The personal is political

Financial Modernization legislation allows corporations to distribute consumers' personal information to the highest bidder.

By Ralph Nader



The Fourth Amendment to the U.S. Constitution spells out the right of citizens to be "secure in their persons, houses, papers and effects against unreasonable searches..." by their government.

When that amendment was ratified in 1791, no one imagined that corporations, not governments, would be the ones exercising their vast power to invade the privacy of citizens and, in effect, carry out unreasonable searches of their most intimate personal data.

But, that is exactly what is happening, particularly among newly-formed giant financial conglomerates who have access to massive databases of information about millions of individuals, all of which has been provided by their far-flung insurance, bank, credit card, and securities affiliates. Today these giant corporations have the ability to assemble information that creates a head-to-toe profile of most citizens and their buying and personal habits, including what prescription and nonprescription health products they use, their investments, income, employment histories, and entertainment preferences.

For this consumers can thank the Clinton Administration and a bipartisan group of Senators and Congressmen who lacked the courage to really defend citizens' right to privacy when they passed the so-called Financial Modernization legislation in 1999. This law is the vehicle that allows banks, securities firms, and insurance companies to merge as parts of a financial conglomerate.

People like Democratic Representative Ed Markey of Massachusetts and Republican Senator Richard Shelby of Alabama fought hard to give citizens the right to control where and when their personal information was sold or used in any manner that was not authorized in writing by the consumer-owner of the information. In short, under the Markey-Shelby approach, consumers would be the only ones with the authority to "opt-in," in writing, the use of their personal information. Without this written permission from the consumer, the corporations would not be allowed to sell, share, or use the data for any purpose beyond that specifically agreed to by the consumer.

The industry, however, believed that few consumers would give permission to have their information shared with unknown persons and corporations and threatened to walk away from the legislation if the Shelby-Markey opt-in was adopted. They lobbied for an opt-out system that would require consumers to send in a form indicating that they were opposed to having their information shared.

The Clinton Administration and a bipartisan majority in the Congress surrendered to the threats and left privacy protections to the financial industry's demand for a weak ineffectual opt-out approach. This laid the burden on the consumer to "opt out," and if they failed to send in the form or could not understand the legal jargon, the corporations would be free to distribute the personal information to anyone they chose.

The industry has sent out more than a billion of these opt-out notices as required by law. Most of them have been stuffed in with the variety of miscellaneous promotional brochures that accompany monthly billing statements. Financial consultants who are following the issue estimate that only about five percent of the opt-out notices are being returned