November 24, 2002
By Mike Krause
This month, the New York Attorney General’s office announced the settlement of a 30-month, 10 state investigation into the privacy practices of the online advertising company Double-Click. Besides paying the states nearly half a million dollars for investigative costs, and another nearly $2 million in legal fees to settle a separate class action suit, the company is required, among other things, to disclose its online tracking activities in the privacy policies of web sites that profile their users and submit to an independent review of its practices and policies.
All in all, the company paid a pretty steep price in time, money and reputation for engaging in predatory privacy shenanigans, that when they were disclosed, had citizens, privacy advocates and politicians howling for blood.
So, when are the various government agencies that routinely invade, intrude, demand and then trample on the privacy of Americans, going to be held to a similar standard?
In announcing the settlement, New York’s Attorney General stated, “It’s hard for consumers to trust e-commerce when they can’t see the practices behind the promises.”
A fair enough claim, yet shouldn’t the same standard apply to government privacy practices?
More so than banks and credit bureaus, or even online advertisers, government is simply the worst protector of privacy, or as Congressman Dick Armey (R-TX) puts it: “The most intrusive force in the lives of Americans.” Government is also, as Mr. Armey continues, “The biggest privacy offender.” For example, we routinely hand over every scrap of financial information about ourselves to the Internal Revenue Service. Not out of choice, but rather as a matter of law. A recent audit of the IRS by Treasury officials (kind of a fox guarding the other foxes sort of thing) found that the tax-collecting agency has lost or misplaced 2,332 desktop computers and servers containing taxpayer information over the last three years. Moreover, the report found “a material weakness in inventory controls” every year since 1983. (<http://www.wired.com/news/0,1294,49615,00.html>)
Similarly, according to a scathing General Accounting Office (GAO) report released in May 2001 stated, “We demonstrated that unauthorized individuals, both internal and external to IRS, could have viewed and modified electronically filed taxpayer data on IRS computers. For example, we were able to access a key electronic filing system using a common handheld computer.”
DoubleClick’s problems arose several years ago when it was disclosed that they were planning to linkup-without any meaningful consent- web surfing and online buying habits with individual identifying information, in other words build a database of who you are, what you buy and what sites you peruse and use. As a result, DoubleClick got deservedly slammed. Their stock price tanked, editorial scribblers condemned the practice and clients quickly distanced themselves from the company. DoubleClick themselves beat a hasty retreat. In other words, long before the recent settlement, DoubleClick was swiftly punished by both the marketplace and consumer sentiment.
And what of the IRS? Senator Charles Grassley (R-IA), the ranking Republican on the Senate Finance Committee threatened to hammer the IRS’ budget, “The IRS wouldn’t accept from a taxpayer the non-answer it has given regarding the 2,300 computersjust as a taxpayer would be held accountable for missing receipts, so must the IRS be held accountable”
Well, don’t hold your breath. It’s one thing for the government to punish a private business, but quite another to actually do something about itself. The fact is, as long as the lions’ share of tax dollars comes from the income tax and as long as there are over a trillion and a half dollars to be collected and spent by politicians (such as Mr. Grassley), there will be an IRS, it will be predatory in nature and the congress will keep it so.
Businesses like DoubleClick want your data and invade your privacy because their clients desperately want to sell us their goods and services. As consumers in a land of amazing choices, we can either utilize that to our benefit or tell them to get stuffed. And when they cross the line, both the market and the law may well punish them.
Government on the other hand collects your data and invades your privacy without benefit of choice. If you don’t want to comply, men with guns will force you. Since government is a growth industry, and since the first and foremost rule of any bureaucracy is to protect and expand itself, the priority of a bureaucrat is the collection of data on citizens, rather than to protect the privacy of the citizens to whom the data relate. The net result is that in terms of making choices that affect their privacy, Americans are more empowered as consumers in the marketplace than as citizens of a country founded on liberty.
Quoted in “Dependent on D.C.”, the must read book on how the government grows, Law Professor Paul Swartz makes the case “Americans no longer know how their personal information will be applied, who will gain access to it and what decisions will be made with itIndividuals whose personal data are shared, processed and stored by a mysterious bureaucracy will be more likely to act as the government wishes them to act.”
### Copyright 2002, Independence Institute
INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank. It is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and Constitutional rights.
JON CALDARA is President of the Institute.
MIKE KRAUSE is a Research Associate with the Independence Institute .
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