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Two years ago, Congress passed the Electronic Communications Privacy Act (18 U.S.c. $ 2510). The Act amends the federal wiretap act to prohibit the unauthorized interception and disclosure of electronic communications made possible by new technologies, such as cellular phones, electronic mail and satellite television transmissions. The passage of ECPA was

supported by a number of industry associations, partly due to concern about public confidence in using the new systems.

Legislation is currently pending to bring under the wing of the 1974 Privacy Act the computerized matching of personal information held in federal agency databases. For years, the computerized matching of records has grown outside the scope of government regulation and oversight. The legislation, the Computer Matching and Privacy Protection Act of 1988, passed the Senate last year by unanimous consent and was recently reported out of the House Government Operations Committee. The ACLU is optimistic that the legislation will pass, and that the gaping hole created by the misinterpretation and misapplication of the Privacy Act's routine use exemption will be partially covered.

The legislation before us today promises to be another positive Congressional response to the need for protections on personal, sensitive information.

CONCLUSION

The ACLU is hopeful that the Video and Library Privacy Protection Act will continue to garner broad, bi-partisan

support. We look forward to continuing to work closely with you to ensure passage of this important and timely legislation.

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Mr. KASTENMEIER. Thank you, Ms. Goldman.
Now we would like to call on Mr. Vans Stevenson.

Mr. STEVENSON. Mr. Chairman, and members of the committee, I appreciate the invitation and opportunity to appear before you today.

I am Vans Stevenson, Director of Public Relations, Erol's, Inc. As many of you know, we are a suburban based Washington, DC, video sales and rental chain and we have 165 stores in eight States and the District of Columbia. In addition to speaking for my company, I am also appearing on behalf of the Video Software Dealers Association, which represents video retailers and distributors throughout the United States. Approximately 20,000 of the 30,000 video retailers in the United States are represented by VSDA.

We would like to commend you, Mr. Leahy, Mr. Simon, Mr. Kastenmeier and Mr. McCandless and your staffs for the hard work that you went through to put together this important legislation. We support both bills. We support H.R. 4947 and S. 2361, which would prohibit the disclosure of individual customer rental or sales records, except in very limited circumstances. In our view, rental and sales records are privileged matters between the retailer and the customer. That is the firm policy of VSDA and its members.

We also agree that there should be certain exceptions to the rule against disclosure of such records.

First, we feel that an exception is appropriate when it is necessary in the routine course of business, such as when a delinquent account may require the involvement of a collection agency.

Second, we believe that disclosure is warranted where provided pursuant to a legal court order for law enforcement purposes. However, this law enforcement exception should be limited; it should be available only when the law enforcement agency has sufficiently showed its necessity, and when the customer is given notice and afforded an opportunity to appear and contest such an order.

As for requests made in the context of civil litigation, we recommend the approach in H.R. 4947. Disclosure should not be permitted.

Third, disclosure should also be allowed when a customer has clearly expressed written, informed consent. This could be either when the customer fully understands the exact circumstances in which the records are being requested, or when the customer's name and address will merely be disclosed as part of a general mailing list. We agree that this mailing list exception should not be used if the subject matter of a customer's rental would be indirectly revealed

Erol's, my company, which is the nation's largest volume specialty retailer, has had a policy for a number of years prohibiting individual account disclosure. Any Erol's employee who violates that policy faces disciplinary action which could include immediate termination. Fortunately, we have never had to dismiss an employee for violating the policy.

In addition to strengthening our existing policy, it is our expectation that your committees will provide both courts and video retailers with guidance in the legislative history as to what kinds of actions retailers might take to safeguard the privacy of video records, so that they may avoid being unreasonably burdened by the legislation.

The Committee report can provide such guidance. We feel strongly that a video dealer should not be unfairly held liable for the unauthorized acts of an employee which are in clear violation of a strong and enforced store policy against such authorized disclosure.

The legislation is needed. I am aware of at least three instances when Erol's has received direct inquiries about individual accounts. Two were from Government agencies, and one from an attorney representing a client in a divorce proceeding.

1. A United States Secret Service agent asked if we could release information about an individual suspected of passing counterfeit currency. We refused unless ordered by a court of law. We never received such an order or a further inquiry.

2. An investigator from the United States Department of Housing and Urban Development requested account information regarding a Government employee suspected of using a Government vehicle for personal use during work hours. The HUD official said he suspected the employee was checking out tapes at one of our stores during working hours. We refused the request for information. There was never any followup call.

3. An attorney in a divorce proceeding requested the rental records of the defendant in the case. We refused. A subpoena was threatened but never served.

Mr. LEAHY. Did the attorney give any reason of why that would be valid, of what his reason was for wanting it?

Mr. STEVENSON. He never gave me any reason. He asked if the individual was a member, which we don't disclose either, and, number two, if the record was available. I asked him why and he didn't really make any comment and he said I will be back to you. and we haven't heard anything.

Mr. LEAHY. Thank you.
Thank you, Mr. Chairman.

Mr. STEVENSON. Let me review several other instances that we are aware of, and this is from around the country.

An attempt by the attorney for a spouse in a divorce proceeding to show, through video records that the other spouse was an unfit parent. The records were refused.

A subpoena served by the attorney of one defendant in criminal prosecution who sought the video records of is client's co-defendants. The store did not comply with the subpoena. The attorney did not pursue the matter and the co-defendants were acquitted.

A law enforcement agency subpoena seeking from a video store the video records of all of its customers, in the context of a question about local community standards for an obscenity prosecution. Here again, the records were refused and the subpoena was not passed.

Record sought by a defendant in a civil child molestation case, who sought to show that plaintiffs themselves had stimulated the children's fantasies by virtue of the movies shown in the home.

As you have pointed out, there have been attempts reported in the press to obtain the video records of public figures, such as Government officials.

These incidents suffice to put the Congress on notice about this serious potential for invasion of privacy and chilling of the exercise of the First Amendment right to view films free from fear of harassment or adverse publicity. Many State and local laws do not provide adequate protection. Congress should act.

While the attempts to obtain customer records were successfully rebuffed in the instances I have referred to, there is always the threat of efforts to judicially enforce subpoenas seeking disclosure. Home video dealers should not have to face potential liability for failure to comply with a subpoena, on the one hand, or lawsuits by their customers because they have complied, on the other hand.

Because we feel strongly about protecting the privacy of our customers and upholding the law, we are also concerned about consistency between Federal and State legislation currently in effect. As video dealers, we would like clear guidance as to which legal requirement would apply in case of conflicting standards.

We applaud the proposed bills to formally protect a reasonable right of privacy for the video customer. We believe that the legislation will help to strengthen our company's policy as well as similar policies practiced by the other video retailers in VSDA.

Thank you again, Mr. Chairman and members of the committee for the opportunity to speak to you today on behalf of both Erol's, Inc., and the Video Software Dealers Association.

I will be pleased to answer any questions you may have. Mr. KASTENMEIER. Thank you very much, Mr. Stevenson. [The statement of Mr. Stevenson follows:)

SUMMARY OF

TESTIMONY OF VANS STEVENSON

FOR THE
VIDEO SOFTWARE DEALERS ASSOCIATION AND EROL'S, INC.

ON

HOME VIDEO RECORD PRIVACY LEGISLATION

August 3, 1988

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