Mr. Li, a Beijing resident, was amazed when he found out about a two-currency credit card offered by China's Merchant Bank, and made an application for the service which allows overdrafts and can be used overseas. However, Li became concerned when the bank said it requires critical personal information like deposit certification, property ownership certificate, license plate number, a copy of his ID card and his residential address. Li said: "This is all my critical information. What if it should be leaked or fall into the wrong hands?"

The burgeoning of credit management companies in Shanghai and Beijing has brought with it significant privacy problems. The daily operation of these companies often involves credit investigations that require the collection of individuals' personal information for the application of credit cards. As the public begins to benefit from the credit system that China's business community and government are developing, the community is becoming concerned about who will safeguard the security of personal information.

Bank Promises to Protect Clients' Personal Information

The Shanghai Credit Card Center of the Merchant' s Bank said that the company only collects such critical information for the purpose of better assessing an applicant's credit worthiness and to set out appropriate overdraft limits. Of course, sometimes applicants do not want or are unable to provide all the required information to the bank. In such cases, the bank will decide whether to issue the credit card and set an overdraft limit of between 5,000 to 50,000 yuan, according to an internal credit information assessment based on the information available and collected. The center stressed that the Merchant Bank of China, China's biggest listed bank, will protect absolutely the privacy of all clients, and that the bank has maintained a long and reliable record of offering credit card services.

Both Mr. Wu Bo, general manager of the Beijing Credit Bureau and Miss Yu, spokeswoman for the Shanghai Credit Investigation Company, have said that since credit security and management are critical core businesses, companies won't risk the security of client's personal information. Finally they turned to talking about the lack of privacy laws. As yet, China has not hammered out any credit laws or any clear definitions about personal privacy. They admitted that this makes it "hard for the credit management companies to carry out their business."

First Personal Credit Law Expected Next Year

A legal expert who took part in preparing legislation for China's credit law said that in early 2001 the State Council set up a "Group for Enterprise and Personal Credit Investigation" under the cooperation of 16 ministries and state commissions including the People's Bank of China, the State Administration of Industry and Commerce and the State Taxation Administration. After carrying out intensive research and investigation, the group drew up a draft proposal and wrote a report on the purpose of legislation for the state. The expert said: "We planned to launch the law by the end of 2002, but we were delayed by many unexpected and complicated issues. I'm, however, confident the relevant law will be promulgated in early 2003."

The new law will fill in many blanks that exist in China's current credit investigation process. Some delicate issues like the definition of privacy, the legitimate collection and disclosure of personal information and a company's personal information management procedures will be written into the law.

Credit Investigation Companies Prohibited from Selling Personal Information

Wu Bo said the United States promulgated the Fair Credit Reporting Act, Privacy Act, Freedom of Information Act and Credit Repair Organizations Act to regulate credit investigation and disclosure. For example, the Privacy Act states that unless requested by a person in writing or through prior written agreement, no agency is allowed to disclose any record on their system to any other organization or person through any form of communication. Otherwise, the agency concerned may face civic or criminal charges.

Although American laws don't have a clear definition on personal privacy, Wu Bo said: "Any information that can reveal an individual's identity can be viewed as private information." In addition to basic personal information such as name, birth date, working institute and telephone number, international credit investigation companies collect different kinds of information in different countries. "For example, US credit investigation companies don't collect information on gender out of regard for gender equality. Property and automobiles are not viewed as assets and their information is not collected by companies, due to the swift change of ownership in American society," Wu Bo said. However, information reflecting an individual's rate of consumption and income, the time and value of loans, are considered important indexes within the American credit system.

Wu Bo also corrected some people's idea that "credit investigation companies can sell personal information at will." He gave an example, "When a person negotiates with a potential client, the client may want to know his credit background and request his credit record. Whether the person agrees to provide the information may be key to the success of the transaction. When a bank is appraising a personal loan or overdraft, the organization must get an individual's permission before buying their personal information from a credit investigation company." Moreover, Wu pointed out, American laws clearly states that a credit investigation company can not keep negative personal credit records for more than 7 years and corporate bankruptcy information for more than 10 years.

(China.org.cn by Alex Xu, December 20, 2002)