Posted on 09/22/2003 11:37:55 PM PDT by HAL9000
WASHINGTON, Sept. 22 — Two federal agencies announced today that they had opened investigations into JetBlue Airways in response to the airline's admission that it had provided travel records on more than a million passengers to a Pentagon contractor, violating its own privacy rules.The moves by the Department of Homeland Security and the Federal Trade Commission came as JetBlue disclosed that it had hired Deloitte & Touche, the accounting firm, to review the company's privacy policies and determine if they needed to be revamped.
The fast-growing three-year-old airline, which is based in New York and has worked to build a reputation for bargain fares and customer-friendly policies, apologized to customers last week after disclosing that it provided an Army contractor with more than five million computer files, reflecting the travel records of 1.1 million passengers in 2001 and 2002.
The contractor, Torch Concepts, based in Huntsville, Ala., matched the JetBlue records against another database to determine the passengers' Social Security numbers, occupations and family size in an effort to identify potential terrorists.
Although spokesmen for JetBlue and Torch Concepts have insisted that the passenger records were never shared with the government, privacy rights groups have expressed outrage over the passenger-screening project, describing the airline's decision to release the data to another private company as a grave violation of consumer privacy rights.
The Department of Homeland Security, which assumed responsibility for airport and airline security earlier this year, said it would try to determine if any government officials violated federal privacy laws in helping coordinate the passenger-screening study conducted by Torch Concepts.
The department's chief privacy officer, Nuala O'Connor Kelly, who is conducting the inquiry, said in a telephone interview that "this is an issue that concerns me and concerns the department — there was no notice to citizens or consumers about the use of their data and the sharing of data."
The Federal Trade Commission said that its investigation was prompted by a complaint filed today by a privacy rights organization, the Electronic Privacy Information Center in Washington, that urged the commission to bring civil charges against JetBlue for violating its own corporate privacy rules.
"We take these allegations very seriously and will review the petition carefully," said a commission spokeswoman, Claudia Bourne Farrell. "The F.T.C. has been very active in the area of assuring consumer privacy."
The Army, which hired Torch Concepts as a contractor on the project last year, said it was also reviewing the issues raised in JetBlue's admission of privacy violations. "Given the public interest, and rightly so, we'll be looking into this," said the spokesman, Maj. Gary C. Tallman.
He said that the Army had wanted Torch Concepts to carry out a data-mining project to determine how information analysis could be used to protect military bases from terrorist attacks.
He said that the contractor decided to test its data-mining theories by applying them to a large collection of data — passenger records from a major airline. Spokesmen at Torch Concepts and the Army said it is unclear why JetBlue was chosen for the project over other airlines.
In a statement released tonight, JetBlue said that it had hired Deloitte & Touche "to assist the airline in its analysis and continued development of its privacy policy."
The airline said it wanted "to let our customers know that we are fully committed to their privacy." The airline said that lawyers for Torch Concepts had "confirmed to JetBlue that no identifiable customer data was released to any third party, including the Department of Defense or the Transportation Security Administration, and that all the data has been destroyed."
An airline spokesman, Gareth Edmondson-Jones, said in an interview that the airline had not seen the complaint filed with the Federal Trade Commission and had no immediate response to the allegations.
He said that in the last few days the airline had received about 1,500 complaints through e-mail from customers about the privacy violations, but that there had been no rush of cancellations or any other discernible effect on the airline's reservations.
He repeated the company's explanation for its decision to turn over the passenger data last year, saying the airline was motivated by patriotism and a concern for the safety of its passengers in the aftermath of the terrorist attacks on Sept. 11, 2001.
Spokesmen for Torch Concepts and the Army said Torch was hired for the data-mining project through a major military contractor, SRS Technologies of Newport Beach, Calif., a high-technology engineering company that is helping to develop the Pentagon's controversial Terrorism Information Awareness program.
An SRS spokesman said that the Army had introduced SRS to Torch Concepts last year and had asked SRS to hire the company as a sub-contractor, a procedure that is not unusual in military procurement since it eases the military's bookkeeping when dealing with small companies.
The SRS spokesman said he did not believe that his company had been fully briefed on the details of Torch's work, nor had there ever been any connection between Torch's work for the Army and SRS's work for the Pentagon on the information awareness project, originally known as Total Information Awareness.
The project, a legacy of the Sept. 11 attacks, has been harshly criticized by some lawmakers and by privacy rights advocates as a dangerous effort to expand government surveillance of the public in the name of antiterrorism.
In promotional material, Torch Concepts says it specializes in so-called pattern-recognition technology — specifically, a system known as Acumen, or adaptive concept understanding from modeled enterprise networks," which allows patterns to be detected from mountains of data.
On its Web site, Torch Concepts says Acumen "has been applied successfully in data-mining applications in the health care and financial industries." It works, the company says, through a "unique synthesis of adaptive neural methods, internal models and fuzzy logic."
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