THE SIXTIES AND SEVENTIES

In the 1960s came a proposal for a Federal Data Center that would have consolidated personal data collected by federal agencies. There was great popular and political opposition, leading to increased concern about privacy. The 1970s brought a succession of federal and state laws providing some protections. It could be said in that decade that just about every salient fact about a person was on file somewhere, and most likely on file in a computer system; but it could also be said that hardly any of these computer data banks were connected with each other. There were few if any links of data between the federal government and the private sector. The Privacy Act of 1974 discouraged exchanges of data between and among federal agencies and between federal agencies and non-governmental institutions. The extent of exchanges among data banks in the late 1970s is represented by Chart Two. Each solid line represents an automated exchange of information between the two agencies. The arrows show the direction of the information flow; sometimes it is one-way, sometimes it flows in two directions. The broken lines represent manual exchanges of information.

THE EIGHTIES

In the 1980s, it must be said that there is an inexorable trend in the direction of linkage. Here are some examples:

1. This month, the Office of Management and Budget will complete agreements that will permit any federal agency that wants it to have 24-hour remote computer access to individual credit reports stored by seven different companies. The credit bureaus to be linked with federal agencies have the computer capability to process millions of transactional bits of information from banks, creditors, credit-card companies, and retailers. They also pick up information from courthouses around the country pertaining to mortgages, liens, divorces, and lawsuits. In turn, the credit bureaus will receive computerized information each month from the federal agencies on individuals with government loans, contracts, or grants.

The most shocking aspect of this exchange authorized by Congress is that the credit-bureau has a poor reputation for maintaining the accuracy of its information. The most sophisticated company in the business, TRW Information Services, estimates that of the approximately one million persons who ask to see their files each year (as permitted by the Fair Credit Reporting Act), fully one-third challenge the information they see in the files. Another of the top five companies, Trans Union Credit Information, regularly mixed up a person's credit report with that of a son, or daughter or parent, or even with a person of similar name living in a different city, according to the Federal Trade Commission in 1983. TRW continued to report erroneous delinquencies from two Michigan department stores after a consumer "fervently complained," according to the Sixth Circuit Court of Appeals. A credit bureau in Maryland erroneously implied that a Vietnam veteran had been dishonorably discharged. A San Antonio credit bureau refused to correct an erroneous bad debt that should have been placed in the file of another man with a similar name. A check guarantee company in Kansas City negligently black-listed a man who “had never written a bad check in his life," according to the Court of Appeals in Kansas in 1981. When a Cleveland man demanded the file maintained on him by Equifax Services Inc., he saw that it contained erroneous gossip and was barely literate. Equifax has also included in its files the fact that a person has filed a legitimate complaint with the Occupational Safety and Health Administration. Many credit bureaus have been plagued by dishonest employees who alter credit reports for a fee. Federal agencies should not be using these dubious files, nor adding information to them.

2. The Department of Treasury is proposing that all 2.8 million federal employees must agree to direct deposit of their pay in order to keep their jobs. This will vastly expand the current electronic exchange of personal data between the Department of Treasury and the nation's banks, savings and loan associations, and credit unions. Already a third of all Social Security payments and half of the federal payroll are electronically transmitted directly to the recipient's financial institution. Mandatory direct deposit will mean that a federal employee must use a depository institution and must reveal its identity to the government. Private employers are sure to follow this federal policy, and some already have. Some private employers even ask employees to authorize direct withdrawal from personal accounts, as well as direct deposits (in case of overpayment by error).

3. To administer its Basic Educational Opportunity Grants, the Department of Education has access to sensitive parental financial disclosure forms filed with the College Scholarship Service, owned and operated by the private Educational Testing Service in Princeton, NJ. (One of the service's requirements is that parents agree to permit access to individual tax returns if the scholarship service so requests.)

4. The Internal Revenue Service is now renting computerized lists that provide "demographic profiles" of various households. These "lifestyle" lists include the following information on those listed: name and age of each family member, recent purchases, religion, ethnic group, telephone number, approximate income, length of residence and dwelling size, children's birthday, Census tract, and postal carrier. Similar lists reveal magazine subscriptions, catalog purchases, auto ownership, charitable contributions, and political party affiliation. The IRS is not merely using the lists to determine who is not filing tax returns (it has rented conventional mailing lists for years to do this, and no one quarrels with this). IRS is using these "lifestyle" lists to determine whether individual taxpayers are filing returns that reflect a consumer lifestyle that is portrayed in these demographic lists. This is unfair be cause the lists are based on cumulative data that are not precise enough for individual enforcement investigations and because the information was provided for a wholly different purpose. Chart Three shows an example of what is offered in the new generation of demographic lists.