We are living in "database nation" and we are certainly enjoying its conveniences. Not only do we realize tremendous financial savings at the grocery checkout counter every time we swipe our loyalty cards, our loans and mortgages are easier to get and several points lower than they otherwise would be. 
"Just a few decades ago, applying for credit meant an in-person visit to a loan officer," writes Declan McCullagh in the most recent issue of Reason Magazine. "If the loan officer didn’t know you personally, he or she would contact your references and other creditors and eventually make a decision a few weeks later. If you had just moved to the community, you might be turned down or be approved for only a small loan. It was a slow, painful process that was hardly consumer-friendly."
Of course, privacy activists continue to fight the growing "social accountability mechanisms" that such convenience as instant credit and commerce demand. They want onerous new regulations placed on consumer information. McCullagh refers to the proposed "opt-in rule," which would force every company to demand unambiguous consent every time they use the information a customer has already given them.
McCullagh then shows how it might affect the MBNA Corporation, a major financial services company with more than 51 million customers. Its success is largely related to its "affinity" program, whereby it offered custom credit cards and other services through groups such as NASCAR, universities, baseball teams, etc. This has enabled the company to build a database of 800 million names.
Writing in the Duke Law Journal in February 2003, Indiana law professor Fred Cate and Georgetown business professor Michael Staten explain: "Mandatory opt-in requirements on MBNA’s operations would impair MBNA’s affinity group business model, raise account acquisition costs and lower profits, reduce the supply of credit and raise credit card prices, generate more offers to uninterested or unqualified consumers and raise the number of missed opportunities for qualified consumers, and impair efforts to prevent fraud and identity theft." Under an opt-in rule, recipients of new marketing offers offers would "be more risky and less profitable than MBNA’s target group reached under the current rules. As a result, MBNA’s delinquency and charge-off rates will rise, relative to its current experience, thereby imposing additional costs that will be passed along to all of MBNA’s customers."
As McCullagh sees it, new regulations like an "opt-in rule" would stifle the free exchange of information that drives dynamic economies. "An opt-in regime suffocates the economic activity that takes place when businesses use personal information to offer new products and tell customers about them without obtaining explicit permission in advance," he contends. "Because it assumes customers who have expressed no preference would object to a solicitation, it is more expensive than an opt-out approach."
