When Pam Douglas dropped by Michelle Materres's apartment, Michelle was on the phone-but Pam knew that already. She and her son, Brian, had been playing with his new walkie-talkie and noticed the toy was picking up Michelle's cordless-phone conversations next door. They had come over to warn her that her conversation was any thing but private. Materres was stunned. It was as if her neighbors could peek through a window into her bedroom-except that Michelle hadn't known that this window was there. "It's like 'Nineteen Eighty-four," she says.
Well, not quite. In Orwell's oppressive world, Big Brother-the police state-was watching. "We don't have to worry about Big Brother anymore," says Evan Hendricks, publisher of the Washington-based Privacy Times. "We have to worry about little brother." Until recently, most privacy fears focused on the direct-mail industry; now people are finding plenty of other snoops. Today's little brothers are our neighbors, bosses and merchants, and technology and modern marketing techniques have given each a window into our lives (box).
Suddenly privacy is a very public issue. A 1990 Harris poll, conducted for consumer-data giant Equifax, showed that 79 percent of respondents were concerned with threats to their personal privacy-up from 47 percent in 1977. Privacy scare stories are becoming a staple of local TV news; New York City's ABC affiliate showed journalist Jeffrey Rothfeder poking into Vice President Dan Quayle's on-line credit records-a trick he had performed a year before for a story he wrote for Business Week. Now Congress is scrambling to bring some order to the hodgepodge of privacy and technology laws (page 42), and the U.S. Office of Consumer Affairs has targeted privacy as one of its prime concerns. Advocacy groups like the Consumer Federation of America and the American Civil Liberties Union are turning to privacy as one of the hot-button issues for the '90s. "There's a tremendous groundswell of support out there," says Janlori Goldman, who heads the ACLU Privacy Project.
Concern is on the rise because, like Materres, consumers are finding that their lives are an open book. Workers who use networked computers can be monitored by their bosses, who in some cases can read electronic mail and could conceivably keep track of every keystroke to check productivity. Alana Shoars, a former e-mail administrator at Epson America, says she was fired after trying to make her boss stop reading coworkers' e-mail. The company says Shoars got the ax for insubordination; Shoars counters that the evidence used against her was in her own e-mail-and was misinterpreted. Other new technologies also pose threats: cordless and cellular phones are fair game for anyone with the right receiver, be it a $1,000 scanner or baby monitor. Modern digital-telephone networks allow tapping without ever placing a physical bug; talented "phone phreaks" can monitor calls through phone companies or corporate switchboards.
Such invasions may sound spooky, but privacy activists warn that the bigger threat comes from business. Information given freely by consumers to get credit or insurance is commonly sold for other uses without the individual's knowledge or consent; the result is a flood of junk mail and more. Banks study personal financial data to target potential credit-card customers. Data sellers market lists of people who have filed Worker Compensation claims or medical-malpractice suits; such databases can be used to blackball prospective employees or patients. Citicorp and other data merchants are even pilot testing systems in supermarkets that will record your every purchase; folks who buy Mennen's Speed Stick could get pitches and discount coupons to buy Secret instead. "Everything we do, every transaction we engage in goes into somebody's computer," says Mary Culnan, a Georgetown University associate professor of business administration.
How much others know about you can be unsettling. Architect David Harrison got an evening call from a local cemetery offering him a deal on a plot. The sales rep mentioned Harrison's profession, family size and how long he had lived in Chappaqua, N.Y. Harrison gets several sales calls a week, but rarely with so much detail: "This one was a little bizarre."
High tech is not the only culprit. As databases grew in the '80s, the controls were melting away, says Hendricks. "Reagan came in and said, 'We're going to get government off the backs of the American people. 'What he really meant was, 'We're going to get government regulators off the backs of business.' That sent signals to the private sector that 'you can use people's personal information any way you want'." The advent of powerful PCs means that the field is primed for another boom. Today companies can buy the results of the entire 1990 census linked to a street-by-street map of the United States on several CD-ROM disks.
Defenders of the direct-marketing industry point out that in most cases companies are simply trying to reach consumers efficiently-and that well-targeted mail is not "junk" to the recipient. Says Equifax spokesman John Ford: "People like the kinds of mail they want to receive." Targeting is now crucial, says Columbia University professor Alan Westin: "If you can't recognize the people who are your better prospects, you can't stay in business." Ronald Plesser, a lawyer who represents the Direct Marketing Association, says activists could end up hurting groups they support: "It's not just marketers. It's nonprofit communication, it's political parties. It's environmental groups."
Consumers are beginning to fight back. The watershed event was a fight over a marketing aid with data on 80 million households, Lotus MarketPlace: Households, proposed by the Cambridge, Mass.based Lotus Development Corp. Such information had been readily available to large corporations for years, but MarketPlace would have let anyone with the right PC tap in. Lotus received some 30,000 requests to be taken off the households list. Saying the product was misunderstood, Lotus killed MarketPlace earlier this year, New York Telephone got nearly 800,000 "opt out" requests when it wanted to peddle its customer list; the plan was shelved.
With the MarketPlace revolt, a growing right-to-privacy underground surfaced for the first time. Privacy has become one of the most passionately argued issues on computer networks like the massive Internet, which links thousands of academic, business and military computers. Protests against MarketPlace were broadcast on the Internet and the WELL (an on-line service that has become a favorite electronic hangout for privacy advocates and techie journalists), and many anti-MarketPlace letters to Lotus were relayed by e-mail.
Consumers are also taking new steps to safeguard their own privacy-often by contacting the Direct Marketing Association, which can remove names from many mailing lists, But compliance is voluntary, and relief is slow. In one chilling case, an unknown enemy began flooding business manager Michael Shapiro's Sherman Oaks, Calif., home with hundreds of pieces of hate junk mail. Suddenly Shapiro, who is Jewish, was receiving mail addressed to "Auschwitz Gene Research" and "Belsen Fumigation Labs." Shapiro appealed to the DMA and the mailing companies directly but got no responses to most of his calls and letters. "They ignore you, throw your letter away and sell your name to another generation of people with computers," he complains. Finally one marketing executive publicized Shapiro's plight within the DM industry. Eight months after the onslaught began, the letters have slowed-though some companies still have not removed him from their lists.
How else can privacy be protected? It doesn't have to mean living like a hermit and only paying cash, but it does mean not saying anything over cellular and cordless phones that you wouldn't want others to overhear. Culnan of Georgetown uses her American Express card exclusively, because while the company collects voluminous data on its cardholders, it shares relatively little of it with other companies.
Some privacy activists look hopefully across the Atlantic Ocean. The European Community is pushing tough new data rules to take effect after 1992. The Privacy Directive relies on consumer consent; companies would have to notify consumers each time they intend to pass along personal information. The direct-marketing industry claims the regulations would be prohibitively expensive. The rules may be softened but could still put pressure on U.S. marketers who do business abroad.
U.S. firms might find another incentive to change. Companies don't want to alienate privacy-minded customers. "We're in the relationship business," says James Tobin, vice president for consumer affairs at American Express. "We don't want to do anything to jeopardize that relationship." Citicorp's supermarket plan makes privacy advocates nervous; but Citicorp rewards customers for giving up their privacy with incentives like discount coupons, and it reports that no consumers have complained. Eventually, strong privacy-protection policies could make companies more attractive to consumers, says Columbia's Westin and may even provide a competitive edge. Then consumers might get some of their privacy back-not necessarily because it's the law, or even because it's right, but because it's good business.
LITTLE BROTHER IS WATCHING YOU;
While much of the attention in privacy debates focuses on the direct-mail industry, other technological intrusions are beginning to make people nervous, too:
Cellular and cordless phones are little radio stations. With the right receiver-a high-tech scanner, or even a kid's walkie-talkie or baby monitor-it's possible for the neighbors to tap your most personal calls.
Several companies are testing systems for supermarkets that will record your every purchase; the supermarket could then offer, say, Coke a list of Pepsi buyers so Coke could woo them with discount coupons.
Many computer systems allow the boss fun access to your computer work, from reading personal electronic mail to watching your every keystroke on screen as a way of checking your productivity.
Data merchants put together malling lists of stunning complexity that help companies tar. get likely prospects. They don't just know where you live; your age, income, credit history and personal habits may all be on file.