I think your general argument is a reasonable one if read in isolation. Unfortunately it seems quite possible that rayiner's characterisation of the law is correct, and that the law just happens to be bad and/or anachronistic in this area.
In general, I don't think privacy and data protection laws are anything like strong enough in most jurisdictions today, and I think the data mining industries (and governments) are pushing the boundaries of acceptable behaviour as far as they can as fast as they can so they can then claim that their behaviour is normal and accepted and therefore "OK" before those laws catch up.
The difficulty is that privacy is something of a Pandora's box situation -- once lost, it is almost impossible to truly restore -- with the added twist that it's mostly important to protect against "it would never happen to me" situations, which means the average person doesn't realise or doesn't care what they're losing until it is too late. I'm afraid the data miners will win (or already have won) and for at least one generation the safeguards that privacy should bring them have been lost for life.
Realistically, most people probably won't suffer great hardship as a result. The worst they'll get is some spammy advertising. The people we should worry for are the innocent ones who will nevertheless spend months trying to fix their credit after identity theft, or paying a fortune to accountants when they are investigated for (negligently) suspected tax fraud, or going through a hellish legal process for months to defend themselves against false accusations, or trying to get permission to travel on holiday after being put on some list because something they said was taken out of context, or having their candidacy for public office undermined by character assassination, or in the ultimate worst case who are dead because the SWAT raid/drone strike/other severe and immediate action left them no chance to set the record straight. These are among the reasons privacy and data protection really matter, but to the extent that anyone is really questioning laws and practices today they seem more hung up on Facebook and Google mining data to serve ads.