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Subject: RISKS DIGEST 11.06 REPLY-TO: risks@csl.sri.com

RISKS-LIST: RISKS-FORUM Digest Friday 8 February 1991 Volume 11 : Issue 06

FORUM ON RISKS TO THE PUBLIC IN COMPUTERS AND RELATED SYSTEMS ACM Committee on Computers and Public Policy, Peter G. Neumann, moderator

Contents: Mailing lists (Dan Herrick, Mary Culnan) Americard the Beautyfool (J.C.Patilla, Jay Schmidgall, Frank Wales, Alex Bangs, Pink Prince or Prince Pink?, Jerry Leichter, Geoff Kuenning, Rob Aitken, Daniel B Dobkin, Brian Yamauchi, Joe Keane, Richard A. O'Keefe, Jeffrey Jonas, PGN (epilogue))

The RISKS Forum is moderated. Contributions should be relevant, sound, in good taste, objective, coherent, concise, and nonrepetitious. Diversity is welcome. CONTRIBUTIONS to RISKS@CSL.SRI.COM, with relevant, substantive "Subject:" line. Others ignored! REQUESTS to RISKS-Request@CSL.SRI.COM. FTP VOL i ISSUE j: ftp CRVAX.sri.com<CR>login anonymous<CR>AnyNonNullPW<CR> CD RISKS:<CR>GET RISKS-i.j<CR> (where i=1 to 10, j is always TWO digits. Vol i summaries in j=00; "dir risks-*.*<CR>" gives directory; "bye" logs out. ALL CONTRIBUTIONS CONSIDERED AS PERSONAL COMMENTS; USUAL DISCLAIMERS APPLY. Relevant contributions may appear in the RISKS section of regular issues of ACM SIGSOFT's SOFTWARE ENGINEERING NOTES, unless you state otherwise.

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Date: 29 Jan 91 09:56:00 EDT From: "CONTR HERRICK, DAN" <herrickd%iccgcc.DNET@abvax.UUCP> Subject: Mailing lists are, indeed, cheaply and easily available (RISKS-10.81)

Samuel Bates asked where you can get names of companies that produce the Lotus-style information.

Look in your local Yellow Pages. Possibly Madison is too much a one industry town, so you may need to look in the Milwaukee Yellow Pages. Use the Business to Business Yellow Pages if they make that distinction out there.

The Cleveland Business to Business Yellow Pages have about 3 1/2 columns of entries under Advertising, Direct Mail. Both national and local firms. More than a third of those Yellow Pages advertisers will sell or rent the same kind of information as Esmark and Lotus were offering.

dan herrick herrickd@iccgcc.decnet.ab.com

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Date: 30 Jan 91 20:30:00 EST From: "Mary Culnan" <mculnan@guvax.georgetown.edu> Subject: U.S. Mailing List Business

This is in response to the posting in RISKS 10.81 asking for the names of companies that sell mailing lists based on personal information. The list business in the US is more than a $1 Billion dollar/year industry. To put it briefly, if it moves, it will be for sale in a list. If you use a credit card, call an 800 #, subscribe to any publications, order from a catalog, contribute to a political party or a charity, or return a warranty card, you are on somebody's list.

Of most concern to me is that the two large credit bureaus, TRW and Equifax, are both also in the list business. Data from your credit record are summarized and moved into the marketing databases. This was the source of the data for the Lotus MarketPlace (plus census data). I don't believe that most people knew this.

There is nothing illegal about this, and because the marketing databases do not include an individual's *credit report*, these lists are not covered by the Fair Credit Reporting Act.

If you are interested in seeing examples of actual lists, I suggest you consult the following 3 trade publications:

1) Standard Rate & Data Services (SRDS) volume on Direct Mail List Rates & Data. (A multi-volume reference source available in many libraries--other volumes include names and addresses for radio stations, etc.)

2) DM News, a weekly newspaper

3) Direct Marketing, a monthly magazine.

I will send a short handout with more information on specific list vendors as well as general information on the list industry to anyone who sends me a business-size stamped self-addressed envelope:

Mary Culnan, School of Business Administration, Georgetown University, Washington, D.C. 20057

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Date: Wed, 30 Jan 91 14:49:25 -0500 From: jcp@islay.dco.dec.com (Jolly C. Pancakes) Subject: cashless society

Margaret Atwood's book _The Handmaid's Tale_ makes an excellent case against a cashless, plastic dependent society (doubtless there are other books which deal with the subject but Atwood's is the one most familiar to a wide segment of the population). At some time prior to the action in the book, everyone in the US has converted to an "Americard"-type system. The legitimate government is then overthrown and taken over by a fundamentalist Christian sect which then revokes all bank accounts owned by women. At a single stroke, half of the adult population can be immediately disenfranchised (and you can imagine for yourself all the implications, etc.) -J.C.Patilla

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Date: Wed, 30 Jan 91 14:04:16 CST From: "Jay Schmidgall Rochester MN" <shmdgljd@rchvmw3.iinus1.ibm.com> Subject: Cashless Society

Pointer to Roger Zelazny's "My Name is Legion", a collection of three tales concerning a detective using/making cash in a cashless society.

In this case, it is a world-wide electronic credit card, not just USA. Also, the detective was a compsci guy who was in on the organization of the database from the beginnning and was eventually presented with the decision to enter/not enter into that database.

Very interesting reading, especially as relating to the realization of the detective that this might not be a good thing and how he got around it.

Jay Schmidgall RSCS:shmdgljd@rchvmw3

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Date: Wed, 30 Jan 91 19:46:25 GMT From: Frank Wales <frank@grep.co.uk> Subject: Re: Electronic cash completely

If someone can invent a cash-replacement scheme that lets me give money to a homeless busker, give the equivalent of a post-dated cheque as a deposit to be destroyed if I don't mess up, and allows my friends from abroad to buy things while they visit me, then maybe I'll think about it.

Frank Wales, Grep Limited, [frank@grep.co.uk<->uunet!grep!frank] Kirkfields Business Centre, Kirk Lane, LEEDS, UK, LS19 7LX. (+44) 532 500303

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Date: Wed, 30 Jan 91 15:32:54 EST From: abg@mars.EPM.ORNL.GOV (Alex Bangs) Subject: Re: Electronic Cash Cards (RISKS-10.82)

The primary motivation behind these cards seems to be the potential to eliminate crime. Yet I don't think we can say that all crime involves cash and individuals. Banks have been caught laundering money for drug dealers before; who says they couldn't find a way to do it with cash cards?

Alex Bangs, ORNL

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Date: Wed, 30 Jan 91 17:24:19 CST From: prince@pebbles.tcs.uh.edu (Pink) Subject: Abolish Cash, and destabilize the nation.

The social changes that would be brought about by the proposals in the article "Abolish Cash" by Harvey F. Wachsman are almost prophetic in their similarities to Margret Atwood's _The Handmaid's Tale_. The idea of a cashless society has been around much longer than this book, but the dangers Atwood illustrates are still just as real.

In her book, a group of fundamentalists perform a bloodless coup on this country, primarily by taking over the central computers that control every citizens monetary accounts. The first thing they do is freeze all of the accounts whose holders are women or whom the consider to be the opposition. Literally overnight they are able to seize control of the country. If this were to happen in reality, a hostile group could concievably freeze our entire economy with a reletively small amount of military or political effort.

If this country "goes cashless" I'm sure the control of the system would be distributed with multiple backup computers to come online if an important one failed or started acting "outside of norms." The danger still remains that hostile countries or organizations could place agents in whatever agency would control this program.

In short, we would be putting our economy in the hands of computers and by extention the (probably) small number of people who control them, rather than in the hands of the entire government, where change is slow and relatively visible.

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Date: Wed, 30 Jan 91 23:31:40 EDT From: Jerry Leichter <leichter@lrw.com> Subject: Cashless society

Those interested in this issue might want to look up the December, 1979 CACM (V22 #12). This was a special issue on Electronic Funds Transfer.

Some interesting data (from Lipis's article on Costs of ... Payment Systems): For 1976, it is estimated that the cost of a cash transaction is about $.012, which is actually a DECREASE from the cost in the early '70's. The cost for a credit card transaction is $.52; for a check, $.53. In 1976, cash represented 88% of all transactions, but only 3% of all money changing hands. (96% of the money moved as checks, though only 11% of the transactions were by check).

-- Jerry

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Date: Wed, 30 Jan 91 18:23:34 -0800 From: Geoff Kuenning <geoff@devnet.la.locus.com> Subject: Re: Electronic cash

Somebody said they hardly use cash any more, even using a Visa at 7-11. That's them. Me, I do a *lot* of cash business; it takes much less time to hand the clerk a fiver and get change than any alternative -- and the bank doesn't charge me 10 cents a transaction.

One other small point, pointed out by John D. McDonald in one of his Travis McGee books:

Suppose you are a black marketeer with a large nest egg in the mattress. You learn that on June 1, your money is going to be useless unless it's orange, and there's a complicated system that will keep you from swapping your green for orange. Are you really going to sit quietly while your money becomes worthless? Or are you going to go visit your local car, boat, and art dealers? When you find out that the BMW's are out of stock because your neighbor beat you to it, are you perhaps going to be willing to pay double for a Honda (getting 50% out of your money being obviously better than 0%)? The obvious result is a spurt of demand-pull inflation; how much depends on the true size of the underground economy, but the more you believe the proponents of this idiotic idea, the worse it will be.

Geoff Kuenning geoff@la.locus.com geoff@ITcorp.com

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Date: Thu, 31 Jan 91 12:09:00 pst From: Rob Aitken <aitken@hpdtlra.ctgsc.hp.com> Subject: Cashless society

Yet another problem with the Americard proposal is that a number of small countries, particularly in the Caribbean, use the U.S. dollar as their official currency. Instantly eliminating a country's money supply could be damaging to international relations. Rob Aitken

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Date: Mon, 4 Feb 91 14:06:05 EST From: Daniel B Dobkin <dbd@marbury.gba.nyu.edu> Subject: cashless banking

The recent discussion of the New York Times op-ed proposal for a cashless society reminded me of Robert Ellis Smith's book on "Privacy," published in 1979. I don't have the book in front of me, but I'll paraphrase the passage that really struck me:

A number of years ago a group of academics was asked to consider how a government could best keep track of what all its citizens were up to. After a day's discussion, their proposal was remarkably similar to what the banking industry wants to establish in this country: real-time electronic funds transfers.

Remember, that was 1979. We've come a long way since then!

Unfortunately, Smith doesn't attribute the source of this story; does anyone out there have any clues? Enquiring minds want to know.....

\dbd

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Date: Thu, 31 Jan 91 18:25:25 -0500 From: yamauchi@cs.rochester.edu Subject: Electronic Cash

I'm in favor of replacing the various pieces of paper and bits of metal we currently use for money with a more convenient electronic system, but I think this should and will be done via the free market rather than as mandated by the central government.

Already, I tend to use my VISA debit card for most purchases over $10-$20, and it would be convenient to be able to avoid carrying any cash and use a debit card for all purchases (including vending machines, etc). Transfers of money from one individual to another might be a little more complicated, but one could have a terminal which accepted two cards (with appropriate passwords) and transferred funds between the two accounts. Granted, this is less convenient than just handing someone a few bills, however, on the whole, this system should be more efficient than having to run down to the ATM whenever you get low on cash (hard to imagine how people dealt with bankers' hours before ATM's...).

Another vast improvement would be an LCD display on the card which indicates your current balance. Thus no more need to either balance a checkbook or worry about bouncing checks. (For the paranoid, this feature could be disabled so that others can't see the balance.)

Bill payment would also be easier. Just dial the access number for your electric/phone/credit company, insert your card, and key in your password and the amount you are paying.

I'm not extremely enthusiastic about giving the government too much information. It is true that they could abuse this. On the other hand, the real solution is to enact pro-freedom measures legislatively to limit the government's power. If either (1) the government ceases to become democratic, or (2) the majority wants to allow government oppression, then there's not a lot you can do -- short of armed rebellion -- the tanks can always roll through the streets.

Electronic cash would have both positive and negative effects on crime. On the positive side, violent crimes would drop substantially -- no longer would you have to worry about being knifed for your wallet in a dark alley. On the negative side, the potential for computer crime would be increased. At least in theory, this could create the potential for truly huge sums of money to be stolen, not by stealing large chunks, but by stealing minute amounts from large numbers. For example, stealing 1 cent from every transaction made in the U.S. would probably result in a take in the /day range.

Still, given a choice, I would rather have some hacker breaking into my checking account than some mugger slitting my throat...

Brian Yamauchi University of Rochester yamauchi@cs.rochester.edu Department of Computer Science

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Date: Fri, 1 Feb 91 18:40:24 PST From: jgk@osc.UUCP (Joe Keane) Subject: Re: Electronic cash completely replacing cash

The article on electronic cash worries me. It's so full of vague reasoning and outright contradictions that it seems like a joke, but evidently it's quite serious. It's hard to figure out where to start criticizing it.

The stated goal is to reduce the Federal deficit. But the plan includes the government giving away, to every home and business, machines which evidently read not just magnetic cards but also hand and retina prints. Even ignoring the feasibility and risks of this technology, it's clear that such machines would not be cheap. The article assures us that `regardless' the goverment would come out ahead, but i don't see any basis for this belief.

I'll just point out the obvious irony in saying banks would be `delighted' to open new accounts, and then also saying they will be required to do so.

Most of the article talks about the benefits of the proposed `Americard'. I agree with much of this, and in fact we are seeing more use of credit cards and bank cards to replace cash. But i would prefer the American way, having many banks to choose from rather than one government-mandated plan. This leads us to the obvious question: if the Americard is such a hot idea, then why do we need to outlaw its competition?

In any case, talking about these benefits is deceptive, since it implies that the plan is giving us something we don't have, when really it's taking away something we do have. This is a common ploy; everyone knows the sarcasm in the phrase `for your own good'. And it's not just taking our greenbacks, but quite a bit of personal freedom too. This alone should make this plan unacceptable to any reasonable person.

Finally, the argument that eliminating cash will also eliminate black market activity is ridiculous and goes against all common sense. Apparently we are to believe that black marketeers will simply throw up their hands and give up. A child could tell you that they will simply switch to using yen, Deutsch marks, drugs, diamonds, or whatever else is convenient. Most likely they will also accept the `obsolete' American dollars at some reduced rate. The only way to actually accomplish the stated objective is to eliminate everything of value smaller than a cow. I leave it to the reader to evaluate this option.

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Date: 4 Feb 91 09:24:32 GMT From: ok@goanna.cs.rmit.OZ.AU (Richard A. O'Keefe) Subject: Re: RISKS DIGEST 10.81

In Risks v.10 no 81, 28-Jan-91, David 'Witt' wrote about > Subject: Electronic cash completely replacing cash

The article he transcribed said, amongst other things:

> If all the people who do business in cash were forced to report their > incomes accurately - if the under-ground economy were forced to the surface - > the Government could collect an additional $100 billion a year for the nationl > treasury - without raising taxes.

This is simply false. It's every bit as blatant a lie as the one that says television advertising saves consumers money. The bottom line is SOMEONE HAS TO PAY. The underground economy having been forced to the surface, where do they get the money to pay the taxes? From people who use their services. The nett result is that all around the economy, prices go up. If the underground economy didn't have a major part to play in the national economy, there wouldn't be any point in making them pay taxes, no? People who find themselves spending lots more money, and who notice that the government's income has gone up, may possibly be stupid enough to believe that "taxes haven't been raised", but surely not all of them.

This is the part of the proposal that really bothers me, that there are people who are prepared to believe that huge chunks of money can be extracted from part of the economy without any other effect.

> How do we create a system to keep cash businesses honest ?? Eliminate > cash. That may sound revolutionary, but the exchange of cash for electronic > currency is already used in nearly all legitimate international business > transactions.

EFT is also used in a heck of a lot of dishonest and fraudulent transactions. New Zealand recently created a "Serious Fraud Office" because it finally dawned on the police and the government that the depradations of thieves and muggers were *dwarfed* by white-collar crime. I sometimes wonder whether it might be a good idea to outlaw EFT in order to slow white-collar crime down. (Half (:-), but only half.) People who steal millions of dollars at a time do _not_ walk around with pockets full of $1 notes...

> Think about it. Drug deals, muggings, corruption, businesses > concealing their income - they all require cash and secrecy. A monetary system > bases solely on electronic currency would leave a trail that would cripple such > enterprises.

Don't people read science fiction any more? Has Mack Reynolds gone completely out of favour? Many science fiction writers have published schemes for doing all these things in a cashless society. (Example: your hand- and eye- print scanners had better check for temperature and pulse...) (One elementary principle: having X buy something for you with his money is quite as good as having X give you the money and then you buy it, and in some respects better.)

> In place of paper money, we would receive new cards - let's call them > Americards - each bio-mechanically impregnated with the owner's hand and retina > prints to insure virtually foolproof identification.

If one person can make something, another can forge it. Is this really so obscure? If the handprint is only on the card, that doesn't ensure foolproof identification, it makes forgery all the easier. (To quote Edgar Wallace's Mr J.G.Reeder, "I fear I have a criminal mind". Evidently the author of the article David Witt quoted is very honest.)

> The Government would supply all homes and businesses, free of charge, > with machines, to read the card, certify the holder's identity, and make > instantaneous electronic debits and credits. Regardless of what such machines > would cost, the Government, with $100 billion in new revenues and no more > printing and mining costs, would come out ahead.

Eh? These machines are going to be *at least* as expensive as VCRs, and we're talking about distributing > 500 million of them (ALL homes and businesses, remember, and businesses will need as many of these gadgets as they have cash registers). Then think about maintenance.

> And think of the benefits to the average American.

I have a couple of US bank accounts, but no longer live or work there. Would the US government give *me* a magic reader and a network connection, or would they just steal the money?

> No one would have to write a check again.

What's so hard about writing cheques? The last supermarket I was in would print the cheque for you, all you had to fill in was the signature.

> Muggers and > buglars would be out of business: no one would be carrying cash and stolen > property would be difficult to sell because there would be records of all > transactions.

Cars are registered now, aren't they. There's a change of registration form you have to fill out when ownership changes. Has this done anything to stop car theft? Where has this guy been living?

> The Federal Reserve would be better able to follow the economy, helping > to stabilize the financial markets.

Here we have someone who does not believe in the Free Market, and has a wonderful child-like faith that because there is an outfit whose task is to manage the economy that it is able to do it. I have a bridge for him.

> And besides, I'd like to ask every parent whose child walks to school > through a gauntlet of drug dealers, everyone whose home has been robbed, > whether they think that their rights have been jeopardized by a system that > could solve all these problems ??

If drug dealers can't get cash, I'm sure they'll be happy to take services. I note that two of the most dangerous drugs around (as measured by the amount of social damage demonstrably related to them) are legal... Abolishing cash isn't going to do one little thing to the burglar who steals your TV set because he *wants* a TV set, or because he just feels like trashing your home. This is *unbelievably* naive.

The thing that is really evil about the suggestion is that it is a technological fix to a social problem; the basic attitude is that human "misbehaviour" is best cured by making people behave like good little cogs. "Forget trying to build a humane society so that fewer people *want* to buy drugs, let's build electronic cages so they're found out." How do we educate people like this?

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Date: Mon, 4 Feb 91 06:10:55 -0500 From: jeffj@synsys.UUCP Subject: re: cashless society

Gee, this discussion had elements from misc.consumers (discussions about credit cards, supermarkets tracking people's purchases with Point Of Sale (POS) terminals) comp.dcom.telecom (discussions of Japan's telephone cards that are purchased for cash and the calls are deducted, quite different from a credit card because there's no billing and it's anonymous). misc.legal, and other groups.

I can safely say that this CANNOT happen for a loooong time considering the current state of affairs: 1) ALL credit card companies charge fees. Even if the cardholder pays no annual fee, there's a fee the merchant pays PER TRANSACTION (usually 1-3 percent). Dealing with cash is cheaper and immediate. (gas stations cannot legally charge more for credit cards, but can offer a discount for cash) You'll have to abolish this before progressing. 2) Cash is very negotiable and its authenticity is easily checked. I can buy a pretzel and the vender can check the dollar's authenticity with no special instruments. 3) cash is anonymous. I usually buy my groceries with cash because that way nobody can track my purchases and build up a database about me. 4) most banks won't even provide checking for free.

The Washington DC subway system has a nice arrangement where vending machines dispense magnetically striped tickets with the amount on the stripe. The fare is automatically deducted from the ticket as you exit the station (putting the ticket through the turnstile's reader). Not enough fare? Vending machines allow you to pay cash and add the value to the card. Since cards are anonymous, they're transferrable and can't be used to track my whereabouts.

The Japanese phone cards are similar. I believe that ANY 'money card' should allow anonymous cash deposits to establish the accounts. This prevents companies like Lotus from collecting data about me and then selling it on CD-ROM (a product that was happily withdrawn).

This also allows non-residents/non-citizens to use the system because establishing an account depends ONLY on paying cash (which could have been converted from whatever currency to the native currency by any of several ways). [This has been discussed in the telecom group because non U.S. citizens have problems establishing calling card accounts with U.S. phone companies because that requires international banking.]

Jeffrey Jonas, jeffj@synsys.uucp, synsys!jeffj@uunet.uu.net

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Date: Thu, 7 Feb 1991 14:43:27 PST From: "Peter G. Neumann" <neumann@csl.sri.com> Subject: Epilogue on cashless society

Believe it or not, this issue is brought to you by popular demand. Several people were urgently clamoring for it, requesting even the raw text if I couldn't get around to moderating it. Quite a sociological exercise! For those of you who have read this issue all the way to the end, I hope you can eschew further discussion unless it really adds something substantive. I've been unusually permissive on this one, but after all one of the main purposes of RISKS is to foster intelligent discussion on important issues. PGN

[Knock, knock! Who's there? Cash. Cash-who? ... {Your choice: (1) Sorry, no credit. (2) Gesundheit! (3) Nuts to you, too. (4) ... }

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End of RISKS-FORUM Digest 11.06 ************************