Varsity or Junior Larceny?
From PRIVACY TIMES/July 20, 1999
THIS: SAT FIRM ONLY ONE OF MANY
Ahhh, high school.
A yearbook, a class ring, a school portrait, your first driver's license, the SATs, the prom, graduation. All timeless American rights of passage.
What most people don't realize, however, is that each of these activities -- and others -- results in the "trapping" of high schoolers' names and addresses. Behind the scenes, in a little-known, multimillion-dollar business, organizations providing youth-oriented products and services are gathering and selling students' personal data to direct marketing list brokers without the knowledge or consent of students or their parents, a Privacy Times investigation has discovered.
The practices generally are beyond the reach of the newly enacted Childrens Online Privacy Protection Act, which only covers the online activities of children under 13. The narrowly crafted legislation was recommended by the Federal Trade Commission, which will hold a July 20 workshop on the issue of verifiable parental consent.
Jeffrey Chester, of the Center for Media Education, said that the wholesale trafficking in teens data cast serious doubts on the efficacy of the FTC's narrow approach. "The FTC's failure to include teens in last year's legislative recommendation has put all of 'Generation Y's' privacy at risk," he said.
The high school years are the most advanced -- and lucrative -- level of this information food chain. Some list brokers start compiling lists of newborns and infants, creating a cradle-to-grave marketing database. The outright leader is American Student Lists, of Mineola, N.Y., which grosses $40 million selling kids lists. A division of American List Co., the creative firm obtains data on kids from drivers licenses, student directories, magazine subscriptions, yearbook publishers, class ring vendors, and formal wear companies, and from fast food and book clubs.
More ominous, this robust trade in student data has helped fuel the proliferation of scholarship scams that target immigrant, minority and rural students, and their parents.
One group that has spurred controversy is National Student Financial Aid (NSFA) of Carson City, Nevada. After acquiring name-and-address lists, the group typically sends letters, informing the students and parents that its "research" has identified the student as "eligible to apply for grants, scholarships, negotiated tuition discounts and interest free loans through our college assistance program." The letter invites them to come to a local hotel for a free group seminar. After an hour-long pitch, the parent-student duo meet with an NSFA "counselor," who urges them to pay between $500 and $700 for future assistance in finding financial aid -- information high school counselors offer for free, experts said.
After one such presentation in January, West Virginia Attorney General Darrell V. McGraw Jr. moved quickly to bar the company from returning to the State. On July 16, Deputy Attorney General Jill Miles told Privacy Times that she was finishing work on a consent order that would bar NSFA from doing business in West Virginia. "If they don't sign it soon, I'll sue them," Miles said. She said she found at least 10 potential violations of consumer protection and credit laws in NSFA's approach last January.
Kenneth Simon, a New York attorney representing NSFA, referred to Miles' charges as "technicalities" and said the company wanted to settle the matter amicably. Simon, along with Deborah Sgandurra, an NSFA executive, declined to identify the sources from which the firm obtains lists of high school students. Sgandurra also declined to name her company's president, or how much money the company made. "That's none of your business," she said.
At an NSFA seminar in Silver Spring, Maryland, a company counselor said NSFA targets students that have expressed an interest in financial aid. This implied that the firm got lists from Colleged Board/Educational Testing Service (ETS), which administers various college tests, including the SATs, PSATs and LSATs.
However, Bradley Quin, a College Board executive, strongly disputed this. He explained that the College Board runs the "Student Search Service," which sells the names and addresses of SAT, PSAT and other students that express an interest in financial aid. However, he continued, the group strictly limits sale to accredited colleges and universities, certain non-profit groups and government scholarship programs, like the U.S. military's Reserve Officer Training Corps (ROTC). The lists are "seeded" with dummy names and addresses in order to monitor their use. In 10 years overseeing the program, Quin said, he had never seen a serious abuse of the SAT or PSAT lists.
While parents have some opportunity to be involved in the SAT registration process, that is not true for PSATs, which are administered to 15- and 16-year-olds at the high schools. Thus, these students are "authorizing" the College Board to sell their names to "approved" institutions without parental involvement. Quin admitted that concerns have been raised, particularly about the sale of PSAT student data without parents' consent. But he defended the practice as appropriate, given that it was aimed at helping college-bound students.
Quin said that 96 percent of the PSAT students authorize the sale of their names, as do 86 percent of the SAT students. Quin declined to say how much money the College Board made selling names, stating that such information was "proprietary." He said the group adds some 3 million students' names every year. It sells a total of 40 million names to 1,200 institutions.
A Silver Spring parent, whose daughter received a mailing from National Student Financial Aid, said he was still suspicious there was a connection with the College Board. "She didn't receive any junk mail after she got her drivers license, but as soon as she took her SATs, it started pouring in. It's was just too much to be a coincidence," the parent said.
American Student Lists (ASL) was the only company that did not deny that it sold lists to scholarship "assistance" outfits. The 30-year-old company maintains data on more than nine million high school students. The data are matched monthly through the Postal Service's National Change of Address and "local area conversion services." It is a member of the Direct Marketing Association and says on its Web site (www.studentlist.com) that it honors requests to opt out from its database. The National Center for Missing and Exploited Children teamed up with ASL to create multi-media kiosks at New York's LaGuardia Airport featuring photos and information on missing children. To purchase an ASL list, a prospective client must provide a sample mailing or phone script.
ASL sells to a diverse clientele. In 1981, the Selective Service Administration paid $20,000 for a list of 1.2 million 18-year-old men, so it could send them postcards reminding them to register for the draft. In 1996, the Gillette Corp. bought a list of 1.4 million 18-year-olds so it could send them a razor, shaving cream and a coupon.
Mark Kantrowitz, a trenchant watchdog who runs www.finaid.org, said major clients of ASL are the U.S. Armed Forces components, which use lists to recruit youngsters. Suspecting that ASL was the source of at least some of the lists for scholarship scams, Kantrowitz asked ASL to seed its lists with certain names so he could monitor their use, but ASL declined, he said.
In 1980, ASL unsuccessfully sued the College Board, as part of an effort to get lists of kids that had taken the SATs. But that loss only seemed to make the company more determined to find other sources. It seems ASL now buys from most of the regular collectors of kids data: motor vehicle depts., student directories, magazine subscriptions, yearbook publishers, class ring vendors, and formal wear companies, and from fast food and book clubs.
Company President Martin Lerner said that while ASL collects data from 500 sources, some of the best sources are high school directories and educational counselors. Texas, for instance, allows some access to school records, he said. To help identify "college bound" students, ASL provides "surveys," to high school teachers, who then instruct their students to fill them out. This means that schools are accomplices in an ASL scheme to collect such data for commercial purposes without parental consent.
A similar program is carried out by the National Research Center for College and University Admissions (NRCCUA), a non-profit group in Lee's Summit, Missouri. The two-page survey solicits name and address, high school, grade point average, date of birth, high school and graduation year. In addition to asking what kind of college the student prefers, (i.e., private, state or community), the survey if the student would prefer a religious school, and if so, which
denomination. It also asks favorite fields of study, extra-curricular activities, occupational goals and how many hours per week the student uses a computer at home and at school.
Citing unnamed scholarship programs for minorities, it seeks the respondent's race. It also wants to know if the student prefers a "conservative" college campus, with no drinking, smoking or drugs; a "moderate" one, "observing reasonable limits and avoiding extremes in behavior;" or a "liberal" one, "observing liberal campus regulations."
Dr. Joseph D. Rei, NRCCUA's research director, said the organization sells lists to some 750 members, most of which are colleges. He said any sale of data to a for-profit company would require Board approval. The group had not sold lists to National Student Financial Aid, he said. NRCCUA is developing a brochure on privacy to be distributed to students.
Glenda Rose, former president of the Dade County (Florida) Association of College Advisors, said National Student Financial Aid is only one of many "scholarship" aid groups that parents should watch out for. She led a picket of the Texas-based College Financial Aid Services (CFAS), when it came to the Miami area, forcing it to cancel its seminars. CFAS appeared to target Haitian families, she said. Other groups of concern include College Planning Center, College Fund Life and the Educational Assistance Council, she said.
Rose also suspects that American Student List is the name-and-address source for at least some of these companies. But, she added, there are so many sources of kids names, and so many scams popping up, that a piecemeal approach won't solve the problem.
ASL's Lerner said that when his firm is warned about fraudulent companies, they will stop selling lists to them. "As soon as an agency says there's a problem with a company, we drop them like a hot potato." Lerner said he did not know if lists were sold to either National Student Financial Aid or College Financial Aid Services of America. (To opt out, contact: ASL, 330 Old Country Road, Suite 300 Mineola, NY 11501; Attn: Data Acquisitions Manager; (516) 248-6100. DMA's general opt-out: MPS, P. O. BOX 9008, FARMINGDALE, NY 11735-9008.)
Ted Leventhal & Evan Hendricks