California will begin selling confidential wage data it collects on 14 million people statewide to private information companies, car dealers and creditors wanting to check people's annual income.
A law that passed last summer allows the state's Employment Development Department to disclose the salary information. Previously, the data was available only to other government agencies. The program, which could bring the state $15 million over the next decade, could start later this year or in early 2000.
No data would be shared without the written permission of the individual, state officials said. But private companies that are deemed qualified to have access to the data would operate on an honor system and would not be required to show proof of such permission.
Supporters, including banks and lenders that championed the legislation, contend the data will allow them to process loan applications faster and cut back on fraud. But consumer groups say the electronic disclosure of someone's salary could fall into the wrong hands -- including debt collectors or marketing firms wanting to woo wealthy customers.
"This violates a basic principle of privacy," said Robert Ellis Smith, publisher of the Privacy Journal. Smith said the state wage data were originally collected to figure out unemployment taxes and benefits, not to help aid creditors.
State officials said the information would be given only to qualified creditors, primarily mortgage lenders. The department's salary information dates back about four years and covers about 85 percent of California residents. Federal employees and the self-employed are not included.
San Diego County-based Verification of Income and Employment, a joint venture between First American Financial Corp. and Norwest Mortgage Inc., is helping start the program. The joint venture, which worked with the state legislature for three years to get the law passed, also runs programs in Iowa, Minnesota, North Carolina, Pennsylvania and Texas.