WASHINGTON – A federal court of appeals has upheld a Federal Trade Commission rule that credit reporting agencies cannot sell the names and addresses of selected consumers to marketing companies.
The FTC had blocked such transactions, saying they violated the Fair Credit Reporting Act. Trans Union Corporation, one of the nation’s three largest credit reporting companies, had argued that it had a First Amendment right to sell the data.
The case has special significance because of the language of the ruling by the influential U.S. Court of Appeals for the District of Columbia Circuit. The ruling states that there is a “substantial government interest” in “protecting the privacy of consumer credit information.” This language could be used by other federal courts as a precedent in establishing a formal right of privacy for consumers.
Trans Union was selling data on selected consumers, such as those who have credit cards with limits of more than $10,000 or those who have two or more mortgages. The FTC in 1992 ruled that these lists were “consumer reports” under the Fair Credit Reporting Act (FCRA) and thus could not be sold for target marketing purposes. It ordered the company to halt the sales. The case has been wending its way through administrative hearings and court trials since then.
Trans Union had argued that neither the FCRA nor the FTC order demonstrated a substantial government interest in protecting consumers’ privacy, and that the company’s constitutional rights to free speech were therefore being violated by the agency’s order.
The appellate court rejected the company’s arguments. “Contrary to the company’s assertions, we have no doubt that this interest — protecting the privacy of consumer credit information — is substantial,” the court ruled.
