Summary
For more than 50 years Experian has been a leader in the information
industry. In fact, the company’s roots date back more than 100 years to the
pioneers of credit reporting. Its
success is based on sound information values that guide the development of
practices and policies that protect consumer privacy, ensure security and
provide benefit to consumers and our business clients alike.
Responsible information use today affords consumers greater choice,
convenience, and lower prices than ever before. In past decades, our economy was local. Consumers lived where businesses were located. Product and service choices were limited to
what was available in a consumer’s neighborhood, the local main street, or
perhaps a nearby city. Consumers
learned about businesses by walking down the street, or reading ads in the
local newspaper.
Today, our economy is national. Businesses in Los Angeles and New York
compete daily for sales to consumers in Kansas. Where once there was only a single provider of a product or
service, or maybe two or three to choose from, there now are hundreds. Because of responsible information sharing,
those businesses can reach consumers who are most likely to need their products
and services. That greatly increases
consumer choice and promotes competition, which drives down prices.
Unfortunately, a number of myths and misunderstandings have arisen
about information use for marketing purposes.
Those myths and misperceptions are the basis for many of the privacy
concerns that have brought us here today.
This testimony attempts to dispel three of those myths:
-
MYTH: Marketers want to know specific information
about individual consumers.
In fact, marketers don’t focus on individual consumers. Instead, they are interested in overall
market characteristics.
-
MYTH: Marketing databases are used for individual
“look-up.” In reality,
marketing information is used for overall market analysis. It is not used to identify, locate, or
verify the identity of individuals.
-
MYTH: Marketing information is used for credit,
insurance or employment underwriting. The Fair Credit Reporting Act governs information use for these
purposes. Therefore, marketing information is not utilized for these purposes.
Unintended and unforeseeable consequences of new legislative mandates
based on such myths may jeopardize today’s robust, information-based economy.
Dozens of federal and state laws govern information use for marketing
purposes, along with multiple industry self-regulatory regimes. We are concerned that current legislation
may already have gone too far, and has failed to balance economic vitality with
legitimate consumer interests.
Legislation already strictly controls the use of sensitive information,
including credit, financial, medical and children’s data. Additional government-mandated restrictions
on marketing information use may result in unexpected and unintended
consequences. Small businesses, relying
on cost-effective direct marketing as an advertising channel, could be forced
out of the marketplace, diminishing consumer choice and opportunity. Yet, consumers would likely not benefit from
any substantive privacy protections.
Experian applies stringent information values to all of its information
uses through a strict assessment process that ensures privacy concerns are
addressed and that the information use benefits both businesses and consumers.
We consider ourselves to be stewards of the information we collect,
maintain and utilize. Our
responsibility is to ensure the security of the information in our care is
protected and that the privacy of consumers is maintained through appropriate,
responsible use.
Through its Consumer Advisory Council, Experian receives valuable
insight and guidance from consumer advocates, legislators, scholars and
business leaders regarding our information services. In addition, our Corporate Privacy Council, a group of company
leaders, meets regularly to ensure Experian information services provide
consumer and business benefit while upholding the Experian Information Values
and ensuring privacy expectations are met.
Although the pervasive myths discussed above inaccurately suggest
otherwise, Experian and others in the direct marketing industry work diligently
to understand and address consumer privacy concerns. We encourage you to continue to study the importance of
information flows to our economy. We
believe the current legal and self-regulatory framework best serves consumers
and businesses. The greatest consumer
and business benefit is achieved through consumer notice and the opportunity to
opt-out.
About Experian
Experian is one of the
world's leading information solutions companies. Primarily involved in credit reporting and direct marketing
services, we also provide references services, analytic services, and
consulting solutions, helping businesses make better, faster decisions, and
efficiently reach consumers with new product and service offerings. Our annual sales are in excess of $1.5
billion. The chart in Appendix A outlines
Experian’s history.
Experian employs more than 6,500 people in North America. Our corporate headquarters are in Orange,
CA, where we have 1,364 employees.
Other major U.S. employment centers include:
-
Colorado
- 209 employees (Denver)
-
Georgia
– 157 employees (Atlanta)
-
Iowa
– 585 employees (Mt. Pleasant)
-
Illinois
– 1,398 employees (Lombard, Schaumburg)
-
Nebraska
– 1,218 employees (Lincoln, Seward)
-
New
Jersey – 79 employees (Parsippany)
-
New
York – 220 employees (Albany, New York, Rye)
-
Texas
– 802 employees (Allen, McKinney)
-
Vermont
– 263 employees (Rutland)
Experian’s
primary business areas
Experian has six key
business areas: direct marketing services, credit reporting, automotive
information services, customer relationship management, electronic commerce
services and individual reference services.
Experian direct marketing services help bring
businesses and their customers together.
The company touches nearly one in four pieces of mail delivered by the
U.S. Postal Service. But Experian
direct marketing services extend beyond targeted mailing. Businesses rely on Experian to help them
better understand their markets and the characteristics of the people who do
business with them. Understanding the
marketplace makes possible faster, more efficient product development and
delivery, better retail outlet and service center locations, improved customer
service, more cost-effective advertising and lower costs for consumers.
Each year, Experian ships 1.7 billion pieces
of mail from its processing centers and provides address information for more
than 20 billion promotional mail pieces delivered to more than 100 million
households. Those offers present
consumers with products and services from companies about which they may
otherwise never have known. By
identifying the characteristics of consumers likely to be interested in certain
kinds of products and services, Experian helps marketers more efficiently reach
consumers who are most likely to be interested in a business' products or
services.
Experian and the companies from which it was formed have provided
credit reporting services for more than 100 years. J.E.R. Chilton began credit
reporting in Dallas, TX in 1897 by taking notes from local merchants in a
little red book. Decades later, the TRW
Corporation pioneered computerization of the credit reporting process, leading
to a national credit reporting system.
In 1996, TRW sold its credit reporting unit, which became Experian.
Today, hundreds of millions
of credit reports are provided to lenders annually. The ability of creditors to check a person’s credit references in
an instant enables them to make rapid, sound, and objective lending decisions. That ability helps consumers get the credit
they need and deserve faster and cheaper than anywhere else in the world. Enabling lenders to make objective, safe,
secure loans and minimize other credit-related losses, while providing
consumers instant access to credit, has contributed greatly to the robust U.S.
economy.
Business success is built upon positive
relationships with customers. Relationships are built on information. Experian
helps businesses establish and develop long-lasting customer relationships
through responsible information use. We help businesses get a clearer picture
of their customers across multiple business units and market segments. We help
companies understand why certain kinds of people shop with them and what the
customer needs. With that clearer
understanding, Experian then is able to provide information services that help
businesses initiate relationships with new customers, assist the businesses in
developing new, desirable products and services and aid in providing pleasant
shopping and effective customer service.
The result is a better shopping experience for consumers and more
profitable operation for businesses.
Experian
Automotive Information Services specialize in the collection and dissemination
of vehicular data from each of the 51 United States jurisdictions. The
information is utilized to provide valuable services to auto dealers,
manufacturers, consumers and advocacy organizations, advertising agencies and
internet information sites, law enforcement and tollway authorities. Detailed
vehicle history reports enable consumers to make informed used-auto purchasing
decisions. Manufacturers rely on our
services to manage recalls and conduct market analysis to manage product supply
and improve service.
Experian’s
electronic commerce division helps businesses establish a presence in the
electronic marketplace, develop relationships with online consumers and ensure
consumers and businesses enjoy positive, safe transactions. Our e-commerce
division focuses on both consumers and the businesses that reach them with
patented delivery systems and best-in-the-industry security processes and
systems.
For our business partners, we verify,
authenticate and enhance identity information about consumers and businesses.
With enhanced authentication, clients reduce fraud by making confident
transaction decisions in real time.
For consumers, we offer a range of personal
information solutions ranging from our online credit report with real-time
dispute registration, to our vehicle history report – a must for used car
purchases. We offer a subscription service for unlimited access to credit
report and credit score information along with the tools required to better
understand them. We also offer a
property report – to better understand the value of your home – or prospective
home.
Our reference services help
people, businesses, non-profit organizations, government agencies, law
enforcement, and other organizations identify, locate, and verify the identity
of individuals. The most recognized individual reference services are the
telephone book and directory assistance – services you use every day. They usually include only names, addresses
and telephone numbers.
More sophisticated reference
services may include information about whether you own a home or rent an
apartment, how long you have lived in the same location, and if there are
additional household members.
Sensitive
identifying information such as your Social Security number, driver’s license
number, and date of birth is included in some reference services. These services, however, are limited to use
by law enforcement, government agencies, and other organizations with a
legitimate and appropriate need for such information.
The benefits
of information use
Because of the
information services provided by Experian and its counterparts, the United
States has the most robust economy in the world, and its consumers have greater
choice and receive greater value than consumers anywhere else in the world.
Direct marketing:
Direct
marketing services increase choice and opportunity and reduce costs. Each year,
Experian ships 1.7 billion pieces of mail from its processing centers and
provides address information for more than 20 billion promotional mail pieces
delivered to more than 100 million households.
Those offers present consumers with products and services from companies
about which they may otherwise never have known. By identifying the characteristics
of consumers likely to be interested in certain kinds of products and services,
Experian helps marketers reduce unwanted mail and send only offers that
consumers are likely to want or need. But targeted mail processing is only one
of many direct marketing services provided by Experian and its industry
associates.
Market analysis services help businesses identify the common
characteristics of their customers. A richer understanding of their customer
base helps businesses better plan media campaigns, determine retail site
location, develop new product offerings, better position their brands, have a
clearer understanding of their customers’ service needs, and reach new
customers. For consumers, the result is
lower product cost, better customer service, more convenient shopping, faster
delivery, reduced unwanted mail and exposure to useful new products and
services.
An April 2001 study by the Information Services Executive Council found
restrictions on marketing information use would cost catalog and Internet
apparel shoppers $1 billion annually.1 According to the study, that
cost would be shared disproportionately by inner city and rural catalog
shoppers. Inner city neighborhoods
generally are under-served by traditional retail stores, and rural consumers
often live long distances from the nearest mall or retail center. As a result, these two groups are more
reliant on catalog or Internet shopping alternatives.
Similarly, a December 2000 study by Ernst & Young found members of
the Financial Services Roundtable (FSR) – a group of 90 of the nation’s top
banking, insurance and securities firms – save approximately $1 billion a year
by using targeted marketing. Much of that savings is passed directly on to
consumers.2
“FSR members report that they would send out about three to six times
more direct marketing if they could not use information sharing for targeted
marketing. Targeted marketing results in real savings for financial
institutions, some or all of which will be passed forward to customers in price
reductions,” the study said.
According to
the study, FSR customer households annually save $17 billion and 320 million
hours as the result of information sharing among affiliates and third parties.
Credit reporting:
The United States’ unique credit reporting system dramatically increases
American consumers’ choices and opportunities for financial services. Because of the U.S. automated credit
reporting system, American consumers can obtain credit and secure other
financial services at lower costs from a larger number of providers than
anywhere else in the world.
By comparison, economist Walter Kitchenman said of nations without an
open credit reporting system, “As a result, financial services are provided by
far fewer institutions – one-tenth the number serving U.S.
customers, despite the fact that the pan-European market has almost one and
one-half times as many households.”3 He added, “consumer lending is
not common, and where it exists, it is concentrated among a few major banks in
each country, each of which has its own large databases. “In fact, European consumers, although they
outnumber their U.S. counterparts, have access to one-third less credit as a
percentage of gross domestic product.”
The open U.S.
credit reporting system provides a foundation for lender confidence, increasing
the availability of loans, reducing the cost of credit and increasing
competition for customers, all of which benefit the U.S. consumer.
Individual reference services: Often the benefits of individual reference services, and the services
themselves are taken for granted. Yet
they are used everyday. People,
businesses, law enforcement and other organizations utilize individual reference
services routinely to locate, identify and contact people for a variety of very
positive reasons. Basic reference
services, such as a telephone book, are available to almost anyone. Experian separately provides more
sophisticated services only to law enforcement or other qualified users. A few of the users of individual reference
services and how such services are utilized are listed below.
-
You: through the telephone book or
directory assistance to find a telephone number or an address to send a thank
you note or holiday greeting.
-
Lenders, retailers, e-tailers: to verify
the identities of potential customers and protect you from fraud.
-
Law enforcement agencies: to locate crime
witnesses and apprehend criminal suspects.
-
Child support agencies: to locate parents
who are behind in their child support payments.
-
Government agencies: to find missing
pension fund beneficiaries and heirs.
-
Alumni Associations: to contact recent
graduates and send event notices to current members.
-
Businesses: for product recalls and product
notices.
The information included in individual reference services can range
from just names, addresses and telephone numbers, to more sensitive identifying
information including dates of birth, Social Security numbers and drivers
license numbers. Access to certain
types of reference information is carefully monitored and controlled. For instance, an individual only is allowed
access to published telephone book information. Law enforcement agencies, however, can access more sensitive data
for use in criminal investigations.
During 1998, the FBI made 53,000 inquiries into commercial individual
reference services. According to then FBI Director Louis Freeh, utilization of
these services aided in the arrest of 393 fugitives, identification of more
than $37 million in seizable assets, locating 1,966 wanted individuals and
location of 3,209 witnesses wanted for questioning.4
Experian information services promote competition in the
marketplace. Information sharing for
target marketing and credit reporting opens the door for small, emerging
businesses to compete with larger, established companies. It levels the playing
field by making the cost of entry affordable to everyone.
Information sharing “allows new market entrants, which cannot afford
mass market advertising and lack the customer lists of their well-established
competitors, the ability to reach those people most likely to be interested,”
said Fred H. Cate and Michael E. Staten in their paper, Putting People First: Consumer
Benefits of Information-Sharing.5
According to the Ernst & Young study, “FSR members save about $1
billion per year through targeted marketing based on shared information –
savings that can then be passed forward to customers. Almost all of the survey
respondents said that if they could not use targeted marketing, they would
resort to mass marketing instead, while a few said that they may eliminate
direct marketing completely.”6
The implication is that large companies could bear the cost of mass
marketing – ostensibly unfettered distribution to every U.S. consumer. For small businesses, it means being forced
out of the marketplace. With reduced
competition, consumers would be faced with higher prices and less choice. The French financial banking industry
provides a good example.
In a 1999 study, Walter Kitchenman said:
In France, for example, the EU country with
the strictest financial privacy laws, seven banks control more than 96 percent
of banking assets. The seven dominant
French banks, each with assets of over $100 billion, already own extensive
databases – and don’t need to share customer information with anyone. The fact that this system restrains
innovation, hurts customer choice, and increases price is not a great concern
to those banks because the same system also restrains competition and makes it
easier to hold customers and capital captive.7
As he points
out, while solicitations may sometimes seem annoying to consumers, the
solicitations in fact represent a free flow of information that promotes
competition among businesses of all sizes, giving U.S. consumers far more
choice and opportunity at significantly lower costs.
The direct
marketing industry also is an important source of employment and a significant
part of the overall consumer market. A
recent WEFA Group study estimated that in the year 2000, total consumer sales
attributable to direct marketing would be nearly $940 billion. The same study estimated more than 14.7
million people would be employed throughout the U.S. economy as a result of
direct marketing activities.8
It has been said that credit reporting is a secret ingredient of the
U.S. economy’s resilience. The
availability of automated, nationwide credit histories enable lenders to make
objective, sound lending decisions, reducing risk, attracting investment and
strengthening the economy.9 As a result, U.S. consumers benefit from
widely available credit at lower costs than anywhere else in the world. Some
estimate that because of the U.S. credit reporting system, consumers in this
country save as much as $80 billion a year on mortgage loans alone.10 But the robust
nature of the U.S. economy does not rest only with information use for credit
reporting purposes.
Direct, or target, marketing results in significant savings for
businesses each year. Those savings are
passed on to consumers. An Ernst &
Young study indicated members of The Financial Services Roundtable (FSR) would
have to send out three to six times more marketing offers if they could not use
information sharing for targeted marketing purposes. The result would be far greater costs, which would be passed on
to consumers, not to mention increased volumes of mail in their mailboxes.11
Restricting information use also threatens the backbone of the U.S. economy:
small businesses. Today, small
businesses rely on the availability of information to establish and expand
their markets. They could not compete
with corporate giants if they were unable to utilize target marketing to reach
consumers who otherwise would not even know the business existed. Experian provides marketing solutions to
almost 4,000 small businesses across the country.
In a July 2000 paper, Fred Cate and Michael Staten presented very
clearly the danger to our economy of interfering with information sharing:
Interfering with the availability of that information hurts both
consumers, who miss out on opportunities, and businesses, who face higher costs
to reach consumers, but such interference imposes an especially heavy burden on
small companies, which cannot afford mass market advertising and lack the
customer lists of their well-established competitors. Open access to third-party information and the responsible use of
that information for target marketing is essential to leveling the playing
field for new market entrants.12
The ISEC study
reached the same conclusion when looking at an opt-in approach to marketing
information as opposed to the current opt-out standard. Implementation of data
use restrictions would drive up total costs to consumers from 3.5 to 11
percent. The result would be
devastating to small firms and new market entrants.
According to
the study, “Since marketing costs will likely increase if external opt-in
restrictions are put in place, some retailers will be forced to exit the market
and other, new companies will be deterred form entry. With a smaller
marketplace, competition suffers, giving consumers less choice and higher costs
when distance shopping.”13
It is easy to
overlook the impact of information use on our local, small businesses. We too often take for granted the local food
store, pharmacy or men’s clothing store. In today’s economy, they are competing
not only with giant supermarkets, drug outlet stores and shopping malls, but
also with online services that may deliver to your door. In such an environment, information sharing
is critical for small businesses just to maintain a storefront in the
community.
Experian’s information services are a key resource in providing assistance
to businesses, consumers and law enforcement to detect, stop and recover from
fraud – both online and offline.
Consumer information maintained under Experian’s stewardship is fueling
new, state-of-the-art online verification and authentication systems, including
digital signatures. The new technology,
used responsibly, is critical to the continuing growth of e-commerce.
Individual reference services provided by Experian help law enforcement
identify and locate suspects and perpetrators of fraud, speeding arrest and
prosecution.
Recently,
Experian launched the National Fraud Database, the nation’s first repository of
known fraudulent activity. Participants
include representatives from a variety of industries, such as financial
services, insurance, retailing and telecommunications. Members contribute known fraud data to
Experian, which then enters it into the database. A National Fraud Database Report will be provided to a
participating lender, for example, when a loan application is submitted. Information in the report matching a
previously verified fraud case will help lenders prevent fraud from occurring
at the point of origin.
Participation
in this ground breaking initiative has been offered to Experian’s competitors –
Trans Union and Equifax – as a way of solidifying the industry’s resolve to
fight fraud and identity theft.
Helping businesses build customer relationships
Businesses
rely on Experian to provide accurate, reliable information services that help
them better understand their markets and identify, contact and build profitable
relationships with new customers. Experian’s information solutions help
businesses better understand their markets and more efficiently reach consumers
likely to be interested in the products and services the businesses offer. That reduces marketing costs and increases
new customer satisfaction. Customer analysis and resultant market segmentation
also enables business to tailor their advertising outlets to reach interested
consumers, better position their brands, improve customer service, and better
locate retail outlets and delivery centers.
The result is greater efficiency, lower costs passed on to consumers,
greater customer satisfaction and increased customer loyalty, all of which make
a business more successful.
Some myths about marketing information use
There are a number of myths and misperceptions about direct marketing
and the information in direct marketing databases. Many of these myths appear to drive the debate about increasing
restrictions on marketing information to protect consumer privacy. Here are a few of those myths and the facts
that will help dispel them.
1. MYTH:
Marketers want to know specific information about individual consumers.
Direct marketing is simply another form of advertising, not unlike
television ads aired during the Super Bowl.
Like Super Bowl advertisers, direct marketing advertising are attempting
to reach a large group of individuals who have certain demographic characteristics
that indicate they may be interested in purchasing their products or
services. Unlike Super Bowl advertisers
that have millions of dollars to spend on promotions, direct marketers often
are small businesses, or new market entrants without large budgets. Therefore, they need more efficient ways to
advertise to their marketplace.
Marketing databases are not designed to provide a “list-of-one.” Instead, businesses want to know about the
characteristics of their overall market.
The consumer characteristics of a single individual do not provide
useful market insight. Once a market is
better understood, a business may want to send an offer (whether offline or
online) to hundreds, thousands, or even tens-of-thousands of consumers. For that they may receive a mailing list of
names and addresses, but again, the business is not interested in the specific
information about a single individual.
Further, information in most marketing databases is summarized at the
household, not individual level. Rather
than analyzing information about specific individuals, businesses typically
consider household-level information.
Much of that information is estimated or modeled using U.S. Census data
or consumer survey data. Estimated age
and income ranges and general interests are examples. For more information about the types of information utilized for
direct marketing and information sources, see Appendix B.
2. MYTH:
Marketing databases are used for individual “look-up.”
Experian marketing information services are not utilized to locate,
identify or verify the identity of individuals. Our contracts prohibit the use of marketing information for such
applications.
In the information industry, we refer to such information use as
individual reference services. Appropriate use of these services is ensured
through a strict self-regulatory code and related industry practices.
Although you don’t realize it, you probably use reference services
every day. The most common is the
telephone book.
Experian separately offers more sophisticated services to law
enforcement and other qualified users, such as government agencies, who use the
services for child support enforcement, locating witnesses and victims, and
preventing fraud.
However, such services are not derived from information compiled for
marketing purposes.
Marketing databases are used for overall market analysis and
identifying households with consumers who are most likely interested in
purchasing a product or service. The
information in marketing databases generally are not intended to be used to
locate, identify or verify the identity of individuals and is not used in that
manner. Again, marketing databases are
not designed to return a “list-of-one.”
3.
MYTH:
Marketing information is used for credit, insurance or employment underwriting.
The Fair Credit Reporting Act governs third-party information used for
credit, employment or insurance underwriting.
Use of a marketing database for FCRA permissible purposes would subject
the database to all of the requirements of the
FCRA. The database then could be used
only for FCRA permissible purposes. It
could no longer be used for marketing.
For that reason, Experian’s marketing database and credit reporting
database structures are entirely different and distinct.
And it’s why the legend about grocery store purchases being shared for
insurance underwriting is just that – a legend.
Compiling and
utilizing information for marketing purposes
Experian is a
data aggregator. Our company collects and maintains information for marketing
purposes and provides information solutions enabling marketers to efficiently
reach consumers who are interested in purchasing their products and
services. We are committed to providing
information solutions that benefit both our business clients and
consumers. We also recognize and take
very seriously our responsibility to protect consumer privacy.
We must ensure
the security of the information we collect and maintain, and ensure that it is
used appropriately. Experian takes a "values approach" to privacy,
which is described in greater detail below.
We provide
consumers with notice regarding our information collection and use and choice
regarding that information collection and use including an opportunity to
opt-out of information collection and use by Experian.
To opt-out of
Experian marketing information use, consumers need only call 1 800 407 1088.
Experian also
is a member of the Direct Marketing Association (DMA). We honor the DMA mailing
and telephone preference lists.
The following
sections describe Experian's role as a data compiler and our approach to
addressing privacy issues.
Experian
marketing databases contain information about more than 98 percent of U.S.
households. The information is utilized
to help businesses analyze their overall markets and market segments and to
contact consumers who will most likely be interested in the products and
services they offer.
Experian
maintains databases for two distinct purposes: credit reporting and direct marketing.
The data for those uses is kept separate, both physically and
electronically. Experian’s credit
reporting database is physically located near Dallas, TX. Its marketing
databases are in Schaumburg, IL. The
information is maintained and utilized for appropriate purposes and is not
combined or commingled except as allowed by law.
The information Experian collects
The information Experian collects for direct marketing purposes comes
from a number of sources, first and foremost directly from consumers. Warranty cards, surveys, magazine
subscriptions and sweepstakes entries all are provided by consumers and are
utilized for direct marketing services.
Other sources include non-personally identifiable United States Census
information, public records and telephone directory information. Experian direct marketing information
includes:
-
Census information (median or percentage
values based on census track)
-
Lifestyle information (reported by
consumers)
-
Interests, hobbies, activities
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Public records/telephone directory
information
For more
information about the types of information utilized for direct marketing and
information sources, see Appendix B.
Experian found that rigid rules directing information use are quickly
outdated by today’s rapidly evolving technology and constantly changing
consumer and business needs and expectations.
For more than a decade Experian has taken a values approach to
information use. Our five global
information values ensure Experian information services provide value and
benefit to both businesses and consumers while still enabling adaptation to
cultural and regulatory changes and technological advances.
The Experian global information values are:
Balance
Experian
strives to balance the interests of consumers with the business needs of
customers to ensure both receive benefit from information use.
Accuracy
Experian
strives to ensure the information it collects and maintains is as accurate and
up-to-date as possible and that the information is appropriate for its intended
use.
Security
Experian
protects the information it maintains from unauthorized access or alteration.
Integrity
Experian
complies with all laws and applicable industry codes and operates its
businesses in accordance with these information values.
Communication
Experian
communicates openly about the information it maintains, how it is used and
seeks to inform consumers of their rights regarding the use of information.
Every Experian information service undergoes a formal Information
Values Assessment before it is approved.
The assessment ensures the service not only meets all legal and
self-regulatory requirements, but that it also meets security standards,
addresses consumer privacy concerns and provides value and benefit to both
businesses and consumers.
Teams within each Experian business unit is tasked with ensuring new
information services undergo values assessments. These individuals and their teams work integrally with Experian
sales staff and marketing units to ensure the Information Values are built into
all of Experian’s products and services.
In addition,
Experian seeks input from consumer groups, consumer advocates and its business
partners regarding information use to further ensure the services it provides incorporate
appropriate security and privacy provisions and provide benefit to both
consumers and its business clients.
Our Consumer
Advisory Council was among the first organizations of its kind. Composed of
consumer advocates, legislators, scholars and business leaders, the Council
provides valuable insight and guidance regarding Experian information
services. Consumer Advisory Council
opinions and suggestions help us provide information services that provide
value and benefit to both businesses and consumers while effectively addressing
privacy issues.
The Experian
Corporate Privacy Council is comprised of senior-level managers. Its members meet regularly to discuss and
address privacy issues and to ensure Experian information services uphold the
Experian information values and exceed privacy expectations.
Experian is
committed to providing consumers with notice and choice regarding its
information services. Whenever Experian
direct marketing services are utilized, consumers must be given notice of the
information use and provided with an opportunity to opt-out of that information
use.
To opt-out of
Experian marketing information use, consumers need only call 1 800 407 1088.
We comply
strictly with the Direct Marketing Association (DMA) Privacy Promise and honor
the DMA opt-out lists.
Consumer education
We produce a
number of education materials that describe how information is collected and
utilized, our Information Values and information use policies and consumer
choices regarding information collection and use. All of the materials are provided free to consumers through many
partnerships, among them:
-
State attorneys general
-
State and federal legislators’ offices
-
State and federal government agencies
-
The United States Army
-
The United States Navy
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Offices of consumer affairs
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Consumer organizations
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High school and university educators
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Student organizations
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Divorce attorneys
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Marriage counselors
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Realtors
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Lenders
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The media
There are many
others. Experian is committed to
reaching consumers with the information they need to understand how they can be
actively involved in our information economy.
We have
delivered to consumers more than 1 million copies of our various Reports on
series. Our four-part Reports on Direct Marketing describe how
the direct marketing process works, what information Experian collects and how
it is used, and provides details on the choices consumers have and what they
need to do if they choose to opt-out.
Hundreds-of-thousands
of Experian’s booklet 12 Common Questions about Credit Reporting and Direct Marketing
have been distributed directly to consumers and through our many
partnerships. The booklet is printed in
both English and Spanish versions.
Much of the
consumer education material is available online. Experian also offered the first online advice column about
information use, called Ask Max.
During the past four years, more than 50,000 questions have been
received from consumers, and more than 100 columns have been published. Most column responses address credit
reporting issues because few consumers have submitted questions about direct
marketing.
Access
Marketing
databases often are erroneously compared to credit reporting databases. However, the data, data uses and structures
of marketing databases and those of credit reporting databases are entirely
different. Comparison is, to use a
cliché, apples and oranges. To suggest
an access and dispute process for marketing databases like that for credit
reporting is unrealistic.
The
information in a credit reporting database is used to make critical lending,
insurance, housing and employment decisions about specific individuals. Therefore, the data must be as precise as
possible. Because the information is specific to the individual and of such a
crucial nature, consumers need to know and have the ability to play a role in
ensuring the accuracy of the information.
Information service providers store data and manage its use. The source of the information generally must
correct any inaccuracies and update that information with the credit reporting
agency, which essentially serves as a library.
Marketing
databases also serve, in a sense, as a library. But the nature of marketing databases makes such a disclosure and
dispute process very impractical, if not impossible.
Unlike lenders,
who need to know precise details about an individual’s repayment history,
marketers need only to understand the general characteristics of their overall
markets. By identifying those
characteristics, businesses are better able to reach consumers who will most
likely be interested in purchasing the products and services they offer. Because marketers need only to contact a
broad group of consumers who may be interested in a product or service, the
information in marketing databases is not precise. In fact much of the information in marketing databases is derived
from computer models, is estimated or is presented in ranges.
Consumers
would expect a level of precision and accuracy that simply is not present,
which would make a dispute process impractical, if not impossible. Because most information in a marketing
database is of this nature, such a disclosure would be of little, if any
benefit to the consumer.
While
providing a disclosure would be of little benefit, it likely would pose a
greater threat to privacy than currently exists. The nature of marketing databases would limit identification
authentication largely to name and address, which is widely available in public
sources, such as telephone directories.
Access requirements, therefore, should be constructed by balancing the
benefits to consumers against the risks to them and the costs to companies that
hold the data.
Requiring
access would require information aggregators like Experian to create the very
kind of database you are most concerned about.
In order to provide access, a marketing database would have to include
detailed, personal information that could be compiled and provided easily and
quickly in highly detailed individual dossiers. This is the very thing we want to avoid.
Allowing
access to marketing databases would be enormously expensive. In fact, it would require retooling of an
entire industry. Existing database
architecture would have to be redesigned and disparate databases linked
together to form name-driven profiles. Large
customer service staffs would have to be hired and stringent security
safeguards put in place. While that expense is justified and necessary with
regard to information governed by the Fair Credit Reporting Act, it is of
questionable value for data collected only for marketing purposes.
A consumer’s
current ability to opt-out of having their name shared for direct marketing
purposes satisfies the underlying concern about privacy without imposing undue
and unnecessary costs to businesses and risks to consumers that would result
from access requirements.
The current regulatory environment
A significant body of legislation and self-regulatory regimes already
govern the use of consumer information. All information collected and utilized
by Experian is governed either by specific legislation or industry
self-regulatory guidelines. The
following lists describe the statutory and self-regulatory regimes currently
governing information use for marketing and credit reporting purposes, for both
online and offline applications.
Regulatory requirements governing marketing information:
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Drivers Privacy Protection Act (DPPA)
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Fair Credit Reporting Act (FCRA; for
pre-approved credit offers)
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Children’s Online Privacy Protection Act
(COPPA)
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Telephone Consumer Protection Act and
Telemarketing Sales Rule
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State do-not-call requirements
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Census Confidentiality Act
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State Voter Records Acts
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Gramm-Leach-Bliley Act
Self-regulatory standards for marketing information:
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Direct Marketing Association (DMA)
Privacy Promise
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DMA Telephone Preference Service
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DMA Mail Preference Service
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DMA Electronic Mail Preference Service
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DMA Ethical Guidelines
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Experian Information Values and
associated practices
Regulatory requirements for credit information:
Experian supports the House Commerce
Subcommittee’s efforts to thoroughly investigate the issue of consumer privacy
before concluding that more legislation is necessary. The Subcommittee is wise to focus on what gaps exist, if any, and
whether there is a need for new regulatory mandates or enforcement regimes.
The combination of existing statutory
requirements and self-regulatory guidelines of marketing information already is
substantial. Experian is constantly
working with its trade groups to strengthen and improve existing
self-regulatory standards. For these
reasons, Experian opposes further federal regulation of marketing and reference
service information at this time.
The debate about privacy is incomplete and evolving. We do not yet fully understand the
importance of information flows to our robust economy. Enacting legislation based on incomplete
knowledge could result in additional, negative, unintended consequences to our
economy and greater consumer inconvenience with no meaningful privacy
protection.
The above listed regulations and self-regulatory regimes must be
allowed time to work and the impact of their restrictions on information use
studied. The affects of the safeguards
implemented by these laws and of the recently enacted Gramm-Leach-Bliley Act
are as yet unknown. It is essential
that we allow some time for these new laws to bear out any unforeseen or
unintended consequences.
To reiterate, Experian strongly believes existing law, industry
self-regulation and market responses are providing more than adequate consumer
protection.
In fact, we are concerned that current legislation may already have
gone too far, and has failed to balance economic vitality against legitimate
consumer interests.
The scale is often tilted by
the assumption that direct marketing somehow causes harm. A number of studies, including a report by
the Federal Trade Commission14, have found no evidence of real harm
resulting from marketing information use.
Hard questions
should be asked of those who claim consumers have suffered real harm. How do they define harm? Where are the examples of real harm? Is
there truly harm, or are they erroneously equating harm with annoyance?
New legislation should be considered only if specific consumer harm can
be demonstrated and must be implemented only in a manner that carefully
balances intended consumer privacy protection against the economic benefit of
accessible marketing information.
Conclusion
Thank you for the opportunity to submit these remarks on behalf of
Experian. I hope this document helps
dispel a few of the myths about marketing information use, addresses important
privacy concerns and clarifies the importance of information use to our robust
economy. I look forward to future
opportunities to work with the subcommittee as it studies privacy and
information use.
Appendix A
– Experian History
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1932
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Michigan
Merchants Co., later known as Credit Data Corp., is formed to provide
credit-reporting services.
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1966
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Metromedia
acquires lettershop capabilities and begins operation of its direct marketing
division called Metromail.
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1969
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Conglomerate
TRW buys Credit Data Corp.
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1979
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Metromedia
buys Marketing Electronic Corp. to provide list enhancement services within
Metromail.
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1981
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Direct
Marketing Technology, Inc. is founded in the Chicago area.
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1987
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TRW buys
Executive Service Co. to expand into the direct marketing industry.
Metromail is
acquired by R.R. Donnelly & Sons Co., the world's largest printer.
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1989
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TRW buys
Chilton Corp., a credit-reporting company founded in 1897.
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1996
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TRW sells
Information Systems & Services unit to a group of investors.
Experian
name and logo are introduced.
Group of investors
sells Experian to The Great Universal Stores P.L.C., a British conglomerate.
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1997
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CCN/MDS is
integrated with Experian North America.
Experian
buys Direct Tech, a leading provider of list processing, database marketing,
and consulting, analytical and information services.
Direct Tech
buys Brigar Computer Services.
Metromail
buys Saxe Inc., Marketing Information Technologies, and Atlantes Corp.
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1998
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Experian
buys Metromail, a leading provider of database marketing, direct marketing,
mail processing and distribution, and reference products and services.
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2001
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Experian
buys Exactis, the global leader in multi-platform interactive marketing.
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