Committing Fraud to Protect Privacy?

By Kirtley, Jane | American Journalism Review, March 1999 | Go to article overview

Committing Fraud to Protect Privacy?


Kirtley, Jane, American Journalism Review


A judge rules a reporter erred in lying about reasons for seeking credit reports but finds the story was in the public interest.

A Business Week investigation into privacy problems in the credit reporting business has wound up on the wrong side of a court ruling, which found that the reporter and his publisher committed fraud in obtaining information. However, the federal judge refused to award punitive damages because he said the story served a vital public interest.

In the spring of 1989, Business Week reporter Jeffrey Rothfeder approached WDIA Corp., a superbureau providing computerized access to the credit files of the "Big Three" agencies: Equifax, TRW and TransUnion Corp. Rothfeder wanted to see if the superbureau would let him set up an account. He falsely told WDIA that he intended to use the data to screen prospective employees.

The Fair Credit Reporting Act limits who can obtain consumer credit information and for what reasons. Among those permitted access are credit card and insurance companies and prospective employers, who review the data to determine whether job applicants are financially stable.

Rothfeder signed a contract with WDIA, agreeing to abide by FCRA requirements to keep information he retrieved confidential, to make inquiries through the computerized system only for a "permissible purpose," and to indemnify WDIA if it suffered damages as a result of improper use of the data. Company officials later testified they had noted a few flaws in Rothfeder's application, but because of publisher McGraw-Hill's reputation for "truth and veracity," WDIA approved the contract anyway.

In July 1989, Business Week retrieved credit reports for several high-profile public figures, including Vice President Dan Quayle, to show how easy it was to do so. The magazine obtained consent from all the subjects before writing about them in a cover stow published that September 4.

A few days before Business Week's stow appeared, the Federal Trade Commission started its own investigation of WDIA--prompted by the findings of a trade association audit that found WDIA had failed to prevent a "dubious user" from gaining access to confidential information. The FTC concluded in May 1992 that the superbureau had been lax in policing access to its system.

Business Week's story didn't identify WDIA by name. But the superbureau claimed that because of the article, it was forced to dispatch representatives to Chicago to reassure Trans-Union that it had complied with the law--before TU cut off access to its files. …

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