Keeping private information private in an Internet world has emerged as a major–and troubling–issue on a number of fronts, most recently in the debate on overhauling the nation’s Depression-era bank laws and in the Clinton administration’s unveiling Friday of a policy to safeguard confidentiality of electronic medical records.
Today’s technology makes it possible for companies to dissect consumers’ buying needs, patterns and preferences in awesome ways. Looked at positively, that information could be used to identify products or services a particular consumer might really find useful and didn’t even know about. Looked at negatively, that information could be used to deny a consumer a job or some other opportunity.
To forbid any data sharing is to eliminate the potential benefits of technology in added convenience, efficiency and lower cost. But consumers must retain the right to have a say in whether and how their sensitive personal information is shared–even if it means reducing some of the potential benefits of technology. It is a delicate balance.
A legislative compromise that clears the way to modernize the 66-year-old Glass-Steagall Act governing financial services was reached a week ago, but specific language for the new law is still being crafted. Many privacy experts remain concerned that opening the doors for banks, insurance companies and securities firms to become siblings under one corporate roof will lead to improper sharing of customer information.
The new law prevents financial services companies from sharing or selling sensitive customer information to outside firms but permits sharing of that information in-house among corporate siblings. Companies will also be required to develop comprehensive privacy policies and make sure customers know what those policies are.
House Banking Committee Chairman Jim Leach (R-Iowa) insists the privacy protections in the banking laws are the “strongest ever passed by Congress.” Consumer advocates beg to differ and warn darkly about “Orwellian” invasions of privacy.
Particularly worrisome is the confidentiality of medical records because their potential misuse could cause the greatest harm. The Federal Reserve Board has insisted on walling off records held by the insurance affiliate of a financial services company. That is a start, as is the Clinton proposal safeguarding privacy of electronic medical records.
