-Caveat Lector-
U.S. Helped Fund License Photo Database
By Robert O'Harrow Jr. and Liz Leyden
Washington Post Staff Writers
Thursday, February 18, 1999; Page A1
A small New Hampshire company that wants to build a national database of
driver's license photographs received nearly $1.5 million in federal funds
and technical assistance from the U.S. Secret Service last year, according
to documents and interviews with officials involved in the project.
Congressional leaders who helped make those arrangements envisioned using
the photo file to combat terrorism, immigration abuses and other identity
crimes – applications that appear to go beyond recent company claims the
database would only be used to prevent check and credit card fraud. "The
TrueID technology has widespread potential to reduce crime in the credit
and checking fields, in airports to reduce the chances of terrorism, and in
immigration and naturalization to verify proper identity," said a letter
about Image Data LLC from eight members of Congress in September 1997. "The
Secret Service can provide technical assistance and assess the
effectiveness of this new technology." These details about Image Data's
development add fuel to an intense privacy debate that was touched off last
month by reports that the Nashua, N.H., company recently bought more than
22 million drivers' images in South Carolina, Florida and Colorado. As the
company lobbied to gain access to motor vehicle files, officials apparently
told few people about its ties to the Secret Service or the money it
received from Congress. State legislators, motor vehicle administrators and
others who worked with the company said in interviews they had no inkling
that federal officials might be involved. Several officials from Florida
and South Carolina said they now feel misled by the company. In response
to a surge of complaints after news reports on the transfer of license
images, Florida Gov. Jeb Bush (R) canceled a contract to sell 14 million
photographs. Colorado Gov. Bill Owens (R) halted the sale of 5 million
images, while the state legislature pushed through a bill that would ban
the transfer. South Carolina Attorney General Charles M. Condon sued the
company for the return of 3.5 million digital photographs already being
used in a pilot project there. A state judge rejected that claim last week,
saying the company's True ID system is "no more intrusive on the privacy of
an individual than showing the driver's license itself." But Condon is
appealing the decision to the state supreme court. State legislators,
meanwhile, have proposed laws blocking future sales and a South Carolina
woman filed a class-action lawsuit this week seeking to stop Image Data
from using the images. Officials in Florida, Colorado and New York also
have said they intend to study sales of personal information by their
states, with an eye toward new restrictions. Officials at Image Data have
consistently defended the company's efforts, saying that photographs,
names, addresses, Social Security numbers and personal data would only be
used in a secure computer network to stop retail fraud. They said their
computers can briefly flash a tamper-proof photo of a person named on a
check or credit card to a tiny screen at a retailer, enabling a clerk to
verify the shopper's identity. A pilot program for check writers started in
South Carolina last August. In an interview yesterday, Image Data founder
Robert Houvener said he believes his company has the potential to save
consumers, businesses and governments billions of dollars in losses to
identity theft – a fast-growing crime in which fraud artists take on the
persona of victims and rack up bills in their names. Houvener said that's
why he sought out federal assistance and welcomed the expert advice of the
Secret Service, which investigates identity theft and electronic crimes.
Houvener played down any contradiction between his recent statements and
the potential uses cited by congressional supporters, saying in every
instance the technology would be used to prevent a fraudulent transaction.
That holds true for airlines that use it to screen passengers buying
tickets, Houvener said, or for banks verifying the identity of welfare
recipients getting their benefit. "An airline counter is the same as a
counter at a 7-Eleven," Houvener said. "It's the exact same situation. All
you're trying to do is prevent fraudulent transactions." But state
officials said they are skeptical. "The arguments against this program
become much more credible if the federal government and others ultimately
intended to use the technology and data on Americans for purposes broader
than fighting retail fraud," said Tom Feeney, a Florida Republican
legislator who, after meeting with an Image Data's lobbyist, sponsored a
law enabling the sale of the state's driver photographs last year. As
recently as two weeks ago, during a court hearing in South Carolina about
the company's purchases of the images, Houvener passed up several
opportunities to discuss the federal funding when asked about the company's
financing, according to a transcript of the hearing. Houvener said several
newspapers mentioned the federal funds and the Secret Service role when
they were first approved and so he assumed that people knew about these
matters. The one article in a national newspaper cited by Houvener,
however, briefly referred to the funds in a long report on the federal
budget. He said Condon, who questioned him in the case, had asked about
investors – not federal financing. Condon said he intends to review
Houvener's statements to determine if he misled the court. "This office is
going to investigate," said Condon, who predicted that South Carolina
drivers will not appreciate hearing about the ties between Image Data and
the Secret Service. "We don't want to be a guinea pig for the federal
government to experiment on how to solve federal problems," he said. A
Secret Service official said the agency did not seek to be included in the
effort. But the official, who is overseeing the project, also saw a chance
to help Image Data tailor its technology to fight a vexing crime. "We were
trying to show them positive ways the system could work," said Cary Rosoff,
a special agent in charge who visited the company's pilot program in South
Carolina in December. "Our feeling was, if the government was going to
invest money into the program, why not make it work as well as it can?"
Company officials have portrayed themselves as well-meaning corporate
newcomers, overwhelmed by attention from the media and policymakers.
Houvener said some critics mistakenly believe the images will be sold or
made available on the Internet. "We've been forthright with everyone,"
Houvener said yesterday. "There's nothing inconsistent here at all." With
help from an influential Boston public relations firm, the Rasky/Baerlein
Group, Image Data hired lobbyists in Florida and South Carolina. The
company spent about $25,000 on the South Carolina lobbyist – five times the
cost of the database it eventually bought. It contributed $500 to state
Sen. John Land, the legislator who sponsored a bill enabling the sale, as
well as $1,000 to former governor David Beasley. Image Data also received
help from eight legislators on Capitol Hill. They include Sen. Judd Gregg
(R-N.H.), who received $2,000 in campaign contributions in his last
campaign from the company's officials or their families, and Rep. Charles
F. Bass (R-N.H.), who received $3,000 in contributions from company
officials since 1995, according to Federal Election Commission data. In
the September 1997 letter written to Sen. Ben Nighthorse Campbell
(R-Colo.), chairman of the Appropriations Committee panel that oversees the
Secret Service, Gregg, Bass, Sen. Ernest F. Hollings (D-S.C.) and the
others expressed thanks "for including $1.46 million for a pilot program to
combat identity-based crimes." A spokeswoman for Gregg said he was not
available for comment. Bass was also unavailable for comment, but
spokeswoman Sally Tibbetts said he remains supportive of the company's
effort. Hollings continues to support the company's anti-fraud
initiatives, as long as drivers can choose not to participate, according to
his spokesman.
© Copyright 1999 The Washington Post Company
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