Trans Union Corp. is standing its ground against the Federal Trade Commission, which ordered the credit bureau to stop selling lists of consumers to direct marketing companies.

The history of this conflict spans about 22 months, with the central point of disagreement being each party's interpretation of the Fair Credit Reporting Act.

Trans Union was not the only target of regulatory scrutiny. About three years ago, privacy advocates and government agencies raised the question of whether information collected by the credit bureaus to determine consumers' creditworthiness should be used for another purpose -- direct marketing.

The three major credit bureaus -- Trans Union, TRW Information Services Inc., and Equifax Inc., -- freely sold lists of consumers to direct marketers at that time.

In the late 1980s and early 1990s, however, the credit bureaus frequently made the headlines and were the Subject of congressional hearings because of errors in consumer credit reports and a general perception that they were insensitive to consumers' privacy.

"The spotlight was on the credit bureaus," said Norm Magnesun, director of public affairs of Associated Credit Bureaus Inc.

As a result, TRW and Equifax made concessions, but Trans Union fought back.

Trans Union claims that the information it is providing to companies that want to sell their products to a targeted group of consumers is available from other list providers, so Trans Union should be allowed to compete in the marketplace by selling information in its consumer data bases.

The FTC maintains that credit bureaus have certain obligations under federal law to protect the information given to them by credit grantors for credit granting purposes.

The Chicago-based 'company argues that its marketing lists do not provide information about a consumer's creditworthiness, thus it is not violating the credit reporting act.

Prescreening lists, which provide consumer credit information, are allowed under federal law, because credit grantors are required to offer people who appear on those lists a firm offer of credit.

On Jan. 12, 1993, the same day the FTC filed its complaint against Trans Union, TRW agreed to modify its target marketing practices in a settlement with the FTC. The Orange, Calif.-based credit bureau ceased relying on credit reports for information about consumers that direct marketers request.

At issue is the fact that credit bureaus have used their credit data bases to compile such lists. The FTC says accessing this data base for direct marketing violates federal law, and that credit bureaus should either set up a reporting business in which they gather information about consumers separately from the credit file or the bureaus should purchase credit information from outside sources, like government agencies or list compilers.

TRW now simply accesses its credit data to obtain what it calls identifying information such as a consumer's name, telephone number, address, date of birth, and Social Security number. TRW purchases additional information about the consumer from outside sources.

Atlanta-based Equifax announced in August 199 ! that it would no longer sell lists of consumers to direct marketers, citing the results of privacy studies and the concerns of Congress. "We are listening to consumers, and we are continuing to initiate practices to earn the public's trust," said Equifax's chief executive C.B. "Jack" Rogers Jr. in a prepared statement at that time.

Some industry observers said that Trans Union is the only credit bureau fighting this issue because it is privately owned, and therefore, not beholden to shareholders like TRW and Equifax.

Trans Union has been defending its position for a couple of years by appealing the FTC's complaint in 1993 and a September 1993 summary decision by administrative law Judge Lewis F. Parker, who upheld the FTC's complaint.

On Oct. 18, the FTC ruled on the second appeal, ordering Trans Union to stop selling such lists. The order will be effective 60 days after it is served.

Trans Union said that it will seek an appeal with the Federal Court of Appeals.

In the meantime, each side insists that the other is wrong. Oscar Marquis, Trans Union's vice president and general counsel accuses the federal agency of "looking at a literal reading of the law.

"They [the FTC] are not concerned with the nature of the information, but where it comes from," he added.

And indeed that appears to be the case. David Medine, associate director for credit practices with the FTC said that "if it was collected differently, the information they [Trans Union] are providing now could be given our."

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