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Privacy Developments
The impact of opt-in laws
By Scott E. Blakeley, Esq.

Proponents of "Opt in" privacy argue that government, both federal and state, should require parties to give explicit approval, to opt in, before companies can use personal information. However, in California, the state legislature recently declined to approve opt-in regulations.

Under such a system, a consumer's basic data - such as name, address and summarized purchase history - can't be marketed without explicit consent. Opposition to the bill say it will be the consumer who suffers under an opt-in approach. Not only may the quality of services diminish, but consumer costs may rise proportionately. If the right information isn't available, businesses will be forced to spend more to reach their target audiences, and naturally those expenses will be passed on. In addition, the cost of fraud and identity theft will push higher, as credit card companies now depend on accurate data to authenticate customers and verify account information.

Federal prosecutors focus on identity thieves

Federal authorities arrested three men in the largest identity-theft case in U.S. history, involving more than 30,000 Americans whose identities were stolen and sold to people who emptied the victims' bank accounts and opened credit cards in their names. Prosecutors said the three were part of a ring that downloaded credit reports with stolen passwords and sold them to criminals for $60 each. The reports list a person's bank accounts, credit cards, mortgages and other financial information.

The Privacy Rights Clearinghouse, a nonprofit group, estimates that 500,000 people are victimized each year, costing financial institutions, utilities and merchants more than $5 billion. The FTC has said that identity theft accounted for 42% of its consumer complaints last year. According to the criminal complaint, one of the individuals stole the password and codes to download credit reports from credit-reporting agencies Experian, Equifax Inc. and TransUnion. In one case, the password and code for Ford Motor Credit were used to download about 13,000 creditor reports from Experian.

Reprinted with permission from The Trade Vendor Monthly. 1/03

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