credit is denied or a job given someone else, the person may never know that he was the victim of a computerized sandbagging job. We have made some progress in requiring that credit information compiled about a person be disclosed upon request and an opportunity be given for correcting that information. But more should be done.

Congress has made progress at attempting to assure the American people their right to privacy. But we must continue to work at it. I am sure George Bernard Shaw would have liked someone to prove him wrong-about lack of privacy for Americans, and Congress should demonstrate that there is such a thing as individual privacy in this country-and that it must be preserved and protected.

Mr. SEIBERLING. Mr. Speaker, in recent years hundreds of thousands of veterans have been unfairly subjected to an invasion of privacy by the Defense Department's policy of placing certain highly prejudicial information on their discharge papers. This information specifies what the Defense Department calls the "reason for separation" from active duty and is known as a "separation program number"-SPN-which appears usually in coded form.

In fact, the information has almost nothing to do with the reason why an individual is discharged. Instead, it represents an attempt by DOD to classify the character of service beyond what is permitted by the classification of types of discharge honorable, general, undesirable, bad conduct, dishonorable. The SPN may classify the veteran as a drug abuser, alcoholic, shirker, liar, bed-wetter, homosexual, sexual deviant, or simply as an "antisocial' person.

The use of a classification system containing SPN's constitutes more than an invasion of individual privacy by the Defense Department. The system makes it possible for private employers to gain access to personal and perhaps unfounded information about job applicants. Placing an adverse SPN on an individual's discharge papers can make it impossible for him to obtain a job, even if he has an honorable discharge.

Last year I conducted an investigation of corporate employment practices concerning veterans, especially those with less-than honorable discharges. The results are summarized in the Congressional Record of November 28, 1973. My investigation showed that there was massive employment discrimination against veterans with less-than-honorable discharges. Over 40 percent of the Nation's largest corporations admit discriminating against veterans with general discharges, even though the Defense Department asserts that these discharges are "under honorable conditions."

Over 90 percent of the large corporations require veterans to submit a copy of their DD-214-discharge papers-when applying for a job. And 20 percent admit they have lists to decode the SPN's while others indicated that they would like to have the lists, which the Defense Department classifies as "official use only." There is no telling what happens to SPN information once it gets into the private sector. It may work its way into data banks to which hundreds of private users have common access. The General Accounting Office is now investigatiing the possibility of such abuse.

On March 22, Armed Services Committee Chairman F. Edward Hébert announced that the Defense Department was discontinuing its policy of placing SPN-type information on the DD-214 received by every serviceman when he is discharged. Under the new policy, however, SPN's would be assigned to the serviceman upon his discharge, but they would not appear on the DD-214. In addition, the new policy appears to permit the release of SPN-related information to private employers upon the request of the veteran.

The Defense Department's new policy has not yet been finalized in the form of regulations. When regulations are issued, there is a substantial likelihood that private employers will require veterans to request release of the information as a precondition to any job decision. While 20 percent of the large corporations admit having lists to decode SPN's many more may try to obtain information which would be available. The new policy could encourage private corporations to pressure the veteran to request release of the SPN-related information. In many cases such information is irrelevant to future job performance. But whether or not it is relevant, such an invasion of privacy cannot be justified or tolerated.

Mr. Speaker, I have just received answers from the Defense Department to a series of questions which I sent them earlier this year on the subjects of SPN's and types of discharges.

The Defense Department's letter speaks for itself, indicating quite clearly that DOD feels no moral or legal responsibility for veterans with unfavorable types of discharges or those with adverse SPN's.

Especially disturbing are the DOD answers to questions 9 and 17. The Defense Department states that the standard of proof required to award an adverse SPN is "that which is sufficient to persuade the recommending commander and the discharge authority that the reason for discharge and the character of service is warranted and appropriate." DOD states further that the standard of proof for awarding a general or undesirable discharge "is not determined by reference to issuance of either a general or undesirable discharge. Rather, the standard of proof is based on the reason for discharge." Perhaps the imprecise standards help explain why so few veterans are able to change their types of discharges or SPN's. I cannot believe that these standards of proof are not violative of constitutional due process of law.

I am also very disturbed by the Department's inclusion in its list of reasons for the rise in the rate of unfavorable discharges the "necessity to identify and discharge members who do not meet retention standards, especially during times of reduction of forces." Are we to accept higher rates of adverse discharges because the Defense Department is reducing forces? Why does the Defense Department feel it must brand servicemen as unsatisfactory in order to meet new force levels?

I was also interested in the answer to question 26, where DOD states that it is unaware of any studies supporting or rejecting the notion that the type of discharge is generally a good predictor of future civilian job performance.

Mr. Speaker, I do not know what the answers to all of the questions would have been before the change in SPN policy. I do know that the answers now furnished paint a picture of a Defense Department unconcerned with what happens to veterans with unfavorable types of discharges and adverse SPN's. I am somewhat surprised at the lack of regard for the rights of servicemen about to be discharged, who may forever be branded because of the Defense Department's disregard for their privacy.

I think that the Defense Department has a moral and a legal obligation to respect the privacy of servicemen and veterans. I have asked the Secretary of Defense to prohibit the disclosure of SPN information to private employers, even if the veteran requests the release of that information.

Armed Services Committee chairman said in announcing the new policy:

"The nature of the discharge should speak for itself, and that should be it as far as the discharge papers handed to the veteran are concerned. It is tough enough for a veterans with an honorable type discharge to become gainfully employed these days without carrying the additional burden of something that may not be relevant to a particular job as a civilian."

I agree.

Mr. Speaker, so that the Members and the public may have a better understanding of the Defense Department's policy on SPN's and types of discharges, I will tomorrow ask unanimous consent that the Defense Department's answer to my letter appear in the Record.

BANK SECRECY

Mr. STARK. Mr. Speaker, as author of the Right to Financial Privacy Act of 1973, a bill cosponsored by 102 of my colleagues, I am pleased to add to the discussion today on this most pressing issue.

I was also a plaintiff in a case on the constitutionality of the Bank Secrecy Act that this bill would amend, and the Supreme Court yesterday handed down its long-awaited decision. The Court in effect chose to skirt the issue by finding that the plaintiffs didn't have standing-and thereby threw the issue back into the lap of Congress where it was first created.

The Congress passed the Bank Secrecy Act in 1970 with the intention of assisting the war on crime. Its purpose was to facilitate the gathering of information on suspected criminals by permitting any Government official to have access to individual bank records. In addition, banks were required to report "unusual” currency transactions to the Secretary of the Treasury as well as all domestic transactions over $10,000. The banks, then, were to act as investigators for the Government-to spy on their own customers.

I filed suit with the ACLU and the California Bankers Association and got an injunction against those reporting provisions of the act. However since the recordkeeping requirements were upheld, we appealed the decision, as did the Government from the other side, and it was thus cross-appealed up to the Supreme Court. The Court's decision, therefore, was in a sense disappointing. However, in not addresing the constitutional issues, they left the way open for legislative remedy. And in fact, the dissenting opinions of Justices Douglas, Marshall, and Brennan and the concurring views of Powell and Blackmun can be interpreted as urging legislative relief to a problem that was caused by legislation.

I am hopeful that the Banking Committee, of which I am a member, will soon hold hearings on the Financial Privacy Act. If we act promptly it will be possible to pass this momentous legislation before the end of the session.

As my colleagues are well aware, this is perhaps one of the most critical issues of the time. Even the President has expressed a new-found concern for the safeguard of privacy and legitimized it by creating Gerald Ford's Commission on Privacy. Clearly then, this is the time to pass the necessary legislation. We cannot let this momentum pass us by.

For the interest of my colleagues, I would like to include in the Record some excerpts from a statement I made last summer on the Financial Privacy Act and some of my own experiences with abuses of confidence.

[The information follows:]

EXCERPTS FROM A STATEMENT BY MR. STARK ON THE FINANCIAL PRIVACY ACT

The bill I have introduced, H.R. 9424, resolves all the ambiguities in existing law relating to an individual's financial records. It clearly safeguards the individual's right to privacy with respect to his financial transactions and history. Specifically, the Right to Financial Privacy Act establishes four means of access to private records held by financial institutions: customer consent, administrative subpenas and summonses, search warrants, and judicial subpenas. Correspondingly, the act places an obligation on the financial institutions not to disclose information from customer records unless one of the above requirements has been met. In addition, it is stipulated that the information obtained by the Government must be used only for those purposes for which it was originally solicited.

The need for this act, while not resulting directly from the Bank Secrecy Act, stems from subsequent controversy over the precise interpretation of an individual's fourth amendment rights. At Senate hearings held last year on legislation to amend the recordkeeping laws, the Secretary of the Treasury admitted that subpenas are not required for the release of financial information. He suggested that as the 1970 act had not specifically addressed the matter of access to records, the Treasury could not take arbitrary administrative action to do so. It was therefore up to a bank to determine whether or not a subpena was necessary before records would be provided without the consent of the customer. The Treasury would take no position to supersede the bank's judgment.

In this situation, the privacy of a customer's financial records is dependent on the whim of his bank. Without his knowledge or consent, his entire financial history may be divulged. As he is unaware of official scrutiny, he cannot possibly challenge the dissemination of the information. There are no safeguards to protect this confidentiality.

In June 1972, I filed suit with the northern California ACLU and the California Bankers Association to test the constitutionality of this reporting system. The suit, asking for an injunction of the Bank Secrecy Act on the grounds that it authorized illegal search and seizure, was later joined by the Wells Fargo Bank. Bank of America representative Robert Fabian publicly voiced his own similar objections to the dangers inherent in the reporting provisions of the Act. He declared that "the regulations could undermine people's confidence in the banking system and the Government."

A Federal judge in San Francisco issued a temporary restraining order to prevent the act from taking effect. Subsequent to an appeals court decision, the Supreme Court is now deciding whether or not to hear the case.

This bill that I have introduced is not inconsistent with the essence of the Bank Secrecy Act. It recognizes the critical need for a thorough system of recordkeeping and reporting and upholds the requirements for reporting of information, subject to the previously mentioned limitations. Finally, the bill explicitly limits to two situations the Secretary of the Treasury's ability to require an institution to transmit reports or to keep records on customers. Such reports must either be required by the Internal Revenue Code, or by a supervisory agency. This, then, effectively repeals contrary provisions of titles I and II of the Bank Secrecy Act. However, I do not believe that their deletion in any way weakens the Bank Secrecy Act, or undermines its intent. Instead I believe it can only strengthen it, by removing any lingering doubt over possible or potential unconstitutional applications of its provisions.

This bill has already stimulated discussion. In particular, two areas of doubt have been raised, and I would like to attempt to answer them at this time. The

first is criticism raised by certain members of the law enforcement sector-that the limits placed on the Secretary's right to obtain reports will inhibit important criminal investigation. I believe that the legal processes still open to any law enforcement officer under this Act are sufficient. This act simply guarantees that customers be notified and have an opportunity to respond to any attempt to gain access to their records except where the standard of probable cause has been met. Within the bounds of the fourth amendment rights, that is all that is constitutionally possible.

Others have objected to consideration of this act at this time on the grounds that airing of the issue may bias the upcoming decision of the Supreme Court to review the appeals case. It must be remembered, however, that legislative action will take precedence over court action in such a way as to render that appeal inoperative. If passed, this act answers all the charges filed in the original California suit.

I would like to include for the information of my colleagues an excerpt from a supporting statement by the California Bankers Association. On July 19, the Association wrote that:

We should make it clear that, although the Association places a high value on maintaining the financial confidentiality which bank customers have come to expect, it certainly does not wish to deny it any way the necessary prerequisites of effective law enforcement. The Association feels, however, that it owes its highest responsibility to the banking public who have entrusted some of their most personal records of private financial affairs to our care. The public expects these records to be held in the highest confidence and the California Bankers Association welcomes legislation which would safeguard their expectations.

Mr. FRASER. Mr. Speaker, privacy is a basic right. But the growing network of information-gathering activities is threatening our constitutional right to privacy and individual freedom.

The law offers the individual protection against physical surveillance, but virtually none against data surveillance.

Computers make the vast collection of data on individuals collected by Government and private sources a danger to all residents of our country. This private information often includes highly personal, unverified hearsay and gossip. Illegal or even legal access to this data and the exchange and selling of such information without the knowledge of the individual involved endangers the basic right to privacy.

A person who voluntarily fills out a form, takes a psychological test, or has a physical examination may not consider or anticipate that confidential information resulting from these acts may well wind up in a computer and follow him for the rest of his life, affecting the course of his life.

One of the more startling examples of Government invasion of privacy was the Executive order-now fortunately rescinded-which gave the Department of Agriculture the power to inspect Federal tax returns of farmers "needed for statistical purposes."

We are all affected by the indiscriminate use of data collected-through credit records that often contain misinformation or computer mistakes; through health record data banks used by life, health and accident insurance companies; through bank records, military records, school records, and juvenile records. There is even a Government controlled data bank of information on children of migrant farmworkers. Intelligence gathering operations are carried out by some 20 Federal agencies and by State, county, and city agencies. There are many more examples of data collecting mechanisms such as airline computers, television surveys, psychiatric reports, and polygraph tests.

Recordkeeping may appear harmless on the surface. But we must have safeguards that will protect against the dangers inherent in this massive collection system.

Data surveillance is a chilling specter, intimidating and demoralizing.

I am committed to legislation that will guard against unwarranted access to such data.

Mr. Moss. Mr. Speaker, we are frequently asked whose privacy is being invaded and how. What follows are a number of stark and freightening examples demonstrating how some law enforcement organizations and businesses have intimidated individual citizens. Hopefully these examples will serve to reenforce our commitment to the basic right of privacy for every American, for when one citizen's right is abused, all Americans suffer.

[The information follows:]

37-583-74-pt. 2-24

INDIVIDUALS VICTIMIZED BY INVASION OF PRIVACY

The $100,000 punitive damage suit of James C. Millstone against O'Hanion Reports, a New York-based retail credit reporting firm, goes to trial Feb. 19 in federal court in the eastern district of Missouri (72-C224-4). Millstone, assistand managing editor of the St. Louis Post-Dispatch and, incidentally, a member of the White House enemies list, is a classic unfair credit reports victim. He was turned down for auto insurance in 1971 because O'Hanion reported that "a poll of four neighbors proved" Millstone had a "lack of judgment," undisciplined kids, a prior history of evictions and a bad "attitude." Millstone received insurance coverage elsewhere but under the current Fair Credit Reporting Act, could receive only a verbal account, not a copy of his credit reports from O'Hanion. He then had difficulty getting the firm to correct its report, which proved to contain inaccurate allegations from one disgruntled neighbor in Washington, D.C.

A Princeton University faculty member, Galen L. Cranz, has filed a similar suit, wtih the aid of the ACLU of New Jersey, in federal court in Trenton (CA 1858-73). She was denied auto insurance on the basis of a Retail Credit Co. of Georgia report that mentioned that she was living with a man to whom she was not married. A Minneapolis woman suffered the same fate ("immoral behavior" according to the Safeco Insurance Co. and Service Review Inc.) but the state insurance commissioner may reverse the insurance cancellation as arbitrary. A young couple were returning home to San Francisco one evening a year ago when they were stopped by Santa Clara County sheriff's deputies, eventually handcuffed, held at gunpoint and locked up overnight on charges of auto theft. The arresting officer had queried the San Francisco city and county criminal justice data bank and learned that the couple's Falcon had been reported stolen a year earlier. Police had failed to enter into the computer the "pink slip" record that the car had been recovered by its rightful owners. Eighteen hours after arrest, the pregnant woman and her husband were released. They have filed a $250,000 suit against Bay Area law enforcement agencies. "Not an isolated instance," according to their attorney, Bruce Krell of San Francisco.

It is in California where a San Francisco police cadet was fired for stopping a polygraph test about his sexual preferences and activities.

Arrest Records. When Brad Shipp was named to the Fairfax County Board of Education in Virginia, it seemed like a great triumph for a 17-year-old high school senior. But the distinction turned promptly into a possible nightmare when members of the Board of Supervisors insisted upon seeing Shipp's arrest record after he revealed two arrests for the possession of marijuana. Virginia law forbids dissemination of juvenile records without the permission of the juvenile or the court. Shipp was saved when the Board deadlocked 4-4 and failed to reach the necessary majority to pass a motion asking Juvenile Court for Shipp's records. He is now serving as a member of the school board.

Arrest Records.-After Charles A. Tosh, an organizer for the Retail Clerk's Union, and others were arrested at a labor demonstration at a Buddies Supermarket in Fort Worth, the security director for the market tried to get the arrest records and mug shots of those arrested. First he tried asking his brother, the Dallas police chief, but was turned down. Then he called a buddy on the Fort Worth police force. This time he was successful, and the Buddies Supermarket displayed mug shots and "rap sheets" of the union organizers so that employees would be discouraged from voting for union representation.

When Tosh saw the anti-union posters, he hit the roof. The company was displaying the photo and arrest record of Charles Tosch, no relation to Tosh the organizer. Tosch was a convicted felon; Tosh had been arrested on minor charges and released.

The Fifth Circuit of Appeals (72-3017, June 22, 1973) held that the Fort Worth policeman's release of arrest records did not constitute "state action" and that Tosh's right to privacy was not violated by the company or the police. Tosh's lawsuit did succeed in showing that the Fort Worth policemen, like others around the country, make any of their 40,000 arrest records available to private security officers, as well as to other law enforcement agencies.

Arrest Records.-An enthusiastic 17-year-old youth was arrested at a rock concert in Columbia, Md., last fall and accused by a private security guard of throwing a rock. He denied the charge. The guard later disappeared, and so the charge was dropped and the youth's criminal file destroyed. However, the reference card to the charge remains in Howard County juvenile files and the young man is attempting to have it purged. “This could plague him the rest of his life,” said his father.