Tags: Banks | Use | Sneaky | Method | Sell | Your | Financial

Banks Use Sneaky Method to Sell Your Financial Data, Social Security Number

Sunday, 06 May 2001 12:00 AM

A late April edition of the American Banker reports that, as of then, only 5 percent of consumers had asked their banks not to share their personal financial information with outside entities, marketing companies or mailing lists.

The small percentage of consumers who have been responded have apparently read carefully mailings sent by banks, credit card companies and other financial institutions informing them of the new rules.

Legislation passed by Congress last fall, and signed into law by Bill Clinton, permits banks and other financial institutions to share and sell your financial data, including your Social Security number, to marketing companies.

The low response of consumers seeking to protect their financial privacy should not be surprising.

In many cases, the notice (required by law) that customers can "opt-out” of allowing their bank to share their Social Security number and other financial data with mailing list comapnies and marketing firms is often tucked away amongst the junk ads that often accompany bank statement mailings.

Many customers throw those things away without even looking at them, privacy experts complain.

Privacy experts argue that the law should have required banks and other institutions to receive permission for the sharing and selling of their financial data, rather than require a customer to go to the trouble of "opting out."

Even the U.S. Senate's leading privacy advocate, republican Senator Richard Shelby of Alabama, has called the privacy policy "opt-out" policies a "sham."

While the Gramm-Leach-Bliley "Privacy” Act does not require banks to hit you between the eyes with a "two-by-four” to get your attention, many banks are framing the notices in bland formats.

That way, if only 5% of customers respond, they can say, "See? They (customers) don’t care if we share their information with outside marketers.”

NewsMax reviewed one bank's privacy disclosure note.

Though it was sent out in a separate mailing from the monthly balance statements, one had to go through 42 paragraphs until coming to a direct offer to "opt out” of sharing the customer’s name with "most commercial and non-profit mail solicitation lists.”

There was a choice of mailing the "opt-out” to an out-of-state address or opting out online.

However, even that notice comes below an offer to "opt out” if the customer prefers not to receive mailings about products and services offered by the bank itself.

Many privacy advocates believe the Gramm-Leach-Bliley Act is as full of holes as Swiss cheese.

That is why Sen. Shelby is pursuing legislation to make it harder for banks to share information with others.

Banking interests are opposed to his legislation making your Social Security number "non-public” information.

The senator’s office has told NewsMax.com his subcommittee will hold hearings soon.

Friday’s Washington Post quoted Shelby as saying some banks used "poor judgment” in a case where several of the banking houses, including Bank One of Chicago, bought financial dossiers from a Baltimore-based broker who had been accused by the Federal Trade Commission of violating privacy rules.

After the FTC subpoenaed records from Bank One and a Maryland law firm, some of the nation’s top bankers planned a conference call to discuss the matter.

"Given the recent revelation and the FTC action, we decided to move that up to the top of the list and deal with it sooner rather than later,” declared John Byrne, senior counsel at the American Bankers Association.

The 5 percent response is obviously greeted with some glee by the bankers.

Consumer Bankers Association President Joe Belew tells "American Banker” that reaction "from customers has been pretty positive.”

One banker says obviously customers "see this as a good business opportunity, a chance to make a business choice about how they want their information used.”

That assumes that making the customer go to the trouble of informing the bank to remove his or her name from the list constitutes a real "choice” in the strictest sense of the term.

No one addresses the question of what would happen if the question were framed in such a way as to require customers to notify the banks only if they specifically did want their names shared.

If 95 percent of them were respond by saying, "Yes, by all means, please share my name with any marketer coming down the pike who is willing to pay you for it” then perhaps the statement that customers "see this as a good business opportunity” would carry more weight.

You should be aware that even if you "opt out”, banks are still permitted, under Gramm-Leach-Bliley, to share such information with institutions affiliated with them.

The "world of consumer rejection”, as the Consumer Federation of America disapprovingly calls it, has been typified by the book clubs that send you three or four books periodically, with the understanding that you will be charged for all of them unless you take time out from your busy schedule to package them and send them back with a rejection notice.

With banks, insurance companies, and credit card firms that are now sending out the "opt-out” notices now (with a July 1 deadline), the issue is not so much inconvenience.

Rather, it is the fact that many consumers won’t notice the negative option because of the fine print or the bland format in which it is printed.

Belew, the Consumers Bankers Association President, tells American Banker that "pretty complicated and tortured regulations …..that even confuse lawyers” make it difficult for banks to write notices that consumers would understand and that regulators can accept.

Florida’s assistant deputy attorney general for economic crimes Les Garringer is quoted in Sunday’s Washington Post as saying "It’s a bad practice (the negative rejection), yet it’s not unlawful.”

Bottom line: If you do not see passing your name around to marketers who are willing to meet your bank’s price for handing it over to them as "a good business opportunity”, tell your banker in no uncertain terms you wish to "opt out.” Until the privacy law is tightened, it is the only choice available to you.

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A late April edition of the American Banker reports that, as of then, only 5 percent of consumers had asked their banks not to share their personal financial information with outside entities, marketing companies or mailing lists. The small percentage of consumers who have...
Sunday, 06 May 2001 12:00 AM
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