THOMAS M. REGAN
DIRECT DIAL (215) 665-2052
September 29, 1998
National Telecommunications and
14th Street and Constitutional Avenue N.W.
Washington, D.C. 20230
c/o Jane Coffin
Office of International Affairs
Re: Department of Commerce
Docket No: 980422102-8102-01
Response by National Fraud Center, Inc.
to Request for Public Comment
Please be advised that our firm represents National Fraud Center, Inc. and is providing this response, on its behalf, to the Department of Commerce's Request for Public Comment on the "Elements of Effective Self-Regulation for Protection of Privacy."
Initially, National Fraud Center, Inc. is an investigative and technological company based in Horsham, PA, that focuses on detecting and preventing fraud in private industry. Its clients include businesses of all sizes in virtually every segment of commerce, including banking, insurance, casinos, cellular and wire communications, etc. The principals of National Fraud Center, Inc. have been involved in fighting fraud on behalf of private industry since the early 1980's. The company is comprised of former federal, state and local law enforcement officials.
National Fraud Center, Inc.'s concern is that the information privacy debate seems to be taking place in a vacuum, with little or no consideration given to the purposes for which information is used. Privacy issues must be balanced against society's needs for information. In the December, 1997 Federal Trade Commission's "Individual Reference Services - A Report to Congress", the FTC identified "private sector" uses of personal identifying information as: detection and investigation of potential fraud; enforcement of court orders; locating witnesses and parties for litigation; finding assets to satisfy judgments; locating missing or abducted persons; tracking down non-custodial parents who owe child support; etc. Under "public sector uses", the FTC noted the use of personal identifying information databases by the Financial Crimes Enforcement Network (FinCEN), the National White Collar Crime Center, the U.S. Secret Service and the Federal Trade Commission itself.
All of the above purposes, served by allowing freedom of access to this information, provide significant benefit to society. It is incumbent, therefore, that the parties to the privacy debate, recognize these purposes when considering the limitations to be placed on the flow of the information.
The impact of fraud or commerce is enormous. Estimates of fraud losses run as high as $500 billion annually, or more. Since the loss caused by fraud inevitably results in higher prices, premiums and interest rates, the effect on consumers is obvious. Further, as the FTC correctly points out, fraud also affects consumers directly, through telemarketing scams, Internet fraud, identity theft, etc. Indeed, it is generally understood in the fraud-fighting world, that organized groups who defraud private industries through insurance schemes, bank fraud and credit card scams, often bilk consumers through telemarketing fraud, investment scams and identity theft.
Undoubtedly, one of the most effective tools in fighting fraud is current, accurate and available information. The FTC recognizes this concept when it touts its fraud database, "Consumer Sentinel." Although the FTC's data base is comprised of consumer complaints of fraud, it is generally not available to private industry. Much of the currently computerized information that is available to private industry is accessed from public records or publicly available information. The more current, and hence often more valuable information, is that which is gained through private transactions. As the Internet increasingly becomes the means to conduct business transactions, the information obtained from these transactions becomes increasingly more valuable in fighting fraud. It is incumbent on everybody involved in the privacy debate to recognize this fact.
The most obvious privacy issues to be considered, when contemplative the need for information in fighting fraud, are concepts such as "consumer opt out" and "consumer access." Allowing a fraudulent consumer to opt out information concerning himself would prevent private industry, and even the FTC itself, from conducting meaningful fraud prevention and detection services.
National Fraud Center is willing to assist the Department of Commerce, and all reasonable people, in trying to strike the delicate balance that needs to force the impositions of appropriate privacy restrictions on the use of personal identifying information and society's need to have that information made available in order to fight fraud.
If we can be of any assistance in this regard, please feel free to contact me or Normal N. Willox, President, National Fraud Center at 215-657-0800, ext. 208.
Thank you for your kind consideration in this matter.
Very truly yours,
COZEN AND O'CONNOR
BY: THOMAS M. REGAN
cc: Norman N. Willox