Copyright 1999 The Washington Post
The Washington
Post
View Related Topics
April 17, 1999, Saturday, Final Edition
SECTION: FINANCIAL; Pg. E01
LENGTH: 1115 words
HEADLINE:
Digital-Age Snoops Hire Lobbyist, Make Headway on Hill
BYLINE: Robert O'Harrow Jr., Washington Post Staff
Writer
BODY:
They work in the shadows,
sweeping up information about people and selling the dossiers for a profit. And
by their very nature, private investigators, asset searchers and other data
brokers use unconventional means to get what their clients want.
But
after being threatened with a crackdown from legislators last summer, these
Digital Age snoops have turned to the most traditional of Capitol Hill ways to
fight back: They formed an advocacy group, pooled their money and hired a
lobbyist.
So far they have managed to insert language in a major banking
bill, recently approved by the House Banking Committee, that would shield some
of their activities from new privacy restrictions -- even though it's difficult
to find many people who support what they do. Indeed, only a few months ago
powerful House members said the activities of these data brokers may be illegal
and vowed to shut them down. Banking regulators also cautioned national banks to
better defend themselves from "this invasion of their customers' privacy."
Nevertheless, the advocacy group -- the Coalition to Amend the Financial
Information Privacy Act -- is hoping in typical Washington fashion to leverage
its recent victory into even more protections for the burgeoning information
industry.
"The camel got its nose under the tent," said a coalition
official in the group's April newsletter, commenting on "the tangible result of
CAFPA influence."
"While Congress was mired in impeachment this winter,
CAFPA mobilized to confront this year's financial privacy legislation," the
newsletter said. "CAFPA moved swiftly to retain a high-powered Washington
lobbyist, bolster its media campaign and double its efforts at garnering support
from a wide range of industry groups." The group is so new that information on
how much it spent lobbying the issue or contributing to members of Congress is
not yet available.
No one knows for sure how many data brokers are out
there. Brokers say their leading customers include lawyers, debt collectors and
police, who buy the data to help in civil lawsuits, divorces and investigations.
Prices vary from a little more than $ 100 for a modest search to several
thousand dollars for a look at banks nationwide and a report that includes
information about stocks, mutual funds and safe-deposit boxes.
Data
brokers have one prime goal -- they want to keep making so-called pretext calls.
That's the practice of calling a clerk at a bank or other business, posing as a
private individual and using readily available personal data, such as a Social
Security number, to coax the clerk into sharing information about the targeted
person's account balances, stock holdings and the like.
Pretext calls
seem to fall in a gray area of various federal and state laws, but they have
begun to draw fire from law enforcement authorities throughout the nation.
Brokers have been prosecuted for making pretext calls in Massachusetts
and Connecticut. Last summer the Office of the Comptroller of the Currency
warned national banks to use better passwords and other measures to protect
customer information from such intrusions. "Just a couple of years ago, banks
and other financial institutions were not facing this kind of assault," said
then-acting comptroller Julie L. Williams.
Rep. Jim Leach (R-Iowa),
chairman of the House Banking Committee, proposed making pretext calls a federal
crime as part of a giant bill to revamp the financial services industry. "The
lack of controls are extraordinary," Leach said last year.
But last
month, when it came time to approve that bill, the Banking Committee said
licensed private investigators and their employees could continue the practice
-- as long as they were helping to track down the assets of deadbeat dads.
That was a fine start for the information brokers.
"Though child
support makes up a relatively small percentage of the asset research work
conducted by investigators, this is a significant development since it proves
that Congress is amenable," the group said on its World Wide Web site. "In
addition, this event sets a precedent for exemption of other segments of asset
research such as judgments and matrimonial work."
The loophole is a
single paragraph in a 375-page document. Consumer activists view it as an
example of Congress's ambivalence toward consumer privacy, noting that
legislators seem willing to permit almost any measure -- even one that some
authorities have deemed illegal -- that promises to track down deadbeat dads.
"They wrap themselves in child support. Everybody's for going after
people who don't pay their child support. But they're using children as an
excuse to make a law unworkable," said Edmund Mierzwinski, a consumer advocate
for the U.S. Public Interest Research Group. "What good are financial privacy
laws if loopholes allow shady operators to track you down?"
Robert
Douglas, a private investigator who testified before the Banking Committee
against pretext calling, said what information brokers "are really after is a
blanket exception for private investigators and information brokers to use
pretext to access people's personal financial information."
Rep. Ed
Royce (R-Calif.), who had originally pushed for an exemption that would give
private investigators almost complete leeway, said current means of obtaining a
subpoena for financial information are too cumbersome. Royce said he believe
deadbeat dads often hide their assets.
"The question I have is,
'Shouldn't we be attentive to this problem?' " Royce said. "The same principle
that applies to child support also applies to alimony and to debts."
Leach consented to the language because it appeared that other committee
members might delay the bill unless the exemption was included, according to
David Runkel, the banking committee spokesman. "We were running out of time on
getting this bill through, so it was accepted and put in," he said.
Rep.
Edward J. Markey (D-Mass.), a member of the Commerce Committee, which has until
mid-May to review the legislation before it is voted on by the full House, said
the bill also exempts banks from any civil liability for handing out customers'
information -- or for pretext calling themselves. Markey said he will try to
remove the language.
Coalition lobbyist James J. Butera declined to
comment on the issue. Butera said members of the group did not plan to return
telephone calls and electronic-mail messages.
In the group's newsletter,
however, an official signaled its intentions: "All professionals who share a
common interest must strive to form a broader coalition if we expect our
legislators to consider additional amendments."
LOAD-DATE: April 17, 1999 
