812 HASTINGS CONSTITUTIONAL LAW QUARTERLY [Vol. 2 passage of the FCRA, use of investigative agencies has declined to some extent206 due to provisions restricting permissible purposes for which such reports can be used. 207 However, their use has by no means been discontinued. The Justice Department continues to obtain credit reports for employment purposes. 208 The Civil Service Commission which investigates prospective employees for Atomic Energy Commission, National Aeronautics and Space Administration, Peace Corps, United States Information Agency and United States Arms Control and Disarmament Agency, routinely checks with credit bureaus in most cases.2 The Federal Housing Administration makes extensive use of credit reports in granting mortgage insurance,210 as does the Veterans' Administration in processing G.I. loan applications.211 The Veterans' Administration also uses investigative credit bureaus to locate G.I.s who were overpaid while in the service or while attending school.212 A number of agencies are required by statute to consider an applicant's financial responsibility." This information usually is obtained from 200 213 with such investigative agencies of the U.S. Government as the Federal Bureau of Investigation and the Internal Revenue Service by making available to authorized representatives of such agencies information which may be in our files." Retail Credit Hearings, supra note 56, at 22-23 (testimony of W. Lee Burge, president, Retail Credit Co.). The Treasury Department disclosed that its Internal Revenue Service agents use approximately 25,000 credit reports a year. These reports "save many hours of investigative effort in locating and identifying persons and providing leads to financial transactions that are relevant and material to tax inquiries." The Wall Street Journal, Apr. 13, 1970, at 21, col. 2. 206. Foer, supra note 58, at 76. 207. The FCRA specifies the purposes for which a consumer report may be furnished to a governmental unit. The permissible purposes requirement is satisfied if the information is to be used: (1) in connection with an application for credit, employment or insurance; (3) for an otherwise legitimate business need. A credit report may also be furnished to a governmental body in response to a court order, or in accordance with the written instructions of the consumer. 15 U.S.C. §§ 1681b and f (1970). 208. Letter from Ralph Erickson, Assistant Attorney General, Office of Legal Counsel, Department of Justice, to Albert Foer, Mar. 21, 1972, in Foer, supra note 58, at 126-28. 209. Interview with Charles Rice, assistant chief-Investigative Division, San Francisco Regional Office, United States Civil Service Commission, in San Francisco, Nov. 27, 1974. 210. Letter from R. David Lasure, Director, Management & Operations, Assistance Division of FHA, to Albert Foer, Jan. 14, 1972, in Foer, supra note 58, at 122-23. 211. Letter from Howard Denney, Assistant General Counsel for the Veterans' Administration, to Albert Fcer, Feb. 17, 1972, in Foer, supra note 58, at 124-25. 212. 1974 Proxmire Hearings, supra note 19, at 26. 213. E.g., Export-Import Bank of Washington [12 U.S.C. §§ 635 et seq. (1970)]; Summer 1975] LITTLE BROTHER 813 credit agencies. Again the exchange of information goes in both directions with credit investigative agencies making extensive use of federal sources of information.211 b. Indirect Federal Involvement 1. Regulation of Industry The FCRA itself constitutes extensive federal regulation of the credit investigating industry, limiting the purposes for which the information can be gathered and persons to whom the information can be sold. It also provides that the consumer must be notified of any adverse action taken on the basis of reports and be given an opportunity to correct any mistaken information. In effect, it extends government approval of privacy-invading activities of such agencies. 2. Authorization of Investigatory Activities Section 1681h(e) of the Fair Credit Reporting Act denies the consumer the right to: [B]ring any action or proceeding in the nature of defamation, inva- The effect of this provision is to suspend the consumer's fundamental constitutional right of privacy as it relates to such investigatory reports.215 To deny the consumer a remedy for invasion of his right of Federal Home Loan Banks Board [12 U.S.C. §§ 1424 et seq., § 1701c(c) (1970)]; Federal Deposit Insurance Corporation [12 U.S.C. §§ 1811 et seq. (1970)]; Department of Interior (U.S. Fish & Wildlife Service) [16 U.S.C. §§ 742A et seq. (1970)]; Department of State (Agency for International Development) [22 U.S.C. §§ 2151 et seq. 1970)]; Veterans' Administration [38 U.S.C. §§ 210 et seq. (1970)]; Department of Health, Education and Welfare (Public Health Service) [42 U.S.C. §§ 294 et seq. (1970)]. 214. A five-page internal memorandum of Retail Credit's Los Angeles metropolitan office rated various federal agencies as to their degree of cooperation with investigators: (1) Bankruptcy Records: "Entire file may be pulled and examined. Portions may be purchased. They are of particular value in pinning down financial difficulty, running down creditors and of use in business background. (2) Criminal Records: "Of use in confirming Criminal Activities on Location cases. (3) Veterans' Administration: "With proper medical authorization, we may review full medical files. The memorandum concludes: "Various sources within the Federal Government are cooperative, such as the State Department, and other agencies. Others are not, such as the FBI and Treasury Department." From Record Sources Available in the Los Angeles Civic Center Area, on file with David Weinberger, West Miami, Fla. 215. See generally Comment, Fair Credit Reporting Act: Constitutional Defects of the Limitation of Liability Clause, 11 HOUST. L. REV. 424 (1974). 814 HASTINGS CONSTITUTIONAL LAW QUARTERLY [Vol. 2 privacy is to stamp the activity with a seal of governmental approval. Such approval can only encourage the investigatory practices that lead to invasions of privacy. In the "open housing" case, Reitman v. Mulkey,216 the Court upheld a finding of state action based on an amendment to the California. constitution which prohibited government restriction of the right of private citizens to convey real property. The Court found that the amendment would significantly encourage and involve the state in private discrimination contrary to the Fourteenth Amendment. "Here we are dealing with a provision which does not just repeal an existing law forbidding private racial discriminations. Section 26 was intended to authorize, and does authorize, racial discrimination in the housing market."217 The provisions in the FCRA denying a remedy for invasion of privacy similarly authorizes and encourages actions violating the Constitution of the United States. C. Delegation of Duties The delegation of activities from governmental to private bodies can, under some circumstances, convert the private body into an instrumentality of the government, and subject it to the same constitutional limitations.218 Investigations of prospective employees and applicants for licenses, loans and other governmental benefits, clearly come within this definition. 3. Alternative to Finding Government Action: 18 U.S.C § 241 Even in the absence of a finding of state action, 18 U.S.C. section 241219 presents a possible alternate means of preventing privacy-invading activities by consumer credit reporting agencies. The Court has yet to recognize congressional power to legislate against any and all private conspiracies to interfere with the constitutional rights of others. Nevertheless, Congress' power to regulate interstate commerce justifies the extension of section 241 penalties to invasion of the constitutional right of privacy by consumer credit reporting agencies.220 Although 216. 387 U.S. 369 (1967). 217. Id. at 380-81. 218. The Supreme Court has adopted this position in Evans v. Newton, 382 U.S. 296, 299 (1966); Terry v. Adams, 345 U.S. 461, 469 (1953). 219. 18 U.S.C. § 241 reads in part: "If two or more persons conspire to injure, oppress, threaten, or intimidate any citizen in the free exercise or enjoyment of any right or privilege secured to him by the Constitution or laws of the United States, or because of his having so exercised the same . . . [t]hey shall be fined not more than $10,000 or imprisoned not more than ten years, or both. . . .” 220. Cf. United States v. Guest, 383 U.S. 745 (1966) (federal commerce power Summer 1975] LITTLE BROTHER 815 the original intent of the statute was to protect the black population of the South against outrages committed by the Ku Klux Klan, its scope has been greatly enlarged. 221 Several cases have held that section 241 protects all rights granted under the Constitution of the United States regardless of whether the particular mode of injury for which the defendant is indicted was known at the time of the adoption of the statute, 223 It is not necessary that the right in question be specifically mentioned in the Constitution; the conspiracy statute applies with equal force to implicit constitutional rights.224 The power of Congress to enact legislation to protect individual liberties guaranteed by the federal Constitution from interference by private conspiracies has been upheld in a number of cases.225 Thus it is unnecessary to allege actions under color of state law for purposes of applying section 241. It is essential, however, that the requisite specific intent be satisfied. Under section 241 proof that the actors actually knew it was a constitutional right they were conspiring against is not necessary. It must be established, however, that the acts which violate constitutional rights were the primary purpose of the conspiracy, rather than an incidental side effect.220 Under section 241 there must be a finding of conspiracy to deprive a citizen of his constitutional rights. Conspiracy has been defined as a combination of two or more persons for an unlawful purpose or supports the extension of section 241 to protect freedom of interstate travel against interference by private conspiracies). ... 221. In United States v. Mosley, 238 U.S. 383 (1915), Mr. Justice Holmes commented on section 6 of the Enforcement Act of 1870, 16 Stat. 141, as amended, now 18 U.S.C. § 241: "Just as the Fourteenth Amendment . . . was adopted with a view to the protection of the colored race but has been found to be equally important in its application to the rights of all, [section 241] had a general scope and used general words that have become the most important now that the Ku Klux have passed away . . . . [W]e cannot allow the past so far to affect the present as to deprive citizens of the United States of the general protection which on its face [the statute] most reasonably affords." 238 U.S. at 388. 222. United States v. Johnson, 390 U.S. 563 (1968); United States v. Price, 383 U.S. 787 (1966); United States v. Waddell, 112 U.S. 76 (1884). 223. United States v. Classic, 313 U.S. 299 (1941). 224. In re Quarles, 158 U.S. 532 (1895); Logan v. United States, 144 U.S. 263 (1892); United States v. Pacelli, 491 F.2d 1108 (2d Cir. 1974). 225. E.g., United States v. Guest, 383 U.S. 745 (1966) (private interference in right to freedom of interstate travel); United States v. Classic, 313 U.S. 299 (1941) (private interference in federal primaries); In re Quarles, 158 U.S. 532 (1895) (right to inform federal officials of violations of federal laws); Logan v. United States, 144 U.S. 263 (1892) (conspiracy to injure someone in the custody of a United States marshall); United States v. Waddell, 112 U.S. 76 (1884) (statutory right to make homestead upon unoccupied public lands); Ex parte Yarbrough, 110 U.S. 651 (1884) (right to be free from private interference in federal elections). 226. United States v. Guest, 383 U.S. 745 (1966). 816 HASTINGS CONSTITUTIONAL LAW QUARTERLY [Vol. 2 to effect a lawful purpose by unlawful means. A combination requires that the parties have reached agreement. Agreement need not be formal, however; it is enough that the parties tacitly come to an understanding in regard to the unlawful purpose. This may be inferred from sufficiently significant circumstances. Unlawful, includes whatever is punishable as an offense by statute or at common law.227 The agreement between a consumer reporting agency and the user of the report satisfies the definition of conspiracy. A combination between the credit reporting agency and the user is demonstrated by the standard investigation forms used by the largest consumer reporting agencies during investigations of applicants for life, automobile and accident and health insurance. Each form requests information as to the applicant's character or reputation. Specifically they request the investigator to give details of any evidence that any of the following apply to the applicant: heavy debts, domestic trouble, drug habit, irregular beneficiary, illegal activities, questionable business practices. Every form has a catchall question as to any criticism of applicant's character, morals or associates.229 Additionally, some consumer reporting agencies require their investigators to meet production quotas for protective and declinable information.230 In Retail Credit's Manager's Manual, protective information is referred to as "the 'meat' of the report-the basis upon which we sell our service."231 That insurance companies agree with this assessment is apparent from the fact that they award their contracts to the company developing the highest percentage of adverse information.232 Likewise, the requirement that the actors combine to effect an unlawful purpose is satisfied by intent to invade the privacy of the home. C. Summary In summary, it can be seen that investigative consumer reports are an invasion of the individual's constitutional right of privacy and often result in actual harm. The right of privacy outweighs the need for such information when competing interests are balanced against each other. Additionally, there are less restrictive and more reliable alternatives for gathering the information needed. The requirement of 227. R. PERKINS, PERKINS ON CRIMINAL LAW 629 (2d ed. 1969). 228. The largest national insurance inspection bureaus include American Service Bureau, Hooper-Holmes Bureau, National Inspection Bureau (O'Hanlon's Reports), Retail Credit Company and Service Review. Foer, supra note 58, at 51. 229. 1973 Proxmire Hearings, supra note 4, at 839-72. 230. See generally, 1974 Proxmire Hearings, supra note 19. 231. 1973 Proxmire Hearings, supra note 4, at 973. 232. 1974 Proxmire Hearings, supra note 19, at 18. |