Whos Minding Your Data?

Unease mounts over practice of selling info to government for the war on terrorism.

Fighting terrorism on the home front has given the U.S. government a big appetite for information, with records such as credit reports, charity lists and traffic incidents being scoured for leads in the name of national security. This zeal to cross-check and profile citizens is creating a rush of companies eager to sell the fruits of private and public databases to federal agencies. But as the stakes rise in this growing industry, concerns are mounting about the quality of the data being gathered and the integrity of the information traders themselves.

"The information industry is a thug industry," said Chris Hoofnagle, legislative counsel at the Electronic Privacy Information Center, in Washington. "These guys are opportunists. Their operating principle is that since they can collect this information, they can use it."

Thus far, the government appears unconcerned about regulating its sources of personal data. The FBIs use of commercial databases has grown 9,600 percent over the last decade, according to EPIC. The bureau uses credit records, property records, professional licenses, drivers licenses and other data purchased from companies such as ChoicePoint Inc., of Alpharetta, Ga., and LexisNexis, of Dayton, Ohio, as well as credit reporting agencies such as Atlanta-based Equifax Inc., Experian Information Solutions Inc., of Costa Mesa, Calif., and Trans Union LLC, of Chicago. But none of these companies is held accountable for the truth or accuracy of the information it sells.

Some of the companies, such as ChoicePoint, have been operating for a long time but are ramping up homeland security divisions and buying smaller, more specialized data brokers. According to a lawsuit filed by International Biometric Group LLC, ChoicePoint is developing a biometrics tool to acquire and match biometric data for security purposes. ChoicePoint officials did not respond to requests for comment.

In addition to old-line info dealers ramping up new services for homeland security, new companies are popping up to satisfy federal data needs. Intelius Inc., of Redmond, Wash., was formed in January to respond to the call for information. Intelius sells integrated data for safety and homeland security. Most of the data is information the government already has, according to founder Naveen Jain.

Jain has done little to dispel the opportunist label placed on information merchants, however. He founded dot-com standout InfoSpace Inc. in 1997 but was ousted from the company in December. As chief executive of InfoSpace, Jain told the Puget Sound Business Journal in 1997 that his goal was "world domination just like Microsoft [Corp.]," where he worked as a marketing manager.

In May, a federal judge ruled that Jain had made illegal "short-swing" stock trades while at InfoSpace. Jain said that the transactions involved moving shares from trusts for his children into other accounts and that he did nothing wrong.

Besides proving that the background of information dealers is less important to the government than the details of the lives of Americans they are investigating, critics charge that, unlike security vendors, data merchants do not have to be certified or meet quality standards when selling to the government.

Next Page: Dangers of innacurate data