Data-driven decision support in high-stakes domains like healthcare and finance faces significant barriers to data sharing due to regulatory, institutional, and privacy concerns. While recent generative AI models, such as large language models, have shown impressive performance in open-domain tasks, their adoption in sensitive environments remains limited by unpredictable behaviors and insufficient privacy-preserving datasets for benchmarking. Existing anonymization methods are often inadequate, especially for unstructured text, as redaction and masking can still allow re-identification. Differential Privacy (DP) offers a principled alternative, enabling the generation of synthetic data with formal privacy assurances. In this work, we address these challenges through three key contributions. First, we introduce a comprehensive evaluation framework with standardized utility and fidelity metrics, encompassing nine curated datasets that capture domain-specific complexities such as technical jargon, long-context dependencies, and specialized document structures. Second, we conduct a large-scale empirical study benchmarking state-of-the-art DP text generation methods and LLMs of varying sizes and different fine-tuning strategies, revealing that high-quality domain-specific synthetic data generation under DP constraints remains an unsolved challenge, with performance degrading as domain complexity increases. Third, we develop a membership inference attack (MIA) methodology tailored for synthetic text, providing first empirical evidence that the use of public datasets - potentially present in pre-training corpora - can invalidate claimed privacy guarantees. Our findings underscore the urgent need for rigorous privacy auditing and highlight persistent gaps between open-domain and specialist evaluations, informing responsible deployment of generative AI in privacy-sensitive, high-stakes settings.
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