An Electronic Assault on Privacy?

By Philip Elmer-DeWitt

After living quietly for five months on the outskirts of Los Angeles with her two children, Rosa Delgado came home one day to a rude surprise. Her landlord had sued to have her evicted, contending that he needed her $390-a-month apartment for his sister. Delgado, 28, a nurse's assistant, at first refused to move. Eventually she settled out of court, accepting her landlord's offer of a little cash and a 30-day grace period in which to find a new home. But when she began apartment hunting, she encountered some unexpected resistance. One landlord objected to her children. Another did not want to take on a "welfare case" with a record of refusing to pay her rent. Finally, Delgado discovered the source of her trouble: her name had been added to an electronic registry of "bad tenant risks" available by subscription to any local property owner. As party to a tenant-landlord suit, Delgado had been automatically included in a computer blacklist.

In many states across the U.S., tenant lists have become a growth industry. "It seems to be an idea that is catching on," says Paul Jenney of Springfield, Mass., whose Landlord Reports Computer Service will, for $4, deliver a profile of any one of 100,000 Bay State tenants who have ever butted heads with their landlords. Denver-based RentCheck boasts a coast-to-coast network; its subscribers control 2.5 million rental units, some 10% of the % total U.S. rental housing supply.

Merchandising computer lists of bad-risk clients has spread to other fields. Chicago-based Docketsearch Network Corp. has compiled the names of 2.2 million Americans who have filed medical-malpractice, product-liability or personal-injury lawsuits. Doctors who subscribe to its $150-a-year Physician's Alert service can call a special toll-free number, give a prospective patient's name, and within 25 seconds find out if the individual has a penchant for filing lawsuits and ought to be handled with care. This summer Docketsearch plans to expand its listings to include records of bankruptcies, tax liens and workers' compensation claims. "We have the capability of becoming a one-stop national resource," says President Michael Eckstein. "It becomes a very powerful tool."

The computer-blacklist industry already has its giants. Such credit bureaus as TRW Information Services in Orange, Calif., and Equifax Inc. in Atlanta have long relied on huge banks of mainframe computers to provide consumer credit records for banks, department stores, finance companies and employers. Every working day, TRW's machines handle an average of 255,000 requests, culling information from a massive data base that contains detailed records of the bill-paying habits of 133 million people.

Still, bigness is not a prerequisite for the burgeoning industry. Today anybody with a personal computer and access to public documents can set up his own miniature private-investigating agency. Dozens of these mom-and-pop data services have sprung up, selling specialized electronic lists of police reports, arrest records, citations for motor vehicle violations and other potentially damaging information. Says Robert Ellis Smith, who keeps track of the services in a Washington-based newsletter called Privacy Journal: "For a very small investment, you can have a very widespread impact." Under the Federal Privacy Act of 1974, the Census Bureau, the IRS and other Government departments must notify citizens and obtain their consent before releasing information about them to another agency. Federal law also gives consumers the right to stop credit bureaus from dispensing false or misleading data. But the regulations governing the new private blacklists are murky and contradictory. "There's a crazy quilt of state laws on privacy," says Jerry Berman, director of the American Civil Liberties Union's project on privacy and technology. Where someone lives, Berman says, can determine whether he has < a right to read what is said about him in many data bases or to correct any errors they may contain.

Although Docketsearch's Eckstein claims he knows of no situation in which an individual has been denied medical treatment because of a computer blacklist, the potential for abuse is real. Even before Physician's Alert existed, doctors sometimes refused to treat patients who they knew were prone to sue. One woman from Joliet, Ill., who filed a malpractice suit was later denied treatment by 30 other doctors. In Providence last year, several families who applied for federally subsidized housing were turned down because of damaging reports supplied by a computer firm called Landlord Credit Data Service. One woman was described in the computer as "aggressive and an organizer." Another who frequented church-sponsored bingo games was listed as a "chronic, excessive gambler."

Some states are responding with protective legislation. California, for example, is considering a measure that would put an age limit of five years on tenant data and restrict lawsuit records to those decided in the landlord's favor. But the purveyors of computer blacklists are certain to fight any bill that makes it harder for them to do business. TRW Spokeswoman Geri Schanz points out that most people want the conveniences that computerized credit checks afford. "When you go to a showroom floor and see a shiny red car and want to drive it out tomorrow, you can," she says. "We have to give up a little bit of our privacy to get the quick service we all expect in this day and age."

Perhaps. But Samuel Shore, for one, has decided to fight back. Shore, the vice president of the California Trial Lawyers Association, was a practicing surgeon for 15 years before he became a lawyer. He was so incensed when he heard about Physician's Alert that he organized a computerized hot line to provide a similar service to patients. His Consumer Information Program, which went on-line last week, lists 20,000 physicians in the Los Angeles area and any lawsuits that have been filed against them in the past ten years.

With reporting by Scott Brown/Los Angeles and Barbara Dolan/Chicago