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)