If a business refuses to keep private information about one's consumer preferences secure, consumers can take their business elsewhere. But they hardly have the same opportunity when it comes to the Department of Motor Vehicles or the Internal Revenue Service. Government collects and shares more personal information about individuals than any other entity, and privacy analysts say it poses a greater threat to individual privacy than data collection by business.

A recent study by the privacy organization Privacilla found that during an 18-month period beginning in September 1999, federal agencies announced 47 times that they would exchange and merge personal information from databases about American citizens (see figure):

• The Social Security Administration announced involvement in 21 different information sharing arrangements.

• The Internal Revenue Service participated in information-sharing arrangements on eight different occasions.

• The Department of Justice and the Department of Education were involved in five and nine different arrangements, respectively.

• Many of these arrangements were broad, dealing with multiple state or federal agencies.

The Privacy Act of 1974 was supposed to protect individuals from the unauthorized use of records collected by federal agencies. Yet, agencies often violate the Privacy Act's requirement that data be collected directly from the individual rather than being gathered surreptitiously by mining other agencies' records.

Furthermore, a study by the General Accounting Office found that 97 percent of federal government Web sites failed to meet the privacy standards (notice, choice, access and security) recommended by the Federal Trade Commission for private sector Web sites.

But government tends to exempt itself from regulations on information collecting it imposes on the private sector. Thus, the new federal medical privacy regulations limit the use of medical information by private sector entities, but require doctors, hospitals and other health care providers to share patients' personal medical records with the federal government.

Source: Devon Herrick (research manager, NCPA), "Privacy from Government in a Transparent Society," Brief Analysis No. 364, July 30, 2001, National Center for Policy Analysis.

For text http://www.ncpa.org/ba/ba364/ba364.html