| Section IV |
On-Line Issues: E |
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The U.S. Supreme Court declined to review a decision over whether the Federal Trade Commission can prohibit a major credit reporting agency from issuing “target marketing lists” — lists of names and addresses sold to target marketers who then contact consumers with offers of products and services.
Trans Union Corp., one of three major credit reporting agencies, cannot sell target marketing lists because the FTC in 1994 considered such lists “consumer reports” prohibited for sale by the Fair Credit Reporting Act of 1970 (FCRA), 15 U.S.C. Sec. 1681 et seq. The FCRA regulates consumer reporting agencies to protect the privacy and accuracy of credit information.
Trans Union had argued in federal court that the FCRA violated its free-speech rights because the Act prohibited the company’s ability to disseminate truthful information. However, the U.S. Court of Appeals for the District of Columbia Circuit rejected the company’s First Amendment claim, writing that the company’s target marketing lists “warrant reduced constitutional protection.” See Trans Union Corp. v. Federal Trade Commission, 245 F.3d 809 (D.C. Cir.), petition for reh’g denied, 267 F.3d 1138 (D.C. Cir. 2001).
The D.C. Circuit determined that the lists were not entitled to full constitutional protection because they were private speech, rather than speech on a matter of public concern. The appeals court relied on the Supreme Court’s defamation decision in Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749 (1985). In that decision, the High Court ruled that a reporting agency’s false credit report warranted only qualified constitutional protection because the report “concerned no public issue.”
The appeals court recognized that there were differences between the truthful speech by Trans Union and the false credit report in Dun & Bradstreet. However, the court determined that in both cases the targeted speech implicated the interests of only the speaker and its “specific business audience.”
Because the speech was private, the appeals court determined the law was subject to intermediate, rather than strict, scrutiny. The FCRA ban on targeted marketing lists serves the substantial state interest of protecting consumer privacy and does not have to be the least speech-restrictive way of accomplishing the state’s goals.
The Court denied Trans Union’s petition for certiorari in Trans Union LLC v. Federal Trade Commission, 122 S. Ct. 2386 (2002). Justices Anthony Kennedy and Sandra Day O’Connor voted to hear the case. Justice Kennedy wrote that the Court should hear the case because the D.C. Circuit misapplied Dun & Bradstreet. He explained:
The plurality opinion in Dun & Bradstreet concluded that a false statement in a credit report was not speech on a matter of public concern, as that term is used in the context of defamation law. It is questionable, however, whether this precedent has any place in the context of truthful, nondefamatory speech. Indeed, Dun & Bradstreet rejected in specific terms the view that its holding “leaves all credit reporting subject to reduced First Amendment protection.” 472 U.S. at 762, n.8. The Court of Appeals, nonetheless, relied on Dun & Bradstreet to denigrate the importance of this speech. A grant of certiorari is warranted to weigh the validity of this new principle.
Justice Kennedy questioned whether Trans Union’s “speech” was private speech, as opposed to speech on a matter of public concern because “the speech is essential to the purchasing decisions of millions of Americans.” He also determined that the FTC’s ban on target market lists was “nonsensical” because the FTC allows prescreening — selecting individuals for guaranteed offers of credit or insurance. The lower court had reasoned that this distinction was valid because “Congress apparently believes that people are more willing to reveal personal information in return for guaranteed offers of credit than for catalogs and sales pitches.” Justice Kennedy disagreed, noting that the release of information in the prescreening process “is far more invasive of consumer privacy than release of the names and addresses contained in petitioner’s targeted marketing lists.”
Justice Kennedy also noted that the lower court ruling could bankrupt Trans Union. “This case is of national importance, and the Court of Appeals has adopted a novel approach to commercial speech,” he concluded.
--David L. Hudson, Jr.
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