Trading privacy for terrorist tips. (Up Front: news, trends & analysis).

Can consumer data help identify potential terrorists? Many businesses think so. According to a recent Associated Press report, more than 15 major financial companies are working on a plan to use public and private consumer databases to stop possible terrorists.

The group, which includes representatives of American Express and Visa, investment firms JP Morgan and Fidelity Investments, and lender CapitalOne, will explore how to use credit reports, marketing databases, and other information for domestic security. The businesses also are studying how to use information to create profiles about what potential terrorists might look like and plan to take their findings to government officials before the end of the year.

Originally formed to combat identity theft, the consortium shifted to exploring how to take advantage of the immense consumer data held by financial companies to benefit U.S. security. Consumer databases often include information such as whether an individual is a homeowner, whether he or she owns a car and subscribes to particular magazines, and his or her occupation.

The group says it will not push for particular laws but will focus on helping companies agree how best to use such data in a way that's reliable and respectful of privacy.

But privacy advocates have questioned whether such a plan would infringe on Americans' basic rights and whether consumer databases would even be useful.

The latter question is worthy of debate. Privacy Council official Larry Ponemon told the Associated Press that large data aggregation and integration has not been done well historically. And in this case, who would have control of such a profiling system, and for what would it be used? If you got behind on your American Express payment, would you be profiled? Also, what would happen to those who fit the profile created by this group?

Those are just a few of the thorny issues. Convincing consumers that your business is participating in such data profiling for well-intended--not commercial--reasons will be difficult, too. But the timing may be right for such a plan: Since September 11, the Bush administration and corporate America have been rolling back plans for giving consumers greater protection of their personal information on the Internet because of terrorism and national security concerns.