Skip to content
Ralph Nader > In the Public Interest > Opt-Out for Your Privacy

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 it would be corporations, not governments, which would use their vast power to invade the privacy of citizens and, in effect, carry out unreasonable searches of the most intimate personal data.

But, that is exactly what is happening, particularly among newly-formed giant financial conglomerates which have access to a mass of data collected about millions of individuals by their far-flung insurance, bank, credit card and securities affiliates. Today, these giant corporations can assemble information to build a head to toe profile of most citizens and their buying and personal habits including what prescription and non-prescription health products they use as well as their investments, income, employment histories and entertainment preferences.

For this, consumers can thank the Clinton Administration and a bi-partisan group of Senators and Congressmen who lacked the courage to really defend citizens’ right to privacy when the so-called Financial Modernization legislation moved through the Congress in 1999. This law is the vehicle which allows banks, securities firms and insurance companies to merge as parts of financial conglomerates.

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 not authorized in writing in advance by you, the consumer-owner of the information. In short, under the Markey-Shelby approach consumers would have to “opt-in” in writing specifically authorizing the use of the information. Without this written affirmative permission from the consumer, the corporations could not sell, share or use the data for any purpose beyond that specifically agreed to by the consumer.

The industry, however, believed (correctly) that few consumers would give permission to have their information shared with unknown persons and corporations. They lobbied, successfully, for an opt-out system which would require consumers to send in a form indicating that they were opposed. The burden was on the consumer to “opt out.” If they forgot the form or failed to send it in or could not understand the legal jargon, the company would be free to distribute the personal information anywhere or to anyone it chose.

The industry lobbyists threatened to walk away from the legislation if the Shelby-Markey opt-in was adopted. The Clinton Administration and a bi-partisan 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.

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

Further rendering the opt-out approach nearly useless is the fact that many of the notices are written clumsily with little attempt to explain the consumers’ rights in clear understandable language. Some appear to have been copied verbatim from technical federal regulations without translation into language that would help consumers take proper action to protect their privacy.

“People don’t read them, and they don’t understand them,” Karen Petrou, a leading financial consultant told a banking conference in Washington recently. That was exactly what the financial lobbyists were betting on when they pushed the opt-out language on a willing Congress.

Despite the shortcomings of the opt-out approach, consumer organizations and the media should do everything possible to publicize the existence of the opt-out possibilities and to encourage consumers to protect their privacy by sending in the opt-out forms immediately. But the only truly effective means of controlling the wholesale invasion of privacy is for Congress to flatly prohibit the distribution of personal information unless the consumer has specifically authorized it in writing in advance.

Your personal information belongs to you. You do not authorize its wholesale distribution just because you have provided information to a bank for a specific limited purpose such as a home mortgage. The bank should not have the right to sell or share that information for any other purpose unless you authorize it in writing and know specifically what information is being released and to whom.

Your personal information is your personal property. You should demand that the financial institutions you deal with so treat it. And you should demand to know how your Congressman voted when the Financial Modernization Act was adopted in November, 1999 with a weak industry-supported opt-out provision attached.

For Further Information on Privacy Contact:
U. S. PIRG, 218 D Street, SE
Washington, D. C. 20003