Using techniques that grew more sophisticated over the last decade, businesses comb through an array of sources, including bank and court records, to create detailed profiles of the financial lives of more than 100 million Americans.
They then sell that information as marketing leads to banks, credit card issuers and mortgage brokers, who fiercely compete to find untapped customers — even those who would normally have trouble qualifying for the credit they were being pitched.
These tailor-made offers land in mailboxes, or are sold over the phone by telemarketers, just ahead of the next big financial step in consumers’ lives, creating the appearance of almost irresistible serendipity.
These leads, which typically cost a few cents for each household profile, are often called “trigger lists” in the industry. One company, First American, sells a list of consumers to lenders called a “farming kit.”
This marketplace for personal data has been a crucial factor in powering the unrivaled lending machine in the United States. European countries, by contrast, have far stricter laws limiting the sale of personal information. Those countries also have far lower per-capita debt levels.
In other words, farming of financial records is simply a symptom of out of control lending practices. But a comprehensive privacy approach to privacy would have the benefit of reducing such practices. Unfortunately, privacy seems to be one of those issues that comes in a variety of contexts and that no one legislative response seems to exist for, thanks largely to a lack of political leadership. One exception to this rule has been Hillary Clinton, who first proposed legislation that would address this issues in a speech to the American Constitution Society in 2006 (a speech I had the pleasure of hearing.) Unfortunately the PROTECT Act that she proposed languished in Congress, and there are no prospects of revival. I can only speculate, but I imagine that between the powerful financial interests that lobby against such legislation and the scattered reports that American consumers receive through the media about violations of their privacy, the former is considerably more persuasive to members of Congress.