Despite regulators' efforts to seek common ground, consumer advocates and businesses appear to be sharply divided on where policy makers should set limits on collecting personal information.
That split was evident at a Wednesday hearing, organized by the U.S. Federal Trade Commission, which focused on the costs and benefits of collecting consumer data for everything from credit bureau reports to supermarket saver cards to online transactions. The FTC said it plans to use input from the meeting and a public comment period to shape policy and enforcement priorities for cases involving questionable data collection practices.
FTC officials acknowledged that more in-depth information gathering is to be expected due to advances in technology, but said the agency wanted to prevent overly intrusive practices.
"The question should become not whether information should be shared, but how much and what kind," said Todd Zywicki, director of the FTC's Office of Policy Planning.
The proposed answer to that question varied widely among the hearing's participants.
Speakers, who included executives, government officials, academics and advocacy groups, staked out largely familiar positions, with merchants and data-mining firms defending the use of sophisticated information-collection tools to help ensure that products are marketed to the appropriate people.
Privacy advocates, meanwhile, cautioned that aggressive data collection practices are invasive and leave consumers increasingly vulnerable to identity theft.
"There's a perception that individuals have little control over data," said Beth Givens, director of the Privacy Rights Clearinghouse, who recounted her experience attempting to get a supermarket saver card that did not contain personally identifiable information. It took multiple supermarket visits, she said, before one merchant agreed to let her sign up with simply a made-up name.
Electronic Privacy Information Center representatives also objected, in written comments, to merchants' and service providers' frequent demands for customers' Social Security numbers. EPIC advocated that rather than collecting as much customer information as possible, merchants should try to minimize the amount of data required to complete a transaction.
Marketers took a different perspective. David Schrader, marketing director of Teradata, a data mining firm, said that sophisticated analysis of customer data can actually result in less intrusive advertising practices, since it allows merchants to pitch products only to individuals they believe are likely to be interested in them.
This is the direct opposite of the approach taken by the most obnoxious telemarketers and spammers, Schrader noted, who inundate the public with product pitches while knowing that only a miniscule percentage of people will actually buy anything.
Still, as advanced data-analysis tools allow companies to collect more detailed customer profiles, panelists expressed concern about the potential for inaccuracy.
Speakers took a particularly critical look at the mother of all personal data-collection repositories: the consumer credit report. With requests for credit report data from lenders, employers and individuals on the rise, Robert Hunt, an economist at the Federal Reserve Bank of Philadelphia, said it would be helpful to have better information about what goes into a credit score.
"We know it's valuable, but we don't have a lot of information about the accuracy of information in credit bureaus," Hunt said. Moreover, because lenders provide most of the revenue to the three largest credit reporting agencies, it's possible that bureaus err to the benefit of creditors in the methodologies they employ to compile reports.
Travis Plunkett, legislative director of the Consumer Federation of America, said he was particularly troubled by frequent reports of discrepancies in credit scores for the same individual depending on the credit bureau that is tracking them.
"There is going to be some variance between agencies," he said. "But whatever the underlying data, we shouldn't be seeing variance like we're seeing."
