July 28, 1998 3:15 PM PDT

Report: Industry fighting privacy

With the emergence of the computer revolution, legislative proposals to institute stricter privacy protections for personal information in electronic form have been continuously derailed or watered down by medical, credit, or financial industry lobbyists, according to a report released today.

The Center for Public Integrity's report, called "Nothing Sacred: The Politics of Privacy," chronicles the federal policy debate over personal privacy since the 1960s.

"Time and time again, Congress has put the economic interests of various privacy invaders ahead of the privacy interests of the American public," Charles Lewis, chairman of the center, said in a statement. "When it comes to privacy, in fact, the agenda seems to be set mostly by commercial interests. That's the disturbing message that flows from virtually every page of the report."

Despite evidence that the onslaught of propriety computer networks and the Internet could foster a new host of privacy breaches, the report concludes that numerous industries have historically pressured Congress to reject stronger protections.

The findings come as the online privacy debate has become a significant issue in the United States. In addition, a demanding European privacy directive will take effect in October that threatens to cut off e-commerce and personal record exchanges from nations that don't support the same protections.

Although about 50 privacy bills are in the legislative mill on Capitol Hill, lawmakers and the White House have yet to implement new rules for the use of personal information collected by e-commerce, financial, and content sites.

Based on congressional records, news articles, interviews, and campaign finance records, the center's report charges that the powerful credit or health care industries often win politicians' votes over the concerns privacy advocates. The center also draws a correlation between these industry victories and campaign contributions.

According to the report, Congress heard testimony about medical-record confidentiality concerns in 1971 but has yet to pass legislation to curb abuses. For example, legislation has been proposed, but not passed, to put the onus on hospitals and insurance companies not to release or share private data without a patient's permission and apply strict security measures for computerized records.

On the other hand, the report cites Congress's passage of the Health Insurance Portability and Accountability Act in 1996, which institutes privacy protections but also could allow for the creation of a single computer identification number for all patients to allow heath care and insurance companies to easily ship around records or bill patients.

Privacy advocates fear a universal medical ID could make it almost impossible to receive confidential medical care.

"Hospitals, insurance companies, and members of trade associations that oppose such protections have poured more than $45.6 million into congressional campaigns," Lewis said. "Antiprivacy interests have little trouble finding members of Congress to do their bidding."

The report submits a laundry list of other accusations against credit, direct marketing, and insurance firms, including the following:

  • In 1996, credit agencies lobbied heavily against legislation to prevent them from selling credit header information such as a Social Security number, mother's maiden name, phone number, and recent addresses.

  • The insurance industry killed a bill that same year that would restrict them from releasing information about policyholders' claims to third parties, as well as legislation to prevent Internet service providers from selling information about customers without their permission.

  • Also in 1996, the direct marketing lobby helped kill Sen. Dianne Feinstein's (D-California) and Rep. Bob Franks's (R- New Jersey) legislation to prohibit companies from gathering information about children without parental consent. The bill sought to require "list brokers" to disclose all data they had sold about that child and to whom it had been sold.

    The Direct Marketing Association said today it supported the goal of this bill but opposed its passage as drafted.

    "Using databases to define and reach a specific audience is important far beyond commercial markets, and passage of this legislation would effectively eliminate the use of databases for other important direct marketing purposes," the DMA stated in its official position paper on the proposed law. "The legislation would hamper efforts by law enforcement officials to help find missing children" and "hamper academic organizations from granting scholarships to needy and often financially disadvantaged youth."

    Chet Dalzell, director of public relations for the DMA, had no comment today on the center's report, but added that "the [Feinstein-Frank]bill had nothing to do with [protecting children].

    "We don't normally respond to every group that comes along," he added. "We're very active on the Hill about educating people on many fronts. We pride ourselves on the relationships we have, and they are built on serving the consumer."

    But industries often oppose broader privacy protections for other reasons, said Bill Hogan, director of investigative projects for the Center for Public Integrity.

    "They either make money or save money from so doing," he noted.

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