Privacy: Government Use of Data from Information Resellers Could Include Better Protections
Released: 2008-03-11T00:00:00

Letter

Background

Before advanced computerized techniques, obtaining people’s personal information usually required visiting courthouses or other government facilities to inspect paper-based public records, and information contained in product registrations and other business records was not generally available at all. Automation of the collection and aggregation of multiple-source data, combined with the ease and speed of its retrieval, have dramatically reduced the time and effort needed to obtain such information. Information resellers provide services based on these technological advances.

We use the term “information resellers” to refer to businesses that vary in many ways but have in common collecting and aggregating personal information from multiple sources and making it available to their customers. These businesses do not all focus exclusively on aggregating and reselling personal information. For example, Dun & Bradstreet primarily provides information on commercial enterprises for the purpose of contributing to decision making regarding those enterprises. In doing so, it may supply personal information about individuals associated with those commercial enterprises. To a certain extent, the activities of information resellers may also overlap with the functions of consumer reporting agencies, also known as credit bureaus—entities that collect and sell information about individuals’ creditworthiness, among other things. To the extent that information resellers perform the functions of consumer reporting agencies, they are subject to legislation specifically addressing that industry, particularly the Fair Credit Reporting Act.

Information resellers have now amassed extensive amounts of personal information about large numbers of Americans. They supply it to customers in both government and the private sector, typically via a centralized online resource. Generally, three types of information are collected: ● Public records such as birth and death records, property records, motor vehicle and voter registrations, criminal records, and civil case files. ● Publicly available information not found in public records but nevertheless publicly available through other sources, such as telephone directories, business directories, classified ads or magazines, Internet sites, and other sources accessible by the general public. ● Nonpublic information derived from proprietary or nonpublic sources, such as credit header data, product warranty registrations, and other application information provided to private businesses directly by consumers.

Figure 1 illustrates how these types of information are collected and aggregated into reports that are ultimately accessed by customers, including government agencies.

Federal Laws and Guidance Govern Use of Personal Information in Federal Agencies

No single federal law governs all use or disclosure of personal information. The major requirements for the protection of personal privacy by federal agencies come from the Privacy Act of 1974 and the privacy provisions of the E-Government Act of 2002.

Federal use of personal information is governed primarily by the Privacy Act of 1974, which places limitations on agencies’ collection, disclosure, and use of personal information maintained in systems of records. The act describes a “record” as any item, collection, or grouping of information about an individual that is maintained by an agency and contains his or her name or another personal identifier. It also defines “system of records” as a group of records under the control of any agency from which information is retrieved by the name of the individual or by an individual identifier. The Privacy Act requires that when agencies establish or make changes to a system of records, they must notify the public by placing a notice in the Federal Register identifying, among other things, the type of data collected, the types of individuals about whom the information is collected, the routine uses of the data, and procedures that individuals can use to review and correct their personal information. Additional provisions of the Privacy Act are discussed in the 2006 report.

The E-Government Act of 2002 requires that agencies conduct PIAs. A PIA is an analysis of how personal information is collected, stored, shared, and managed in a federal system. Under the E- Government Act and related OMB guidance, agencies must conduct PIAs (1) before developing or procuring information technology that collects, maintains, or disseminates information that is in a personally identifiable form; (2) before initiating any new data collections involving personal information that will be collected, maintained, or disseminated using information technology if the same questions are asked of 10 or more people; or (3) when a system change creates new privacy risks, for example, by changing the way in which personal information is being used.

OMB is tasked with providing guidance to agencies on how to implement the provisions of the Privacy Act and the E-Government Act and has done so, beginning with guidance on the Privacy Act, issued in 1975. OMB’s guidance on implementing the privacy provisions of the E-Government Act of 2002 identifies circumstances under which agencies must conduct PIAs and explains how to conduct them.

The PIA mandate in the E-Government Act of 2002 provided a mechanism by which agencies can consider privacy in the earliest stages of system development. PIAs can be an important tool to help agencies to address openness and purpose specification principles early in the process of developing new information systems. To the extent that PIAs are made publicly available, they provide explanations to the public about such things as the information that will be collected, why it is being collected, how it is to be used, and how the system and data will be maintained and protected.

The Fair Information Practices Are Widely Agreed to Be Key Principles for Privacy Protection

The Privacy Act of 1974 is largely based on a set of internationally recognized principles for protecting the privacy and security of personal information known as the Fair Information Practices. A U.S. government advisory committee first proposed the practices in 1973 to address what it termed a poor level of protection afforded to privacy under contemporary law. The Organization for Economic Cooperation and Development (OECD) developed a revised version of the Fair Information Practices in 1980. This version of the principles was reaffirmed by OECD ministers in a 1998 declaration and further endorsed in a 2006 OECD report. The Fair Information Practices, have, with some variation, formed the basis of privacy laws and related policies in many countries, including the United States, Germany, Sweden, Australia, and New Zealand, as well as the European Union.

In addition, in its 2007 report, Engaging Privacy and Information Technology in a Digital Age, the National Research Council found that the principles of fair information practice for the protection of personal information are as relevant today as they were in 1973. Accordingly, the committee recommended that the Fair Information Practices should be extended as far as reasonably feasible to apply to private sector organizations that collect and use personal information. The eight principles of the OECD Fair Information Practices are shown in table 1.

The Fair Information Practices are not precise legal requirements. Rather, they provide a framework of principles for balancing the need for privacy with other public policy interests, such as national security, law enforcement, and administrative efficiency. Ways to strike that balance vary among countries and according to the type of information under consideration.

Agencies Used Governmentwide Contracts to Obtain Personal Information from Information Resellers for a Variety of Purposes

DOJ, DHS, State, and SSA reported approximately $30 million through contracts with information resellers in fiscal year 2005. The agencies reported using personal information obtained from resellers for a variety of purposes including law enforcement, counterterrorism, fraud detection/prevention, and debt collection. In all, approximately 91 percent of agency uses of reseller data were in the categories of law enforcement (69 percent) or counterterrorism (22 percent). Figure 2 details contract values categorized by their reported use.

DOJ, which accounted for about 63 percent of the funding, mostly used the data for law enforcement and counterterrorism. DHS also used reseller information primarily for law enforcement and counterterrorism. State and SSA reported acquiring personal information from information resellers for fraud prevention and detection, identity verification, and benefits eligibility determination.

DOJ and DHS Used Information Resellers Primarily for Law Enforcement and Counterterrorism

In fiscal year 2005, DOJ and its components reported approximately $19 million through contracts with a wide variety of information resellers, primarily for purposes related to law enforcement (75 percent) and counterterrorism (18 percent). The Federal Bureau of Investigation (FBI), which is DOJ’s largest user of information resellers, used reseller information to, among other things, analyze intelligence and detect terrorist activities in support of ongoing investigations by law enforcement agencies and the intelligence community. In this capacity, resellers provided the FBI’s Foreign Terrorist Tracking Task Force with names, addresses, telephone numbers, and other biographical and demographical information as well as legal briefs, vehicle and boat registrations, and business ownership records.

The Drug Enforcement Administration (DEA), the second largest DOJ user of information resellers in fiscal year 2005, obtained reseller data primarily to detect fraud in prescription drug transactions. Agents used reseller data to detect irregular prescription patterns for specific drugs and trace this information to the pharmacy and prescribing doctor.

DHS and its components reported that they used information reseller data in fiscal year 2005 primarily for law enforcement purposes, such as developing leads on subjects in criminal investigations and detecting fraud in immigration benefit applications (part of enforcing immigration laws). DHS’s largest investigative component, the U.S. Immigration and Customs Enforcement, is also its largest user of personal information from resellers. It collected data such as address and vehicle information for criminal investigations and background security checks. Another DHS component, U.S. Customs and Border Protection, conducts queries on people, businesses, property. The Federal Emergency Management Agency, an additional component, used an information reseller to detect fraud in disaster assistance applications.

DHS also reported using information resellers in its counterterrorism efforts. For example, the Transportation Security Administration (TSA), a DHS component, used data obtained from information resellers as part of a test associated with the development of its domestic passenger prescreening program, called Secure Flight. TSA planned for Secure Flight to compare domestic flight reservation information submitted to TSA by aircraft operators with federal watch lists of individuals known or suspected of activities related to terrorism.

SSA and State Used Information Resellers Primarily for Fraud Prevention and Detection

In an effort to ensure the accuracy of Social Security benefit payments, the SSA and its components reported approximately $1.3 million in contracts with information resellers in fiscal year 2005 for purposes relating to fraud prevention (such as skiptracing), confirming suspected fraud related to workers’ compensation payments, obtaining information on criminal suspects for follow-up investigations, and collecting debts. For example, the Office of the Inspector General (OIG), the largest user of information reseller data at SSA, used several information resellers to assist investigative agents in detecting benefits abuse by Social Security claimants and to assist agents in locating claimants. Regional office agents may also use reseller data in investigating persons suspected of claiming disability fraudulently.

State and its components reported approximately $569,000 in contracts with information resellers for fiscal year 2005, mainly to support investigations of passport-related activities. For example, several components accessed personal information to validate familial relationships, birth and identity data, and other information submitted on immigrant and nonimmigrant visa petitions. State also used reseller data to investigate passport and visa fraud cases.

Agencies Lacked Policies on Use of Reseller Data, and Practices Do Not Consistently Reflect the Fair Information Practices

Agencies generally lacked policies that specifically addressed their use of personal information from commercial sources (although DHS Privacy Office officials reported in 2006 that they were drafting such a policy), and agency practices for handling personal information acquired from information resellers did not always fully reflect the Fair Information Practices. Specifically, agency practices generally reflected four of the eight Fair Information Practices.

As table 2 shows, the collection limitation, data quality, use limitation, and security safeguards principles were generally reflected in agency practices. For example, several agency components (specifically, law enforcement agencies such as the FBI and the U.S. Secret Service) reported that in practice, they generally corroborate information obtained from resellers when it is used as part of an investigation. This practice is consistent with the principle of data quality.

Agency policies and practices with regard to the other four principles were uneven. Specifically, agencies did not always have policies or practices in place to address the purpose specification, openness, and individual participation principles with respect to reseller data. The inconsistencies in applying these principles as well as the lack of specific agency policies can be attributed in part to ambiguities in OMB guidance regarding the applicability of the Privacy Act to information obtained from resellers. Further, privacy impact assessments, a valuable tool that could address important aspects of the Fair Information Practices, were often not conducted. Finally, components within each of the four agencies did not consistently hold staff accountable by monitoring usage of personal information from information resellers and ensuring that it was appropriate; thus, their application of the fourth principle, accountability, was uneven.

Agency procedures generally reflected the collection limitation, data quality, use limitation, and security safeguards principles. Regarding collection limitation, for most law-enforcement and counterterrorism purposes (which accounted for 90 percent of usage in fiscal year 2005), agencies generally limited their personal data collection in that they reported obtaining information only on specific individuals under investigation or associates of those individuals. Regarding data quality, agencies reported taking steps to mitigate the risk of inaccurate information reseller data by corroborating information obtained from resellers. Agency officials described the practice of corroborating information as a standard element of conducting investigations. Likewise, for non-law- enforcement use, such as debt collection and fraud detection and prevention, agency components reported that they mitigated potential problems with the accuracy of data provided by resellers by obtaining additional information from other sources when necessary. As for use limitation, agency officials said their use of reseller information was limited to distinct purposes that were generally related to law enforcement or counterterrorism. Finally, while we did not assess the effectiveness of information security at any of these agencies, we found that all four had measures in place intended to safeguard the security of personal information obtained from resellers.

Limitations in the Applicability of the Privacy Act and Ambiguities in OMB Guidance Contributed to an Uneven Adherence to the Purpose Specification, Openness, and Individual Participation Principles

The purpose specification, openness, and individual participation principles stipulate that individuals should be made aware of the purpose and intended uses of the personal information being collected about them, and, if necessary, have the ability to access and correct their information. These principles are reflected in the Privacy Act requirement for agencies to publish in the Federal Register, “upon establishment or revision, a notice of the existence and character of a system of records.” This notice is to include, among other things, the categories of records in the system as well as the categories of sources of records.

In a number of cases, agencies using reseller information did not adhere to the purpose specification or openness principles in that they did not notify the public that they were using such information and did not specify the purpose for their data collections. Agency officials said that they generally did not prepare system-of-records notices that would address these principles because they were not required to do so by the Privacy Act. The act’s vehicle for public notification—the system-of-records notice—is required of an agency only when the agency collects, maintains, and retrieves personal data in the way defined by the act or when a contractor does the same thing explicitly on behalf of the government. Agencies generally did not issue system-of-records notices specifically for their use of information resellers largely because information reseller databases were not considered “systems of records operated by or on behalf of a government agency” and thus were not considered subject to the provisions of the Privacy Act. OMB guidance on implementing the Privacy Act does not specifically refer to the use of reseller data or how it should be treated. According to OMB and other agency officials, information resellers operate their databases for multiple customers, and federal agency use of these databases does not amount to the operation of a system of records on behalf of the government. Further, agency officials stated that merely querying information reseller databases did not amount to agency “maintenance” of the personal information being queried and thus also did not trigger the provisions of the Privacy Act. In many cases, agency officials considered their use of resellers to be of this type—essentially “ad hoc” querying or “pinging” of reseller databases for personal information about specific individuals, which they believed they were not doing in connection with a formal system of records.

In other cases, however, agencies maintained information reseller data in systems for which system-of-records notices had been previously published. For example, law enforcement agency officials stated that, to the extent they retain the results of reseller data queries, this collection and use is covered by the system-of- records notices for their case file systems. However, in preparing such notices, agencies generally did not specify that they were obtaining information from resellers. Among system-of-records notices that were identified by agency officials as applying to the use of reseller data, only one—TSA’s system-of-records notice for the test phase of its Secure Flight program—specifically identified the use of information reseller data.

In several of these cases, agency sources for personal information were described only in vague terms, such as “private organizations,” “other public sources,” or “public source material,” when information was being obtained from information resellers.

The inconsistency with which agencies specify resellers as a source of information in system-of-records notices is due in part to ambiguity in OMB guidance, which states that “for systems of records which contain information obtained from sources other than the individual to whom the records pertain, the notice should list the types of sources used.” Although the guidance is unclear as to what would constitute adequate disclosure of “types of sources,” OMB and DHS Privacy Office officials agreed that to the extent that reseller data is subject to the Privacy Act, agencies should specifically identify information resellers as a source and that merely citing public records information does not sufficiently describe the source.

Aside from certain law enforcement exemptions to the Privacy Act, adherence to the purpose specification and openness principles is critical to preserving a measure of individual control over the use of personal information. Without clear guidance from OMB or specific policies in place, agencies have not consistently reflected these principles in their collection and use of reseller information. As a result, without being notified of the existence of an agency’s information collection activities, individuals have no ability to know that their personal information could be obtained from commercial sources and potentially used as a basis, or partial basis, for taking action that could have consequences for their welfare.

Privacy Impact Assessments Could Address Openness and Purpose Specification Principles but Often Were Not Conducted

PIAs can be an important tool to help agencies to address openness and purpose specification principles early in the process of developing new information systems. To the extent that PIAs are made publicly available, they provide explanations to the public about things such as the information that will be collected, why it is being collected, how it is to be used, and how the system and data will be maintained and protected.

However, few agency components reported developing PIAs for their systems or programs that make use of information reseller data. As with system-of-records notices, agencies often did not conduct PIAs because officials did not believe they were required. Current OMB guidance on conducting PIAs is not always clear about when they should be conducted. According to guidance from OMB, a PIA is required by the E-Government Act when agencies “systematically incorporate into existing information systems databases of information in identifiable form purchased or obtained from commercial or public sources.” However, the same guidance also instructs agencies that “merely querying a database on an ad hoc basis does not trigger the PIA requirement.” Reported uses of reseller data were generally not described as a “systematic” incorporation of data into existing information systems; rather, most involved querying a database and, in some cases, retaining the results of these queries. OMB officials stated that agencies would need to make their own judgments on whether retaining the results of searches of information reseller databases constituted a “systematic incorporation” of information.

Until PIAs are conducted more thoroughly and consistently, the public is likely to remain incompletely informed about agency purposes and uses for obtaining reseller information.

Agencies Often Did Not Have Practices in Place to Ensure Accountability for Proper Handling of Information Reseller Data

According to the accountability principle, individuals controlling the collection or use of personal information should be accountable for ensuring the implementation of the Fair Information Practices. This means that agencies should take steps to ensure that they use personal information from information resellers appropriately.

Agencies described using activities to oversee their use of reseller information that were largely based on trust in the individual user to use the information appropriately, rather than on management oversight of usage details. For example, in describing controls placed on the use of commercial data, officials from component agencies identified measures such as instructing users that reseller data are for official use only and requiring users to sign statements attesting 1) to their need to access information reseller databases and 2) that their use will be limited to official business. Additionally, agency officials reported that their users are required to select from a list of vendor-defined “permissible purposes” (for example, law enforcement, transactions authorized by the consumer) before conducting a search on reseller databases.

While these practices appear consistent with the accountability principle, they are focused on individual user responsibility instead of monitoring and oversight. Agencies did not have practices in place to obtain reports from resellers that would allow them to monitor usage of reseller databases at a detailed level. Although agencies generally receive usage reports from the information resellers, these reports are designed primarily for monitoring costs. Further, these reports generally contained only high-level statistics on the number of searches and databases accessed, not the contents of what was actually searched, thus limiting their utility in monitoring usage.

To the extent that federal agencies do not implement methods such as user monitoring or auditing of usage records, they provide limited accountability for their usage of information reseller data and have limited assurance that the information is being used appropriately.

Not All Agencies Have Taken Steps to Address our Recommendations

In our report, we recommended that the agencies develop specific policies for the collection, maintenance, and use of personal information obtained from resellers. We also recommended that OMB revise its privacy guidance to clarify the applicability of requirements for public notices and privacy impact assessments to agency use of personal information from resellers and direct agencies to review their uses of such information to ensure it is explicitly referenced in privacy notices and assessments. The agencies generally agreed with our findings and described actions initiated to address our recommendations.

Since the issuance of our 2006 report, two of the four agencies have taken action to address our recommendation. For example, the DHS Privacy Office incorporated specific questions in its May 2007 PIA guidance concerning use of commercial data. The guidance requires programs that use commercial or publicly available data to explain why and how such data are used. Further, the guidance for systems that use or rely on commercial data requires an explanation of how data accuracy and integrity are preserved and the reliability of the data assessed with regard to its value to the purpose of the system. According to DHS Privacy Office officials, after identifying use of commercial data through the PIA process, the Privacy Office works with the relevant DHS component to review uses of commercial data to ensure appropriate controls are in place and that the planned uses are appropriately disclosed in privacy notices. In addition, officials at DOJ informed us that the Privacy and Civil Liberties Office has in place a verbal agreement with agency components that there are to be no bulk acquisitions of commercial data and that when the agency takes in data from commercial sources, there should be a valid system-of-records notice that specifically identifies commercial data as a source. Further, DOJ has updated several of its system-of-records notices to reflect their use of data from information resellers. SSA and State have not yet addressed our recommendation.

However, OMB has not addressed our recommendations. In an August 2006 letter to congressional committees in response to the recommendations contained in our April 2006 report, OMB noted that work on the protection of personal information through the Identity Theft Task Force was ongoing and that following the completion of this work, they would consider issuing appropriate clarifying guidance concerning reseller data. Since then, OMB’s efforts on the Identity Theft Task Force have been completed and on May 22, 2007 OMB issued M-07-16, “Safeguarding Against the Breach of Personally Identifiable Information.” To date, OMB has not issued additional clarifying guidance concerning reseller data.

Privacy Provisions of the Proposed Federal Agency Data Protection Act are Consistent with Our Recommendations

The Federal Agency Data Protection Act was introduced on December 18, 2007. Among other things, the legislation contains privacy provisions that would require agencies to conduct PIAs when “purchasing or subscribing for a fee to information in identifiable form from a data broker.” We believe that such a requirement is consistent with the recommendations contained in our report, particularly given the debate concerning whether or not agencies “systematically incorporate” information or are “merely pinging or querying the information.” Our report found that PIAs could serve to address certain Fair Information Practice principles such as purpose specification and openness, but often were not conducted. Such a requirement could more readily ensure agencies perform these assessments. Further, since OMB has not clarified its guidance on this issue, a requirement in law could provide needed direction to agencies.

The proposed Federal Agency Data Protection Act would also require each agency to prescribe regulations that specify, among other things, the personnel permitted to access, analyze, or otherwise use commercial reseller databases. This legislation is consistent with our recommendation that agencies develop policies concerning their use of personal information from information resellers.

In summary, services provided by information resellers are important to federal agency functions such as law enforcement and fraud protection and identification. While agencies have taken steps to adhere to some Fair Information Practices such as the collection limitation, data quality, use limitation, and security safeguards principles, they have not taken all the steps they could to reflect others—or to use the specific processes of the Privacy Act and E- Government Act requirements—in their handling of reseller data. Because OMB privacy guidance does not clearly address information reseller data, agencies are left largely on their own to determine how to satisfy legal requirements and protect privacy when acquiring and using reseller data. Since we issued our report in 2006, two of the four agencies have taken steps to address our recommendations. However, OMB has not modified its guidance. Without current and specific guidance, the government risks continued uneven adherence to important, well-established privacy principles and lacks assurance that the privacy rights of individuals are being adequately protected. Absent action from OMB to revise guidance, privacy provisions contained in the proposed Federal Agency Data Protection Act could clarify the need to conduct privacy impact assessments wherever reseller data are involved and promote the development of agency policies and procedures concerning the use of such data. We believe these provisions are consistent with the results and recommendations contained in our 2006 report.

Mr. Chairman, this concludes my testimony today. I would be happy to answer any questions you or other members of the subcommittee may have.

Contacts and Acknowledgements

If you have any questions concerning this testimony, please contact Linda Koontz, Director, Information Management, at (202) 512-6240, or koontzl@gao.gov. Other individuals who made key contributions to this testimony were Susan Czachor, John de Ferrari, Nancy Glover, Rebecca LaPaze, David Plocher, and Jamie Pressman.