Credit Bureaus Face Privacy Issue

IS ``junk mail'' an invasion of privacy, or a marketing service that most American consumers desire? That is one of the issues underlying congressional efforts to tighten regulation of the companies that track consumers' ability to repay loans. The credit reporting industry and the Consumers Union, an advocacy group, will face off later this week in testimony before a subcommittee of the United States House of Representatives that is considering proposed changes to the Fair Credit Reporting Act of 1971.

The Consumers Union wants Congress to prevent any use of credit-report information not authorized by the individual consumer. This would apply not only to checks by potential grantors of credit and employers, but also to the renting of mailing lists to direct marketers.

The Consumers Union says unsolicited offers for credit cards and similar solicitations violate consumers' privacy, because the offersare based on specific characteristics requested by marketers and culled by computers from credit-bureau databases.

Michelle Meier, the Consumers Union counsel for government affairs, says consumers should have the right to ``opt in'' on any use of their file. The alternative ``opt out'' approach would require consumers to notify credit bureaus when they do not want their address offered to direct marketers. ``Our concern would be that ... the option of opting out would get very lost in the shuffle of people's everyday lives,'' she says.

The ``opt in'' approach would not only hurt the direct marketing business ($23 billion last year), but ``would hurt consumers as well,'' says Chet Dalzell of the Direct Marketing Association. He says busy consumers want options to arrive on their doorstep.

``If I don't want them [the mailings], well, that's what trash cans are for,'' says Marvin Kaplan, a spokesman for the Associated Credit Bureaus trade group.

In an attempt to balance privacy and consumerism, Equifax Inc., one of the three biggest credit bureaus, has developed a program called ``Buyers Market,'' in which consumers choose which types of direct mail offerings they do not want. Company spokesman David Mooney says this is ideal both for consumers and for direct marketers - who now get names of people who specifically request certain types of solicitations, rather than using predictive methods.