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A second key change is the growing integration and consolidation among financial services providers. Interstate banking and branching have allowed banks to grow larger than ever before, and the removal of regulatory restraints has allowed financial services organizations to enter lines of business that were previously off limits. Banks, for example, may now affiliate with firms ranging from travel agencies to health insurance providers. This integration will allow firms and consumers to benefit from “economies of scale,” in which the provision of related financial services together can better meet consumers’ demands at a lower cost. But these economies stem, in part, from an ability to share consumer data across affiliated entities – and that sharing also raises legitimate privacy concerns.
A third change is the increasing use of electronic means of purchasing and payment. Americans’ increasing use of credit cards, debit cards – and more recently electronic bill payment – in lieu of cash now allows financial services companies to collect enormous amounts of detailed information about an individual’s transactions. Until recently, neither institutions nor individuals were able to create detailed lifestyle portraits using such information.
The creation of electronic case files and the electronic collection and dissemination of bankruptcy information are in their earliest stages. Data on the actual harm resulting from these developments are relatively scarce. However, these developments could create a risk for possible misuse or objectionable re-use. As the comment submitted on behalf of 20 State Attorneys General noted, “the ready availability of such information, particularly when it may be easily obtained and copied from electronic filings that can be accessed from the Internet, greatly increases the concerns about the uses to which the data might be put. . . . The ability to obtain large amounts of information at low cost makes the use of bankruptcy data for commercial purposes economically feasible in ways that were not possible when the data had to be hand- gathered in person from individual clerk’s offices.”
The consequence of each of these developments can be better targeting of financial products to individual consumers, which can lower prices and improve service. However, these trends also may increase the risks of illegal, discriminatory, or invasive uses of highly sensitive personal information. Included among the concerns raised by the State Attorneys General and privacy advocates are:
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