Consumer Privacy��Unit 4

What Is Information Privacy?�In this age of information, we need some way to control what is known about us and how this knowledge is used. Information privacy is about the rights of individuals in relation to information about them that is circulating in society.

Information privacy is important in our information age because:�1. Computer systems routinely record and store lots of information about us and our consumer activities. �2. Computer files containing information about us can be shared between public and private organizations. For example, the IRS can access financial data about you from your bank. �3. Computer data can travel across the globe and change hands in an instant. �For these reasons, accurate data is vitally important. Inaccurate data widely shared can be very damaging to individuals.

True or False (next 4)

Inaccurate information can do great damage to a person’s credit or jeopardize a person’s ability to obtain employment.

• True. If there is an error in your credit report, for example, you may not be able to qualify for a mortgage.

Information gathered from consumers is never used in ways the consumer does not intend.

• False. Information you supply about your marital status or age, for example, could be used to target you for product lines that appeal to your age group or lifestyle.

Information on consumer spending patterns is regularly rented and sold to interested companies.

• True. Information is a very valuable resource that allows companies to efficiently target their consumer base.

The circulation of consumer lists among businesses and organizations can result in annoying solicitation calls and direct mail to consumers.

• True. Direct marketers are able to target consumers in many product areas based on information consumers regularly provide.

Where Does the Information Come From?�

• Public Sources
• The following types of information are generally available from public sources:
• Demographic information from the U.S. Census
• Telephone directories
• Birth, marriage and divorce records
• Voter registration records and campaign contributions
• Drivers’ licenses and vehicle registrations
• Licenses and permits such as hunting and fishing permits
• Legal information such as judgments, bankruptcies and real estate titles

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• Private Sources
• Private information is available only to those with a legitimate purpose. Such information includes:
• Employment information
• Credit reports
• Tax information made available to the IRS or state tax boards
• Criminal records
• Social service records for welfare and Medicaid, for example
• School and medical records

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• Your Access to Records
• You have the right to access most public records and the ability to obtain and challenge public information about you. However, privately held information about you may not be as easy to access.

• Accessing Public Records
• The Freedom of Information Act (FOIA) allows anyone access to most records kept by agencies of the U.S. executive branch.
• Journalists use the FOIA to research articles or books. For example, a biography of civil rights leader Martin Luther King, Jr. used FBI records extensively.
• The Privacy Act permits American citizens and permanent residents to request, inspect and challenge their own federal records.
• Public records are available from local and county courts, Halls of Records, and motor vehicle departments.

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• Accessing Private Records
• Your ability to access private records about you varies depending on the type of record and regulations in your state. For example, you can obtain your own hospital records in some states but not others.

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Amending or Correcting Records�

• The Privacy Act requires all federal agencies that maintain records to allow you to request that your records be amended.
• To amend or expunge a record you must do the following:
• Contact the agency in question.
• Await administrative review of your request.
• If your request is denied, you can request a court review.
• To amend records held by private agencies, you should contact the agency in question to ensure accuracy.

How Information Is Used

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• Database profiles are files of information about you that are stored in computer systems and may be used by a variety of organizations in a variety of ways. These systems have benefits to both businesses and consumers, but there are problems regarding the limits of this kind of access.

What’s in a Database Profile?�

• Database profiles can include:
• Address and phone numbers
• Social Security number and credit card numbers
• Driver’s license number and driving record
• Student loan history and political affiliations
• Medical history, worker’s compensation and insurance records
• Spending patterns and product preferences
• Estimated income, bank account numbers and tax records

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The Benefit to Consumers

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• An organization’s database profiles can benefit consumers in the following ways:
• Database information makes products and services more widely available to groups of consumers who might not otherwise receive them.
• Consumers can receive direct mail that relates to their interests from companies where they have previously shopped.
• Consumers can also receive special discounts and promotional offers on products and services they use frequently. For example, telephone companies discount phone calls made to areas of the country frequently called by the customer.

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The Benefit to Businesses�

• The use of database profiles has clear benefits to businesses:
• Businesses use database information to increase marketing efficiency, which can help to reduce consumer costs.
• Information profiles help identify customers who might want specific products or services.
• Access to database profiles allows retailers or financial institutions to extend credit.
• Businesses can use database information to promote customer loyalty.

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The Privacy Dilemma�

• The privacy dilemma is this:
• Who should have access to your database profile?
• Is it right for state motor vehicle bureaus to sell names and addresses of individuals who have driver’s licenses?
• Is it proper for hospitals to sell to baby product solicitors the names and addresses of women who just gave birth on their premises?
• Should credit agencies be permitted to sell your financial information?
• What should the limits be on database profile use, and how should the rights of individuals be protected?

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The Problem for Consumers

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• Database profiles can potentially create the following problems for you, the consumer:
• You can be turned down for a loan, job or apartment because of a poor payment record.
• You can be turned down for auto insurance because of a poor driving record.
• Information can be given, rented or sold to other organizations without your knowledge or consent.
• You can receive unwanted solicitations.

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What the Law Says

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• Federal legislation now provides a measure of protection to consumers from misuse and intrusive use of their personal information.

• The Fair Credit Reporting Act
• The Fair Credit Reporting Act guarantees consumer rights in the collection and reporting of information for credit, insurance and other consumer transactions.
• The Privacy Act
• The Privacy Act gives American citizens the right to request, inspect and challenge their own federal records.

The Gramm-Leach-Bliley Act�The Gramm-Leach-Bliley Act regulates the ability of financial companies to share your personal and financial information with unrelated companies, called non-affiliates. If these financial companies want to share your information, they must advise you beforehand and give you the choice to “opt out” or limit what information can be shared.�

• The Telephone Consumer Protection Act�The Telephone Consumer Protection Act protects consumers from unwanted telemarketing calls, and restricts the timing of calls and the use of auto-dialers in telemarketing.

The Fair and Accurate Transaction Act�The Fair and Accurate Credit Transaction Act (FACTA) helps consumers combat identity theft by giving them the right to request a free credit report from each of the three major credit agencies every year.�More information on how to order the free credit reports is available at the Federal Trade Commission’s website at www.ftc.org.

Privacy and Direct Mail�Consumers provide their information directly to businesses and organizations when they: �Complete warranty cards on purchases and fill in sweepstakes cards. �Subscribe to magazines or request catalogs. �Make charitable contributions.�

• The result is that direct marketers are able to identify potential buyers of products and services.�The information consumers provide is often rented or sold to other companies or organizations. �Some companies compile lists on consumers from public sources.�

Warranty Card Example�Information you supply on a warranty card can be used by interested businesses. The following are some common elements that businesses use:

• Date/Product ID
• The  example company, PhoTech, can use the purchase date you entered to trigger regular product updates.
• The product entered in the Product Purchased field—a camera—could be used by camera companies to target you.

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• Personal Data
• The date entered in field 5 could be used by magazines targeted to senior adults.
• An entry in field 6 could put you on lists of singles and dating organizations.
• The entry ‘Retired’ in field 7 could result in direct mail relating to leisure products and activities.

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• Children/Income
• Entries in field 8 could trigger interest from children’s magazines and products.
• The income information entered in field 9 could result in credit card applications or travel ads, for example.

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• Product Survey
• The ‘Catalog’ entry in field 10 will interest other mail order companies.
• An entry in field 11 could result in ads from photo magazine publishers.
• The ‘Travel’ entry in field 12 could interest travel companies and airlines.

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• Payment Survey
• Information from these fields indicate use of a credit card by a home owner. The result could be direct mail from credit card companies, banks, and insurance companies.

• Lifestyle Survey
• Entries in this field will trigger interest from garden supply companies, book clubs and travel clubs such as Elderhostel.

“Opting Out” of Direct Marketing Programs�As a consumer you have the right to “opt out” of direct marketing programs and remove or restrict the information direct marketers use.

• Mailing Lists
• If you don’t wish to receive direct mail, take the following steps:
• Ask to be removed from merchants’ mailing lists.
• Contact the Direct Marketing Association (DMA) to have your name removed from the mailing lists of its members:
• Direct Marketing Association�Mail Preference Service�P.O. Box 9008�Farmingdale, NY 11735-9008

• Call Lists
• If a telemarketer calls and you don’t want future solicitations, take the following steps:
• Ask to be removed from the call list and cite the Telephone Consumer Protection Act.
• Contact the DMA to have your name removed from telephone lists of its members:
• Direct Marketing Association�Telephone Preference Service�P.O. Box 9014�Farmingdale, NY 11735-9014

• Guard Your Information
• Your mail can give you clues about what businesses and organizations know about you. Collect samples of direct mail and offers you have received and ask yourself what is known about your age, sex, income, and activities. Ask yourself how your name and address were obtained.

• When purchasing products, don’t give out personal information or information that is not relevant to the transaction.
• Answer only the required information on warranty cards.
• Never give personal or financial information such as your credit card number, checking account number or PIN over the phone unless you know the company or know how the information will be used.

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Privacy and Telecommunications�New technology has made it lot easier for people to communicate worldwide, but communication itself has become less secure, raising a host of privacy issues.

The Value of Telecommunications Services�The following telecommunications devices and services allow instantaneous communication between any two people worldwide:�Telephones and cellular phones �Facsimiles (faxes) �Online computer services �Caller ID �Automatic Number Identification (ANI) �These technologies are tremendously useful for business, research activities, law enforcement and personal communication.

The Privacy Dilemma�The use of newer digital technology has raised privacy questions:�Conversations on cordless phones or cellular phones are vulnerable to eavesdropping, which may violate the 1986 Electronic Communications Privacy Act. �Confidential faxes may be vulnerable to interception. �Some online computer network services offer a degree of security, but others do not. �Caller ID allows people you call to view your phone number before they answer the call. �Automatic Number Identification (ANI) identifies a caller’s telephone number when 800 or 900 numbers are dialed. �

Regulating Telemarketers�Federal and state governments have responded to consumer complaints of privacy violations by telemarketers.

Federal Regulations�Federal law prohibits companies from soliciting you at home by phone if you’ve asked them not to do so. The company must maintain a list of consumers who do not want solicitation calls at home. �Companies cannot solicit you at home before 8 AM or after 9 PM. �Companies may not send unsolicited ads by fax. �Companies that use prerecorded, machine-delivered advertising must disconnect you within 5 seconds after you hang up. �

State Regulations�Some state laws prohibit telemarketers from calling people who do not want to receive solicitation calls. �Contact your state attorney general or local consumer protection agency to learn about regulations in your area. �

• What You Can Do
• Here are some steps you can take to protect your privacy:
• Use cellular phone encryption devices or services to block out eavesdroppers.
• See if your phone company has a blocking mechanism for Caller ID or ANI.
• Contact the Direct Marketing Association Telephone Preference Service to remove your name from calling lists or control the way organizations use your telephone number.
• Tell any company that calls you that you don’t want to receive future telemarketing calls. Keep a list. If that company calls you again, report it to the state attorney general or local consumer protection agency.

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Privacy and Your Social Security Number�Today Social Security numbers are used in ways that go beyond their original intended purpose.

• What Is a Social Security Number?
• Originally Social Security numbers were used to administer tax collection and Social Security benefit accounts.
• Today the number is used as a personal identifier, although technically you can have more than one number or share a number with another.
• Your Social Security number is also used for record-keeping purposes by many institutions including financial institutions, universities, voter registration boards, credit bureaus, employers and government agencies.
• The number is often used as an identifier or record locator for bank accounts, credit reports, driver’s licenses, tax records, credit card accounts and telephone company accounts, to name just a few.

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• The Privacy Dilemma
• The use of Social Security numbers makes it easier for various record systems to exchange, compare, and combine information, which increases accuracy but creates opportunities for misuse.

• What You Can Do
• Here are some steps you can take to prevent misuse of your Social Security number:
• Do not write your Social Security number on personal checks.
• Do not use your Social Security number as a password or PIN for ATMs, building security or other sensitive uses.
• Do not provide your Social Security number unless required by your bank or employer, for example.

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Privacy and the Workplace�Privacy in the workplace is a big issue. Is it an invasion of privacy to screen job applicants for drugs? Who should have access to personnel files and a person’s work history? What are the proper limits of information sharing and how do the rights of individuals get protected?�

Personnel Files�There are no federal statutes that comprehensively regulate employee access to personnel files. Access depends largely on company policy and any state laws that may apply.�Before accepting a job, it is a good idea to inquire about the employer’s policy regarding personnel files. �Many companies subscribe to guidelines issued by the Privacy Protection Study Commission in 1977 regarding access and correction of records, and the internal disclosure of documents. �

Electronic Monitoring in the Workplace�Monitoring employee activity in the workplace is controversial. There are clear benefits to customer service and productivity, but these activities are often at odds with the privacy needs of employees.

Types of Monitoring�Electronic monitoring varies from company to company but can include any of the following:�Telephone monitoring �Voice mail and electronic mail monitoring �Computer keystroke monitoring �Location detectors and surveillance video cameras �

• The Benefits of Monitoring
• Electronic monitoring in the workplace benefits businesses by:
• Improving and ensuring good customer service
• Increasing productivity
• Protecting trade secrets
• Reducing employee theft and drug abuse

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• The Privacy Dilemma
• Privacy dilemma posed by electronic monitoring is:
• How can the company’s business needs and an individual’s privacy needs be met?
• Should an employer have the right to monitor customer service calls to ensure that employees are giving customers proper service?

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• What the Law Says
• Under the Federal Wire Tap Act an employer can monitor employee phone calls if the employee consents or if the employee communicates by phone with customers in the ordinary performance of job duties.
• Most states have similar or more restrictive laws.

• What You Can Do
• Check with your employer or a prospective employer about company monitoring policies.
• If you work as a customer service representative or in another position where your business calls are monitored, make personal calls during breaks on telephones that are designated for personal calls.
• Ask if you can be advised when calls might be monitored.

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• Welcome to the Fraud and Identity Theft section!
• Each year thousands of Americans are victims of identity theft. Scam artists can obtain a loan or charge up credit cards by assuming the victim’s identity, leaving a ruinous credit rating that can take years to correct.
• This section covers the main features of payment card fraud and identity theft.�                                                 �After completing this section you will be able to:
• Describe the risks of payment card fraud and identify steps you can take to prevent it.
• Describe the threat of identity theft and identify steps you can take to minimize the threat.

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• Dealing with Payment Card Fraud
• Credit cards and debit cards provide convenience and the safety of not having to carry cash, but they also provide opportunities for criminal activity and fraud.

• How Payment Card Fraud Is Done
• Payment card fraud is done in many ways; once your credit card or debit card number is known it can be used to make unauthorized purchases.
• The good news is that the payment card industry now has a Zero Liability policy, which protects you financially if your card is used for unauthorized purchases.
• The bad news is the huge inconvenience that can come with having to cancel and reorder cards, and having to manage and regularly monitor your credit report.

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• If You Suspect Fraud
• If you suspect fraud, take the following precautions:
• Monitor activity on your account by carefully examining your account statements or accessing your account on the internet. Look closely for unauthorized purchases.
• Keep a record of your account numbers and telephone numbers to call if your card is lost or stolen. Contact your financial institution immediately if your card is missing or you suspect fraud.
• If you’re not sure how to contact your financial institution, Visa, for instance, offers toll-free assistance at 1-800-VISA-911.

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• If You Are a Victim
• If you are the victim of fraudulent use of your payment card, you have a right to provisional credit.
• Federal law requires financial institutions to supply the credit within 10 days of notification of the fraudulent use.
• Visa’s policy is to supply provisional credit within 5 business days of notification.
• Many financial institutions provide the credit within 24 to 48 hours.

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• Preventing Payment Card Fraud
• Your best protection against credit card or debit card fraud is to maintain control of your card at all times and view your card as an asset just as your house or car is.
• Don’t lend your card to others or leave it behind as a “security deposit.”
• Make sure you know who has access to your cards. You may be liable if they are used without your knowledge.
• Never write your PIN number on a credit card or attach it with a sticky note.
• Be extremely careful in airports and other public places where you might repeat your credit card number out loud. Criminals make a living placing themselves within earshot of counters where transactions take place.

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• Dealing with Payment Card Fraud
• You can help prevent identity theft by monitoring your credit report regularly for unauthorized changes or additions to your existing accounts.
• If you suspect identity theft, there are steps the Federal Trade Commission recommends that you follow.

• Step One: Contact the Fraud Department
• Contact the fraud department of the three major credit bureaus and do the following:
• Tell them you’re a victim of identity theft.
• Ask them to place a fraud alert in your file.
• Place a victim’s statement in your file, requesting that creditors call you before opening any accounts or changing existing ones.
• Order copies of your credit report, which are free in cases of suspected fraud.
• Examine the report for unauthorized activity and continue to order new credit reports every few months until you are satisfied that the problem has been resolved.

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• Step Two: Contact Your Creditors
• Contact the creditors on accounts that have been tampered with or opened fraudulently.
• Speak to someone in the fraud department of each creditor and follow up with a letter.
• Close any accounts that have been tampered with and open new ones with new PIN numbers and passwords.
• Tip: Consumer protection laws and procedures for resolving fraud require that you submit your problem to creditors in writing.

• Step Three: File a Police Report
• Your creditors may need proof of the crime.
• File a report with your local police in the community where the identity theft took place.
• The police report will help you deal with creditors even if the police are unable to catch the thief.

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• Step Four: File an FTC Complaint
• File a complaint with the FTC on their Theft Hotline at 1-877-IDTHEFT or by mail at:
• Identity Theft Clearinghouse�Federal Trade Commission�600 Pennsylvania Ave. NW�Washington, DC 20580�www.consumer.gov/idtheft