Trans Union Suffers Sweeping Legal Defeat
The staggering defeat doled out to credit bureau Trans Union over implementation of the Gramm-Leach-Bliley Act will not lead, as feared, to an opt-in model for use of financial data.
But that is about the only good news to be found in the ruling by U.S. District Judge Ellen Segal Huvelle, industry sources said.
In a sweeping decision on April 30, Huvelle ruled that basic information such as name and address cannot be shared by financial institutions without giving the customer a chance to opt out. And she added that the use of such data is not protected by the First Amendment.
The danger is that these restrictions may be applied to other kinds of mailing lists, observers said.
“They can be spread to catalog lists if there’s legislation,” said Oscar Marquis, an attorney working in the privacy practice of Huntoon & Williams, Atlanta. “This decision makes it easier to pass because you don’t have the First Amendment argument.”
In her 62-page decision, Huvelle upheld rules issued by the Federal Trade commission and five other government agencies for the purpose of implementing Gramm-Leach-Bliley. That bill said, among other things, that financial information could not be shared with third parties by financial institutions unless the consumer had been given a chance to opt out.
The FTC and the other agencies defined credit header information–name, address, social security number, and telephone number–as financial information, subject to the same rules as more sensitive personal data.
Trans Union filed suit last year, challenging the rules as “arbitrary and capricious.” It also argued that as a credit bureau it is not a financial institution, and therefore not subject to Gramm-Leach-Bliley.
The firm was joined in the action by the Individual references Services Group, Inc. (IRSG), a trade group made up of information companies. IRSG challenged the restrictions on credit header use.
Sources said it was likely that IRSG would appeal the ruling. It was not known at deadline whether Trans Union would appeal.
Huvelle upheld the FTC’s restrictions against basic credit header use because Gramm-Leach-Bliley prohibits sharing of any information volunteered by consumers when seeking financial products
