Striking Back At the Super Snoops

To show how precious little privacy Americans have, Hanna Weston, an economics instructor at Kirkwood Community College in Cedar Rapids, Iowa, set out to learn everything she could about the personal affairs of her friend, State Senator Minnette Doderer. The Johnson County auditor's files disclosed that her house was valued at $47,110 and that her property taxes were $1,252.94 a year. An official at an Iowa City bank had no qualms about telling Weston that a $500 check on Doderer's account would clear, meaning that she had a balance of at least that much.

Just as readily, an employee at Blue Cross-Blue Shield looked up Doderer's file--with the help of her Social Security number, which Weston obtained from county voting rolls--and reported that she had not filed a claim in the past 18 months. From a marriage certificate, Weston discovered that Doderer had been married only once; from birth certificates, that she was a housewife when her children were born, in 1948 and 1951. Motor vehicle records showed that she had used a $2,000 loan from the Hawkeye State Bank to buy her 1976 Plymouth Valiant and also revealed that she is 54, blonde, blue-eyed 5 ft 6 in and 1401bs.

Weston's search, which took only three hours, illustrates the variety of information about a typical American that is readily available to any snoop. "And I am only an amateur," says Weston. If she had been a professional investigator she could have tapped the files of banks, credit bureaus, insurance companies and Government agencies even more extensively--and sometimes illegally --to learn details about the Doderer family's investments, debts, shopping patterns, charities, hobbies, social life medical history, drinking habits and morals (see box).

This week a seven-member federal commission that has studied the invasion of privacy for nearly two years will issue a 654-page report showing that the problem is far worse than most people think. The report touches on the threat to privacy that stems from Government gumshoes but concentrates chiefly on the danger posed by private firms, most of which operate with no restrictions on the information they collect and the way in which they use it. Says Commission Chairman David Linowes, a University of Illinois political economist:* "We are an information-spoiled society. It's been so easy to collect that we just keep on collecting. Tens of millions of names are being pushed around from one organization to another for whatever purposes they want them, and we don't know any thing about it."

Does He Drink? The privacy problem has been intensified by the rise of the computer, the relentless superbrain that stores mind-boggling masses of in formation. Federal agencies have 3.8 billion personal records in 6,753 categories from passport applications to Social Security accounts-- an average of 18 files for every citizen. State and local agencies maintain at least as many records, while private organizations store three times the federal total. The nation's largest credit bureau, TRW Credit Data of Anaheim, Calif, keeps records on 55 million people. The biggest private investigator, Atlanta-based Equifax, Inc has files on some 60 million people and annually churns out about 30 million background checks-- consisting mostly of details on people's health, work his tory and life-styles ("Does he drink a lot?")-- for its clients, chiefly insurers employers and loan companies.

Once people surrender personal details--for instance, to banks in applying for mortgages-- they lose control over the information forever. They have no legal right to inspect most private files to contest or correct them. Nor can they prevent the records from being shared among banks, credit bureaus and insurance companies, or shown to employers. or turned over to law enforce ment agencies. Says Douglas Lea, counsel to the Senate Subcommittee on Constitutional Rights: "Privacy is power. What we're really talking about is whether the Government and other large organizations will have power over the individual." Warns California Congressman Barry Goldwater Jr.: "With out a sense of privacy, the Bill of Rights guarantees cease to function."

Executives of the firms at the heart of the privacy debate disagree. Indeed most information is collected for the best of purposes-- for example, to enable social-welfare programs or the credit system to work. Hal Arnold, an executive at Equifax, argues forcefully. "If people are going to enjoy the benefits of credit, they must be prepared to giveup some privacy." Similarly, this is a social cost of demands for more government services Says Jerome Bolin, president of Abraham Lincoln Insurance Co. in Spring field, Ill.: "As society becomes more complicated, it does become difficult to guard people's privacy. That is the price of progress. We can't quit doing business because somebody gets hurt."

But the Linowes commission found that too many Americans are being hurt unnecessarily. The commission reports that many private investigators do not double-check data that may be wrong often gather far more information than is needed and sometimes use illegal methods. While people have a legal right to know what information is kept about them by credit bureaus-- so that it can be corrected-- they do not have a similar right to inspect files maintained on them by private investigators, insurance companies and other businesses. Says Linowes: "There were enough stories of data misuse to suggest that the potential for abuse is limitless."

The commission's study focused on these areas:

PERSONAL FINANCES. Most banks readily make available to Government investigators-- notably from the FBI and Internal Revenue Service-- records of customers' checks. Few banks notify the customer when the Government noses in. Worse, the commission found, bank employees often turn over records to private investigators.

Government and private snoops also have easy access to the records in credit bureaus and credit card companies on the income, job history, shopping habits, travel and entertainment expenditures of more than 100 million Americans. Even the most elaborate safeguards cannot prevent unauthorized snoops from getting at the information. Last year TRW Credit Data discovered that a ring of criminals, for fees of $600 to $1,000, was cleaning up bad credit records stored by TRW's computer.

The firms freely exchange files with each other; thus a mistake made by one of them can be quickly compounded. The commission found that credit bureaus often mix up people with similar names, resulting in unwarranted refusals of credit. The firms can keep adverse information on file for up to seven years so a deadbeat who reforms cannot easily start afresh.

INSURANCE PROBES. These provide an almost inexhaustible supply of horror stories. Denver District Attorney Dale Tooley discovered that 55 insurance companies used Factual Service Bureau Inc. of Chicago, whose gumshoes impersonated clergymen and doctors. This enabled them to winnow information from hospitals, the FBI, the Veterans Administration, the Social Security Administration and the IRS. Because of Tooley's probe, 20 individuals and companies --including Factual Service, Home In demnity Co. of New York, Northwestern National Insurance Co. of Milwaukee and Reliance Insurance Co. of Ohio --are being prosecuted for theft.

The Linowes commission also found that insurance investigators often collect data from neighbors on people's sex lives ("Is she promiscuous?") and marital histories, even though no studies show that either affects life spans or accident rates. The investigations are sometimes shoddy because many firms employ part-time students, off-duty policemen, housewives and retired people as probers. James Millstone, an assistant managing editor of the St. Louis Post-Dispatch, was refused auto insurance by Fireman's Fund Insurance Co. of San Francisco because of phony information obtained from an elderly neighbor, who was mad at Millstone because he put up antiwar demonstrators at his home. The neighbot falsely told an investigator for O'Hanlon Reports Inc. of New York that the editor was a long-haired, bearded hippie who let his children run wild, had been evicted from three previous residences and was suspected of using drugs. Because the investigating agency made no attempt to double-check, Millstone won a landmark court judgment of $40,000 from the firm.

MEDICAL RECORDS. These are routinely--and legitimately--turned over to insurance firms. But medical information is sometimes passed out to credit investigators, Government agencies and employers. Some managers also learn details of their employees' health from insurance claims that are processed by their own companies' medical departments.

The Government's growing role in paying for medical treatment poses another problem. To process Medicare claims, two insurance companies were given access to the bare minimum of information in the Social Security Administration's records; the information--for instance, the person's birth date and the amount of the bill--was needed to verify claims. The same computer contains highly personal facts, including family income, expenditures and assets, that are supposed to be kept private. Though Social Security officials assured the Linowes commission that safeguards had been designed to keep the insurers from obtaining this information, a recent test of the system showed that this was not true. Security has been tightened, but the goof underscored Linowes' point that "there does not exist a means of guaranteeing complete confidentiality of data stored in a computer bank. We just don't have the technology yet."

So rapid are the technological advances in personal record-keeping that the Government has been unable to keep pace with controls. Congress enacted the Privacy Act of 1974 to restrict abuses by federal officials, but has done almost nothing about misdeeds in private business. The Linowes report puts forward 162 recommendations for reform. The package may be overdetailed and could lead to a costly bureaucratic nightmare. But, at minimum, Congress should enact legislation that would:

> Direct credit bureaus, insurance agencies, private investigators and employers to tell people whether files are being kept on them.

> Allow people to see and copy the records, to correct misinformation or at least get in their side of the story. One exception would be medical records, if a physician decides that disclosure would harm the patient.

> Prescribe that these agencies tell people exactly what will be done with the information they provide in applying for loans, jobs, insurance policies and the like. The organizations would have to get the person's permission before sharing detailed information.

> Require that court orders be obtained before banks, credit card companies and other firms turn over information about individual accounts to police, FBI and other Government investigators. Unless the judge was persuaded that secrecy was necessary, the person being investigated would have to be notified and given time to fight the subpoena in court.

> Insist that private firms adhere to standards that would stop the collecting of information that they do not need. For instance, insurance companies should stop gathering details about people's alleged sexual adventures or the condition of their lawns--none of which affect the applicant's insurability.

> Outlaw "pretext" interviews--in which an investigator impersonates a doctor or clergyman to squeeze out information that should be kept private.

> Make public and private organizations destroy or update old credit and financial information after a reasonable period of time. As Linowes says, "We won't tell them what their policy should be--whether it is 30 days. 90 days or five years--but it has to be reasonable."

The commission's recommendations will be sponsored in Congress by Goldwater and Edward Koch of New York, a conservative Republican and a liberal Democrat. Americans clearly want action. A Harris poll in March found that 3 out of 4 voters back laws that would "lay down rules for the way business and other private organizations should deal with information [about individuals]." But the unusual right-left coalition in Congress may prove tenuous because, says Goldwater, "privacy is a subtle issue with no specific constituency. It will constantly get bogged down in political differences."

* And brother of Sol Linowitz, a former chairman of Xerox Corp. and now chief U.S. negotiator for a new Panama Canal treaty.

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