842 TEXAS LAW REVIEW [Vol. 49:837 public records and clip newspapers, but also interview friends, neighbors, former neighbors, acquaintances, employers, former employers, business associates-anyone who may know something, or have an opinion, about the subject.12 For life insurance companies Retail Credit inspectors inquire about the subject's drinking habits and domestic difficulties, seek out criticism of his character and morals, and report whether his living conditions are crowded or dirty.18 For automobile insurers Retail Credit investigates the subject's neighborhood business reputation, morals, and "antagonistic-antisocial conduct.”14 For employers, Retail Credit's inspectors also report whether the subject has any "known connection with a 'peace movement' or any other organization of a subversive type" and whether he is reputed to be "neurotic or psychotic."15 In response to Congressional concern about the reliability of agency reports, spokesmen for Retail Credit proffered two assurances. First, its inspectors are carefully trained persons of “unusual inspection ability." This assurance lost some of its force when inquiry revealed that these highly qualified, well-trained inspectors commanded a starting salary of $475 to $500 per month, that they prepared anywhere from 2 to 16 reports per day, that half had no more than a high school education, and that another 30% were college dropouts.17 Second, Retail Credit reported that adverse information not coming from public records either is confirmed from a second source or is reported as unconfirmed.18 Whatever comfort otherwise might be drawn from this assurance is somewhat qualified by evidence to the contrary. 19 12 House Credit Bureau Hearings II, supra note 1, at 21; Senate Credit Bureau Hearings 1, supra note 1, at 108. 13 Senate Credit Bureau Hearings II, supra note 1, at 196-203. 14 The auto insurers are convinced that there is some correlation between all of these factors (except antagonistic-antisocial conduct) and accident frequency, and that both immorality and antagonistic-antisocial conduct would impair the subject's effectiveness as a witness in the event of litigation. Senate Credit Bureau Hearings II, supra note 1, at 207212, 305-316; House Credit Bureau Hearings III, supra note 1, at 514-516. The latter consideration, of course, should dictate an inquiry into hare-lips, unsightly scars and birthmarks, and the use of deodorants. 15 Senate Credit Bureau Hearings I, supra note 1, at 109-110; Senate Credit Bureau Hearings II, supra note 1, at 176-177. 10 House Credit Bureau Hearings II, supra note 1, at 19-20; see also Senate Credit Bureau Hearings II, supra note 1, at 175-176. 17 Senate Credit Bureau Hearings II, supra note 1, at 176, 192; House Credit Bureau Hearings III, supra note 1, at 473, 503. 18 House Credit Bureau Hearings II, supra note 1, at 21; House Credit Bureau Hearings 111, supra note 1 at 474. 19 One well-trained, highly-qualified inspector, who heard from two sources that a subject had served in prison, reported the prison record as an unqualified fact although the inspector found no confirmation in court or prison records. Wagner v. Retail Credit Co., 338 F.2d 598 (7th Cir. 1964). 1971] PRIVACY AND THE COMPUTER 843 Access to the files of these commercial compilers is reportedly restricted to "reputable" business organizations that possess a "legitimate" business interest.20 However, Congressional and private inquiry has undercut this assertion and ably demonstrated the easy availability of the files, not only to private parties21 but also to government agencies.22 20 House Credit Bureau Hearings I, supra note 1, at 63-64, 90; House Credit Bureau Hearings II, supra note 1, at 19; Senate Credit Bureau Hearings 1, supra note 1, at 62. 21 Credit bureau spokesmen have admitted the possibility of an employee of a credit bureau subscriber obtaining a report for purposes unrelated to his employer's business. House Credit Bureau Hearings 1, supra note 1, at 111; Senate Credit Bureau Hearings II, supra note 1, at 228. Retail Credit's spokesmen admitted that it sometimes gave out reports as a "favor" when, for example, an executive of a subscriber asked for a report on a man being considered as a new minister for his church. House Credit Bureau Hearings II, supra note 1, at 19, 38; Senate Credit Bureau Hearings I, supra note 1, at 101. Moreover, the compilers had been under interrogation by Congressional committees for over a year when CBS News conducted an experiment. Using a fictitious company name, it sent out twenty letters to credit bureaus requesting reports on named individuals. It received ten reports and offers of two more if it would sign a subscriber's contract. On a second effort, the fictitious company sent out twenty-eight letters. This time it did not state that it was considering granting credit-it simply asked for a full credit report, without stating why it wanted it. And this time it asked only about individuals who had been complaining to Congressional committees about the credit bureaus. This time it received only seven of the requested reports-plus one more when it accepted the offer of one credit bureau to sign a subscriber's contract. Senate Credit Bureau Hearings II, supra note 1, at 378-381; House Credit Bureau Hearings III, supra note 1, at 59-61. 22 This includes not only such governmental credit-granting agencies as the Federal Housing Administration and the Veterans Administration, which buy such reports just as do private subscribers. It includes also such law enforcement agencies as the FBI and the Internal Revenue Service. Members of ACB and the Retail Credit Company make their files available to the law-enforcers "as a public service." House Credit Bureau Hearings I, supra note 1, at 134-138; House Credit Bureau Hearings II, supra note 1, at 23, 39; Senate Credit Bureau Hearings II, supra note 1, at 149, 161; House Credit Bureau Hearings III, supra note 1, at 603, 605. The Credit Data Corporation took a different view, and refused to turn over its reports to the IRS. House Credit Bureau Hearings 1, supra note 1, at 90-91; Senate Credit Bureau Hearings I, supra note 1, at 62-63. It was then met with a statutory summons calling for all credit information relative to named taxpayers. The IRS is authorized, for the purposes of "determining the liability of any person for any internal revenue tax" to summon the taxpayer "or any other person the [IRS] may deem proper," to produce "such books, papers, records, or other data.. ... as may be relevant or material to such inquiry...." INT. REV. CODE OF 1954, § 7602. When Credit Data refused to obey the summons, IRS got a judicial order of enforcement pursuant to the statute, requiring it to comply on payment by the IRS of 75 cents per report, the fee which Credit Data charged its regular subscribers. On appeal, Credit Data won a great victory. The decision below was affirmed in all respects save that the case was remanded to determine the "fair value" which IRS must pay for the reports the rate paid by subscribers was not to be taken as conclusive because subscribers supply "valuable credit information" to Credit Data. United States v. Davey, 426 F.2d 842, 844 (2d Cir. 1970). The result was foreshadowed by previous decisions of the Supreme Court. In a long line of cases that court has sustained judicial enforcement of an administrative agency's statutory subpoenas against fourth amendment attack where the subpoena sought testimony about the affairs or the records of the person subpoenaed, if the subpoena was sufficiently specific to satisfy the fourth amendment, if the administrative inquiry was authorized by Congress, and if the evidence sought was relevant to the inquiry-the court's application of the last two requirements when its enforcement order was sought being held to satisfy the fourth amendment's requirement of probable cause. United States v. Morton Salt Co., 338 U.S. 632 (1950); Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186 (1946). Earlier decisions are discussed in 1 K. DAVIS, ADMINISTRATIVE LAW TREATISE 8 3.12 (1958) and Comment, Agency Access to Credit Bureau Files: Federal Invasion of Privacy? 12 B.C. IND. & COM. L. REV. 110, 113-118 (1970). More than forty-five years ago the Supreme Court also 844 TEXAS LAW REVIEW [Vol. 49:837 Notwithstanding the otherwise easy accessibility of files, commercial compilers steadfastly refuse to permit the subject to see the file. Three reasons are given for this position-one laughable and two believable. First, if the subject ever got his hands on the file, even in the compiler's office, he might destroy it. Second, to let the subject see the file would be to reveal the compiler's sources and would tend to "dry up" those sources. 23 Third, if the file consists of a computer printout, the subject wouldn't be able to understand it.24 As a consequence of past practices, many subjects do not know that a denial of credit, employment or insurance may be caused by an adverse report from a commercial compiler. Even the individual who is aware of that fact, and who believes that the adverse report is erroneous, seldom can obtain legal relief. If he sues on a theory of defamation or interference with economic expectations, he encounters the defense of qualified privilege: the subscriber's "legitimate" interest in the subject's affairs protects the compiler who avoids gross negligence or malice.25 If the subject resorts to an action for invasion of privacy, he confronts the traditional assertion26 that the right to privacy proscribes only publicizing private matters. Even if he persuades a court summarily affirmed a decision that no fourth amendment question was even presented when the IRS, investigating the tax liability of a bank depositor, summoned the bank to produce its records. First National Bank of Mobile v. United States, 267 U.S. 576 (1925). Since the Credit Data case was decided, the Supreme Court has unanimously extended that ruling to cover an IRS summons to the taxpayer's employer and, by dictum, to any other third person with no established legal privilege, such as an attorney, where the taxpayer has "no proprietary interest of any kind" in the records subpoenaed. See Donaldson v. United States, 91 S. Ct. 534, 538 (1971) (taxpayer sought to intervene in the enforcement proceeding against the employer, but was held not to have a sufficient interest to entitle him to do so.); cf. Reisman v. Caplin, 375 U.S. 440 (1964). The fourth amendment, therefore, offers no apparent protection to the subject whose file in a credit bureau is subjected to an administrative subpoena or summons of a governmental agency showing a "legitimate" interest in its contents. 23 Doubtless this reason should be expanded to say that the nondisclosure of the files protects not only the compiler's sources, but also the compiler himself from trouble (including litigation) with the subject. 24 See House Credit Bureau Hearings I, supra note 1, at 97; House Credit Bureau Hearings II, supra note 1, at 13-16; Senate Credit Bureau Hearings I, supra note 1, at 21-22, 114-115; Senate Credit Bureau Hearings II, supra note 1, at 153, 178, 179, 232-233, 270; House Credit Bureau Hearings III, supra note 1, at 160, 168, 460-461, 466-467, 490. 25 See Roemer v. Retail Credit Co., 3 Cal. App. 3d 368, 83 Cal. Reptr. 540 (1970); Karst, "The Files": Legal Controls Over the Accuracy and Accessibility of Stored Personal Data, 31 LAW & CONTEMP. PROB. 342, 345-347 (1966); Comment, Credit Investigations and The Right to Privacy: Quest for a Remedy, 57 GEO. L.J. 509, 513-523 (1959). The first amendment protection accorded defamatory but nonmalicious news stories about public figures by New York Times Co. v. Sullivan, 376 U.S. 254 (1964), has been held not to extend to private subscription credit reports. Grove v. Dun & Bradstreet, Inc., 438 F.2d 433 (3d Cir. 1971). 26 For the famous law review article that launched this concept into American jurisprudence see Warren & Brandeis, The Right to Privacy, 4 HARV. L. Rev. 193 (1890). See also Kalven, Privacy in Tort Law-Were Warren and Brandeis Wrong?, 31 LAW & CONTEMP. PROB. 326 (1966). 1971] PRIVACY AND THE COMPUTER 845 that the concept has developed to protect against all offensive intrusions into private affairs," the court may respond that this right is qualified by the "legitimate" interest of the user of the files.28 Notwithstanding this lack of judicial empathy, Congressional investigators were sympathetic to individuals whose dossiers contained erroneous adverse information. The result was enactment29 of the Fair Credit Reporting Act of 1970.30 The Act applies only to the accuracy and accessibility of the reports. No attempt is made to limit the nature of their contents. The report which the Act reaches, whether issued by 27 See 1 F. HARPER & F. JAMES, THE LAW OF TOrts § 9.6 (1956); W. PROSSER, THE LAW OF TORTS & 112 (3d ed. 1964). 28 Shorter v. Retail Credit Co., 251 F. Supp. 329 (D.S.C. 1966); Comment, Credit Investigations and The Right to Privacy: Quest for a Remedy, 57 GEO. L.J. 509, 523-527 (1969). 29 The compilers detected this Congressional sentiment and decided that if they could not fight the move for reform, they had better join the effort in hope of obtaining a palatable result. See Denney, Federal Fair Credit Reporting Act, 25 PERS. FIN. LAW Q. REP. 4 (1970). See also House Credit Bureau Hearings IIÎ, supra note 1, at 108. 30 84 Stat. 1114, tit. VI (1970 U.S. CODE CONG. & AD. NEWS 5142). This Act, applicable both to credit bureaus and to investigatory reporting agencies, attempts to guard against inaccurate or stale information in their reports and to restrict the use of the reports by provisions that: years. (1) Require the compilers to maintain "reasonable procedures" to eliminate from their reports bankruptcies after 14 years and other adverse information after 7 (2) Require the employers to keep their public record entries in employment reports up to date to the extent that the public records are up to date, and require the investigatory agencies to confirm their adverse interview information at least 3 months before reporting it. (3) Require users of investigatory reports to notify the subject that such a report is being made; require users of credit or investigatory reports to advise the subject whenever credit, insurance or employment is denied, "wholly or partly because of" the report and to identify the reporting agency; and require compilers reporting adverse public record information for employment purposes to advise the subject of that fact. (4) Require any compiler, on request of a subject, to disclose to him the "nature and substance" of the information on him in its files (but not the file itself); require credit bureau compilers to disclose also the sources of their data; and require all compilers to reinvestigate any item which the subject disputes and, if it does not correct the item, to include in future reports his statement of not more than 100 words describing the dispute unless the compiler has "reasonable grounds to believe" the statement is "frivolous or irrelevant." (5) Require the compilers to maintain "reasonable procedures" to confine the furnishing of their reports, without written consent of the subject, to those who have "a legitimate business need" for them. (6) Forbid compilers, without written consent of the subject, to furnish more than name, address and place of employment of a subject to a governmental agency except in connection with licensing, governmental grants or other business transactions where the government has a "legitimate business need"-and except in response to court order. (7) Authorize damage actions for subjects when there is negligence in failing to comply with the Act, punitive damages for wilful noncompliance with the Act, and administrative enforcement by the FTC. (8) Immunize compilers and their sources of information from any other liability save for false information "furnished with malice or wilful intent to injure" the subject. (9) Impose criminal penalties for officers or employees of compilers who "knowingly and wilfully" make unauthorized disclosures of information and for any person who "knowingly and wilfully" obtains such information "under false pretenses." 846 TEXAS LAW REVIEW [Vol. 49:837 a credit bureau or an investigatory agency, is defined to mean any communication bearing not only on credit, but also on "character, general reputation, personal characteristics, or mode of living." B. The Punitive Compilers There has been no official investigation of those private compilers who assemble dossiers for the purpose of punishing those with whom they disagree. Nonetheless, it is safe to generalize that the punitive compilers are sponsored and staffed by right-wing extremists. This is not to say that right-wing extremists are more (or less, depending upon your point of view) lacking in virtue than left-wing extremists. The explanation derives from the fact that official investigations of extremist groups have almost invariably focused on those on the left end of the political spectrum (although they tend to hit anyone to the left of the right-wing extremists). Hence, since private punitive compilers rely almost entirely upon official investigations as their sources of information, there is not enough available information to compile dossiers on right-wing extremists. Moreover, in the absence of official investigations to whet the public interest, there would be no substantial market for dossiers on right-wing extremists even if they could be compiled. Some punitive compilers, like American Business Consultants, operate for profit. Organized by three former FBI agents, this group operated during the heyday of Senator Joseph McCarthy. It published the newsletter Counterattack, which provided dossiers on those not sufficiently anti-Communist, with special emphasis on the news media, writers and publishers, and Red Channels, which focussed on those similarly lacking in the entertainment business.31 Other punitive compilers, like the Americanism Committees of some American Legion posts, the John Birch Society, and Aware, Inc. operate out of their own versions of patriotism. The punitive compilers' principal aim is to deprive the subject of his employment. Since their dossiers are neither solicited nor often wanted by employers, the "legitimate" needs of the employer cannot be justifiably invoked as a defense to a defamation or an invasion of privacy action. Offsetting their apparent legal vulnerability is the fact that most, if not all, of the punitive compilers are either completely 31 See M. MILLER, The JUDGES AND THE JUDGED (1952). |