The Federal Reserve Board is scheduled to send Congress a report in March outlining threats to the privacy of people's financial data.
Data collection companies such as Equifax Inc., Atlanta; Experian Inc., Orange, Calif.; and Lexis-Nexis, Dayton, Ohio, have lobbied federal officials preparing the report, arguing that any new regulations that Congress might impose could hinder convenient services such as rapid credit approvals for people seeking loans or credit cards.
"We have had vibrant growth in our economy because we are a service-based economy" built on the free flow of information, including financial information, said Martin Abrams, Experian's vice president of information policy and privacy.
"We need to be very careful that we don't restrict the choices and economic opportunity that comes to all of our people based on that use of information," he said.
The study, being completed by the Federal Reserve Board's office of consumer affairs, is examining how much personal financial data can be found on the Internet, in libraries or in public records.
The main concern is possible fraud of people, banks and credit card companies, inflicted by such crimes as "identity theft," said Leonard Chanin, the board's counsel for consumer protection.
In a case of "identity theft," a criminal gathers enough personal information about an intended victim, such as the person's name, birthday and Social Security number, to apply for a credit card in the victim's name. Once approval is granted, the criminal can use the card to buy merchandise, ensuring that the fraud victim is pressured by the credit card company to pay the bills. The cost of the fraud will eventually be passed by the credit card company back onto all of its customers, Chanin said.
To prevent identity theft, people must guard their Social Security number, said Dave Mooney, a spokesman for Equifax. "With that, [criminals] can get a new driving license and a copy of the person's birth certificate," allowing them to get credit cards, he said.
It is not clear if the Federal Reserve Board, which must approve the study when completed by the board's employees, will recommend any solutions to privacy threats, said Chanin. "This is a tough issue. There is a lot of value to having quick access to a compilation of information," said Chanin. For example, easy access to computerized information allows companies to quickly grant loans or credit cards to consumers, he said.
Adding to the pressure facing the Federal Reserve Board is a fast-approaching March deadline for the report's delivery to Congress, said Chanin. The schedule "is pretty tight," he said.
Both Abrams and Mooney said their companies have instituted stringent security procedures to curb theft and misuse of financial information. For example, Equifax has extensive security procedures to prevent the incorrect dissemination of information to its 100,000 customers, said Mooney. Also, both companies frequently conduct polls to gauge the public's privacy concerns, they said.