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Experian backs away from venture

Experian is withdrawing from an online direct marketing effort because of heated criticism from Internet users.

One of the nation's largest credit bureaus is withdrawing from an online direct marketing venture in the face of Internet users' privacy concerns.

Experian, formerly known as TRW Information Systems and Services, collects consumer and business credit information and resells that information. Company representatives confirmed today they are pulling out of the joint venture, known as EHI.

A company representative attempted to downplay Experian's role in the venture, claiming that the company invested less than $50,000 in EHI.

"We wanted to investigate whether the concept was viable," said Janis Lamar, an Experian representative. "It was interesting, but we decided it was not viable for where Experian is going as a business."

She declined to comment on user criticism.

The member companies of EHI plan to create an "opt-in" database on the Web that direct marketers can use for email solicitations. The plan calls for Internet service providers to encourage their subscribers to volunteer themselves for inclusion in the marketing database. The more successful an ISP's enrollment campaign, the more money it would theoretically earn through commissions from every email advertisement sent to its subscribers.

EHI also plans to create an Internet "white pages" directory into which ISPs would automatically enter their subscribers, unless a subscriber asked specifically to "opt out." So far, only Prodigy has signed up.

To continue without Experian, the remaining EHI members will have to find another company to host the massive amounts of data such a database would create. That someone else will certainly be less controversial than a credit bureau, according to EHI program director Ian Oxman.

"No way, it won't be a credit bureau," he said. "We'll be looking for a vendor that doesn't collect data themselves, perhaps a company that just runs computer data centers."

Experian's high profile as a collector and seller of credit information, as well as their failed attempt to create a secure online credit report service, drew enough fire to make the company withdraw from the EHI project, Oxman added. Oxman is a former Experian employee but claims no current affiliation.

Antispam activists were quick to react to Experian's pullout. "Marketers are slowly being forced to admit the obvious: People don't like being treated as the chattels of their ISPs," said Jason Catlett, president of Junkbusters, a consumer advocacy group.

The Electronic Privacy Information Center (EPIC) accused Experian last month of misrepresenting EPIC's stance about the EHI project.

According to EPIC, Experian boasted that EPIC approved of the privacy measures taken by the EHI program. EPIC then released this statement: "Contrary to Experian's claims, EPIC conducted no formal review of the program, did not approve of the program's practices, and did not consent to the use of EPIC's name in Experian's promotional statements."

Instead, "the EHI program fails to uphold basic fair information practices," EPIC director Marc Rotenberg said in a statement. "There is no opportunity for users to correct or inspect their data nor is there any effort to control secondary use. EHI offers one model for controlling spam, but it is hardly ideal."

The other two partners of the EHI program, Harte-Hanks Direct Marketing and International Business Lists, will discuss replacing Experian at a meeting next week, according to Oxman.

Experian also came under fire last month for its botched attempt to provide private credit reports online. Because of a software glitch in its servers, several dozen reports were sent to the incorrect online addresses. The company pulled the plug on the service less than 48 hours after it went online.