data, the company then used a statistical model to estimate the general range of each card user’s income, though not to specify the actual amount. “We would not disclose a person’s total balances or how much credit they have available in absolute dollar terms,” says John Baker, senior vice president of Equifax, which serves 60,000 business customers and whose profits for credit reporting and information packaging last year totaled $366 million.

That practice proved too controversial, and this summer Equifax got out of the business of selling direct-marketing lists based on its credit files. But smaller data banks have been breaking down figures to offer for sale such tidbits as the location of nearly every household in the U.S. that recently brought home a newborn child. For about $25 to $95 a month, plus search charges, customers of Information America, an Atlanta-based company, have access to profiles of 80 million households. By typing a name into a home computer, a subscriber can obtain that person’s address, phone number, length of residence, records of property ownership, court appearances and business dealings. Some smaller outfits also have a reputation for selling personal data to people who may have no business seeing it — everyone from private investigators to bill collectors and spurned lovers.

Critics also charge that data collectors are deceptive. Few people realize, for instance, that when they fill out a product-warranty card, the information goes to a little-known data seller called National Demographics & Lifestyles. “People fill out product cards because they want the warranty,” says Marc Rotenberg, Washington director of Computer Professionals for Social Responsibility. “But they end up on the mailing lists of stereo and record companies. Was that part of the stated bargain when they filled out the card?”

For marketers, detailed consumer profiles are an unmixed blessing, making it far easier to target the households most likely to welcome their mail-order catalogs and other pitches. Direct marketers were once happy if just 1% of recipients responded to a mass mailing. A 5% response is now more common, which the marketers argue indicates that consumers are happier too. “We’re matchmakers for parties with common interests,” says John Cleary, president of Donnelly Marketing, one of the nation’s largest list compilers. “We make sure companies don’t try to sell lawn mowers to people in high-rises.”

Each of the Big Three also operates a separate unit that compiles credit reports detailing the bill-paying history of nearly every American. The reports are sold to mortgage lenders, credit-card companies and anyone else who can show a “legitimate business interest.” The Big Three argue that their service is essential to the workings of credit-card and loan industries that most Americans could not do without. But their critics complain that the reports are frequently riddled with errors and that it is difficult and expensive for consumers to correct or even know about them. Earlier this year Consumers Union reported that nearly half the credit reports it studied from the nation’s largest credit bureaus contained some inaccuracies.

Eugene N. Wolfe, a retired speech writer who lives in McLean, Va., knows all about that. In 1986 he was puzzled when a local bank turned down his loan request. To his horror, he discovered that for years an Equifax subsidiary called Credit Bureau, Inc., had merged his credit history with that of another Eugene N. Wolfe, who had a raft of debts. After weeks of conversation and paperwork, Wolfe thought he had cleared up the problem — until last year, when he was turned down for a credit card and discovered that information pertaining to the other Eugene Wolfe had found its way back into his file.

“At one time I had to pay the highest interest rate on a car loan because the dealer was looking at bum debts that were erroneously listed in my name, but I didn’t know it,” Wolfe complains. “It makes you angry.” Equifax contends that his case was unusual and that the company has recently adopted new software intended to reduce the likelihood of such confusion.

The issue of faulty reporting came to a head in July, when the attorneys general of six states — Alabama, California, Idaho, Michigan, New York and Texas — brought suits against TRW’s credit-agency operation, accusing it of violating consumer privacy and failing to correct serious reporting errors. The company filed countersuits in federal court arguing that the federal Fair Credit Reporting Act of 1970 supersedes state law. But recently TRW also announced that it would supply consumers on request with free copies of their own credit files, instead of charging up to $20 a copy. Trans Union and Equifax declined to follow suit, arguing that providing free reports would be too expensive. Equifax executives argued that there was no great consumer demand for cheaper reports.

The pressure on the companies seems likely to increase. On Capitol Hill, the House has before it legislation that would require written agreement from consumers before information about them is released by a bank, credit bureau or other institution. Credit agencies oppose the bill, along with another introduced by California Representative Esteban Torres that would update the Fair Credit Reporting Act, which gave consumers the right to see and, if necessary, correct their credit records. That bill would require all credit agencies to send consumers, upon request, one free copy of their report annually, as TRW has voluntarily agreed to do.

While data bases are an almost hidden threat to privacy, American workers are also finding themselves up against more visible measures to probe them and keep them under watch. When Sibi Soroka interviewed for a job as a security guard in April 1989 at a Target store in Pleasanton, Calif., he was asked to take a three-hour written psychological test. The interviewer told him that it would assess Soroka’s ideas about the world of work. Soroka was stunned to discover that many of the true-false questions on the test centered on sex, religion and political beliefs. “My sex life is satisfactory,” read one. “I believe in the second coming of Christ,” read another.

“I was astonished at how intrusive the questions were,” he recalls. “But I needed a job.” Though Soroka received a job offer after completing the test, he filed a class action against Target in September 1989. His suit is believed to be the first major court challenge to the increasingly common use of psychological testing as a condition of employment.

Defenders of the tests say they are needed for such workers as armed security guards, one of the few kinds of employees that Target subjects to the examination. “When we entrust individuals with weapons to protect the public, I think it’s important to assess their emotional stability,” says James Butcher, a psychology professor at the University of Minnesota who helped revise the Minnesota Multiphasic Personality Inventory. An earlier version of that test provided many of the questions that were asked of Soroka. The revised version eliminates some of the inquiries about religion and sexuality.

Opponents of psychological screening say it is not only invasive, it’s ineffective. “It just isn’t the exact science people pretend that it is,” says Lewis Maltby of the American Civil Liberties Union in New York City. “We have some ability to identify people who are potential thieves by a written psychological test. If you were to test 100 potential employees, you could $ probably catch 8 of the 10 thieves. But the only way you could do it is by rejecting 50 of the 100 people. So to catch 8 guilty people, you’re denying a job to 42 innocent ones.”

Surveillance at the workplace is also a concern for an increasing number of jobholders. Drug testing is just the most publicized variety. One increasingly common tactic is to listen in on employees who deal with the public over the phone. Reservation clerks, phone-company operators and anyone who takes phone orders for catalog companies and telemarketers are all likely to be monitored. So are the customers they talk to. The Communications Workers of America, a union active in the fight against such surveillance, estimates that 6 million American workers are subject to monitoring. Surveillance at BellSouth, a group of phone companies in a nine-state Southern region, is typical — about two to five calls a month for each service representative and 30 a month for each operator, less than 1% of all the calls they handle.

Employers say monitoring is both legal and necessary to measure productivity and ensure that their telephone representatives are accurate and courteous in their exchanges with customers. Privacy and labor experts largely concede that employers have a right to monitor workers as part of training and supervisory functions. What they question is the value of employee surveillance — and the acceptable limits. “Supervisors have said to me, you’re being too friendly, your voice sounds too sexy on the phone,” claims Shirley Webb, a Southern Bell service consultant.

Barbara Otto, a director of 9 to 5, National Association of Working Women, a Cleveland-based women’s advocacy group, says such monitoring can backfire. Telephone operators who are penalized for taking too much time with inquiries already tell of cutting short customer calls. At the same time, the personal calls of employees pass through the monitor’s earphone. “Employers start catching non-work related information,” Otto complains. “They discover that employees are spending weekends with a person of the same sex or talking about forming a union.”

The House and Senate have before them bills that would require a visual signal or audible tone on the line when monitoring is going on. Among the leaders in the fight against them has been AT&T, which lobbied successfully to kill one such bill in Virginia. “Factory supervisors don’t blow whistles to warn assembly-line workers they’re coming,” says an AT&T official.

Inevitably, Americans have been looking to Congress to resolve the questions concerning privacy. One irony is that the Federal Government is the nation’s largest data compiler. At last count, in 1982, it possessed more than 3.5 billion files on individual Americans — an average of 15 per person, with more sure to come. Much of the data consists of uncorroborated information and hearsay, which could be potentially damaging to individual rights if it fell into the wrong hands. While the FBI has shelved plans to build a national computer bank that police could use to keep track of criminal suspects, it is still creating a data base on the 25 million Americans who have ever been arrested, even if they were not convicted. Meanwhile, the census is not just counting heads but peeking inside them. Instead of the usual short forms, 17% of all households last year received a longer questionnaire that asked such questions as How long is your workday commute? and How many people travel to work with you? Names of all individuals will be removed from the census files before the information is stored on personal-computer disks that marketers can buy.

Because the forms of privacy intrusion are so numerous and varied, no single remedy applies to them all. Congress is soon expected to tackle one of the most jolting new developments in telemarketing: the automated dialing machines that can call every number in a telephone exchange, one after another, to make pre-recorded sales pitches. Over the objections of civil libertarians, who say the machines are protected by the constitutional right of free speech, both the House and Senate are considering measures that would ban or severely restrict the use of autodialers for most calls to private homes.

In response to a problem that lies closer to home, several lawmakers have proposed legislation to beef up the 1974 Privacy Act, the federal law that defends citizens from government misuse of data. Enforcement is haphazard, and loopholes permit agencies to stretch the law. Though the act would appear to forbid it, agencies exchange information on individual citizens in the name of detecting waste, fraud and abuse of benefits. They claim that such exchanges are legal on the ground that the disclosures are “compatible” with the purpose for which the data were collected. Under that loose standard, tax returns are compared with welfare rolls or lists of student-loan recipients. That might seem justifiable in a time of tight budgets, but the precedent it sets for going around the law could encourage more ominous practices, such as using the records of people in drug-treatment programs to search for possible criminals.

West Virginia Democrat Bob Wise, chairman of the House subcommittee on government information, has gone further. In November 1989 he introduced a proposal to create a federal data-protection board to ensure that personal information in government computers is not abused. Demanding more sweeping action, privacy advocates want Congress to regulate private companies’ use of data by requiring consent for the use of information and strict controls over its accuracy. They also call for the creation of a privacy ombudsman, like those in Canada and Australia, who can aggressively defend consumer interests.

Gary T. Marx, a professor at the Massachusetts Institute of Technology who specializes in privacy issues, even wants Congress to establish a royalty system to compensate individuals — or consumers en masse — whenever personal information about them is sold. “If we are to treat personal information as a commodity,” he wrote recently, “it seems only fair that those to whom it pertains ought to control it and share in financial gain from its sale.”

If nothing else, that scheme would have the virtue of framing what can be a metaphysical problem in simple market terms: Just what price do we put on privacy? No one can answer that question who has not sorted out the issues of how much privacy we need and how much we are willing to give up in exchange for things like convenience shopping, job opportunities, law enforcement and higher productivity. For unlike the nightmarish Big Brother world of Orwell, the question of how much privacy Americans preserve will depend more on the values of the people than the whims and dictates of government.

CHART: NOT AVAILABLE

CREDIT: From a telephone poll of 500 American adults taken on Oct. 23 by Yankelovich Clancy Shulman. Sampling error is plus or minus 4.5%. “Not sures” omitted.

CAPTION: TIME/CNN POLL on PRIVACY