Former U.S Congressman Bob Barr is apparently now advising the A.C.L.U. on data privacy. He’s written an interesting piece on Findlaw concerning the recent issues with data aggregators. Quote:
The risk we face if we target all data providers with knee-jerk, oppressive legislation or regulation, is driving them beyond the reach of any kind of control. In other words, making the United States singularly inhospitable territory for data services will encourage new entrepreneurs to simply set up shop in places where they are subject to no restrictions. And, if you think having your personal information on file in a data warehouse in Atlanta is bad, imagine how much worse it would be to have it in India, Bangladesh, China, or anywhere else the prevalence of cheap labor and minimal government control create a hospitable environment. The current lack of meaningful international protocols or treaties on data aggregation clearly and understandably maximizes this risk.
It’s a thoughtful comment, but I wonder how relevant the concern is. I have my doubts for example, that the consumers and politicians who have raised the furor over recent events would distinguish between US data aggregators with sloppy business practices, and US companies that outsource data aggregation to foreign data aggregators with sloppy business practices. But perhaps the concern is valid – the ChoicePoints of the world tend to concentrate our concern about all of the businesses upstream of them that are their data sources.
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The real question is why has this economic activity come into existence. Is there some value added to the economy? The simple answer is yes. There are billions of dollars of economic activity engaged in data aggregation. The vast majority is focused on legitimate needs in the economy.
The legitimate purposes that data aggregators satisfy is to perform character checks on people. Lets face it — Character is still the single best predictor as to whether you are going to have a successful and honorable business relationship with a person. In a highly mobile and fairly anoynomous society, the best way we have to investigate a person’s business character is to examine how they conduct themselves in public. Does the person move frequently, do they have many court cases against them or by them, how often have they or companies they owned filed bankruptcy, etc. Data aggregation and examination is the most cost effective way to conduct character checks on persons. Regulation to eliminate this industry or drive it offshore is very short sighted.