Housing Bill Amendment Requires Reporting of Consumer Purchases to the Federal Government

San Francisco, June 27, 2008 – In an open letter to Senators Diane Feinstein and Barbara Boxer, Pacific Research Institute technology policy fellow Daniel R. Ballon, Ph.D., called to their attention an amendment to the housing bill that requires the reporting of consumer purchases to the federal government. Dr. Ballon writes: “HR 3221 compels [online companies] to construct vast databases of personal data for the government to tap at any time….The Senate could act now to protect fundamental freedoms and prevent unlimited and unchecked data-mining of the Internet.”

Without debate or discussion, the Senate included an amendment to the housing reform bill H.R. 3221 to require major credit card companies and Internet payment services, such as PayPal and Google Checkout, to collect, aggregate, and transmit detailed information about every online sale to the federal government. According to Dr. Ballon, the amendment:

• Disregards the privacy of consumers
• Subjects customers to greater risk of identity theft
• Adds significant compliance costs to providers that would eventually be passed on to consumers in the form of higher prices
• Cripples advertising platforms that enable companies to offer free and unfettered access to services
• Burdens a promising new crop of California-based startups working to revolutionize paperless commerce.