Smart Privacy Protection.(Review)

Smart Privacy Protection Fred Cate, Privacy in Perspective, AEI Press, 1150 Seventeenth Street N.W., Washington, D.C. 20036.

Congress has recently passed several bills ensuring that a consumer's personal information receives some protection against being read and used by third parties without the consumer's knowledge. But American Enterprise Institute visiting scholar Cate warns that such restrictions are not cost-free. Efforts to ensure consumer privacy, he argues, should be balanced against "the benefits that open information flow make possible."

Imposing over-strict privacy restrictions, for example, would substantially crimp consumer credit. The reason why customers can easily get loans for cars and houses in surprisingly short periods of time is because loan officers can call up a customer's credit history quickly. Another benefit open credit records offer is that lenders do not have to hold substantial sums in reserve to deal with bad checks and delinquent accounts. Open records also enable banks to fight credit card fraud and identity theft. The Association of Certified Fraud Examiners reports that fraud and counterfeiting currently amount to $400 billion a year, or 6 percent of ...