Privacy in the Information Age

In recent years, there has been a virtual explosion of methods for collecting, storing, sharing -- even stealing -- personal information about you. Personal information has become more important in transacting business, and it's available to many people and organizations. They can look at it when it's time to evaluate you for a credit card, auto loan, life insurance, an apartment or mortgage, even a job!

It's important to understand how this information is gathered and used -- and the steps you can take so that it is accurate, reflects on you appropriately, and is used only in lawful ways.

How Your Personal Information Is Collected

You may be amazed to learn how much of your information is on file at places like your state's Department of Motor Vehicles and the Social Security Administration. Not to mention a whole host of marketing lists that catalog your buying habits, income, education, and much more.

Outside parties can often access this information easily. Because of the growing concern and incidence of identity theft, recent legislation has stepped up efforts to protect consumer information from unauthorized access by outside sources.

Who Collects Your Personal Information?

Marketers. More and more advanced techniques have been developed to compile extremely targeted marketing lists about consumers. A quick search on the Internet for "marketing lists" will show you just how many are available.

Websites. When you visit a website, information can be gathered about you in a variety of ways -- either by information you provide voluntarily or using techniques to indirectly detect information about your usage. Generally, personally identifiable information isn't gathered in a widespread way.

Store clerks. Can you remember a time when you were asked your zip code or phone number when you made a purchase? They may not really need that information. But it helped the store compile a profile of your purchasing habits to be used for marketing purposes -- and it may have been sold to others. Be careful when giving out your personal information. Only give what is absolutely necessary.

Warranty cards. Information obtained from warranty cards may be used for marketing purposes.

Grocery store loyalty cards. Many claim that the personal data and shopping information collected by supermarket companies from loyalty cards violates privacy rights and doesn't even save consumers money.

New identification systems. Numerous institutions, including several airlines, have begun working on plans for identification systems that would rely on background checks, fingerprints, iris scans, and high-tech IDs to verify individuals' identities and speed security screening at places such as airports.

It Even Affects Your Insurance

Studies have shown a correlation between consumers' financial history and their future insurance loss potential. As a result, insurance companies may use a person's financial history along with other factors to properly classify people according to their potential risk.

Many insurance companies have also started using insurance scores. Scores help to streamline the decision process so policies can be issued more efficiently. By knowing and understanding your credit history and insurance score, you can learn how you may be able to reduce your insurance premiums over time.

Each insurance company evaluates credit reports and/or insurance scores based on their own business needs. Other information, such as application information, prior claims, or motor vehicle records, may also be evaluated as part of the insurance underwriting process.