Banks looking to peddle your private
financial information
By Robert K. Heady
Bank Rate Monitor
Suppose
the bank turned you down for a loan because it found out you need major
medical surgery?
Or
your auto insurance company denied you coverage after learning you've been
late three times with your credit card payments?
Pretty
scary. Yet, that's the dilemma facing millions of consumers, as big financial
organizations continue to share or peddle your personal financial recordsyour
privacyto other outfits.
The
grieving widow from Dubuque may start getting telemarketer pitches to buy
risky investments only weeks after collecting $100,000 from her late husband's
estate. Or your credit card statement may show that you owe money for a
magazine subscription you never ordered.
Increasingly,
American's financial privacy is going down the tubes. One reason is that
the Depression-era barriers among banks securities firms and insurance companies
are coming down as these big outfits merge. Financial institutions now share
information with their new "affiliates", as those companies are
called, or they sell your personal data to somebody else for a fat commission.
What's
more, they're not required to tell what they did with your sensitive personal
dataincluding your name, age, address, phone number, bank account numbers,
checking balance, Social Security number, credit card history and your overall
creditworthiness.
Mean
and unfair? Banking industry spokesmen contend that consolidating financial
services is to the "ultimate benefit of consumers because it adds value
to customer service." They claim it leads to more "one-stop shopping"
with a single monthly statement, lower rates and fees, and enables them
to outsource administrative functions to third-party companies to cut costs.
There
are, of course, degrees of legal protection such as the Fair Credit Reporting
Actwhich doesn't go far enoughand the tiny, flyspeck-size print in bank
literature that gives you a chance to "opt out" of your name appearing
on telemarketer lists. But you need a law degree and the eyes of an eagle
to wade through the language. Plus most people won't take the time to write
their bank a stiff letter saying, "My personal life is nobody else's
business."
But industry
organizations such as the Coalition to Amend the Financial Privacy Act of
1999 argue that they need to collect money from deadbeat parents and judgment
debtors, so citizens shouldn't be entitled to such a "shield"
of protection.Can
the situation get worse? Oh, yes. Financial outfits, including many on the
Internet, today collect information on your spending habits, such as the
kinds of things you charge on credit cards. Everything from bagels to booze.
Then they sell that info to companies that promote similar products.Even
state governments have gotten into the private information business. California's
Employment Development Department announced in June that it intended to
sell confidential wage data on 14 million people to car dealers and creditors.It
said the state would rake in $15 million over the next decade, whereupon
the California attorney general began investigating banks' privacy practices.
Then, Minnesota's attorney general sued U.S. Bancorp, the state's largest
bank, alleging it received $4 million in commissions from selling customer
data to a telemarketing firm.The
same month, the State of Florida said it would start selling confidential
salary information on millions of Floridians to mortgage companies and banks
that want to know about people's credit strength.The
fur is flying in Congress over how to crack down on privacy invasions. The
eventual outcome isn't clear, but Comptroller of the Currency John D. Hawke
Jr., who oversees nationally chartered banks, has warned institutions to
stop peddling customers' personal data or they'll face tough new laws.Marc
Rottenberg, director of the Electronic Privacy Information Center (www.epic.org/privacy)
complains that privacy disclosures on the Internet don't adequately explain
how consumers can refuse to allow their personal information to be sold
or shared. There are simply too many loopholes in the current laws, insist
many other consumer-action groups.I
suggest you do three things:Send
a "none of your business" letter to your bank and/or credit card
issuer, exercising your rights under the Fair Credit Reporting Act, preventing
them from sharing any of your private information with their affiliates
or any marketing company. Copy your senators and congressman.Check
the Better Business Bureau Web site at www.bbb.org/library/cyberprivacy.html
for tips on how to protect your financial privacy on the Internet.If
you have a financial privacy horror story, you can e-mail me at jrnl8888@aol.com.As
former Chief Justice Lewis Brandeis put it 71 years ago: "The right
to be left alone is the most comprehensive of rights, and the right most
valued by free people."Editor's
Note: Robert K. Heady is the founding
publisher of Bank Rate Monitor and is the co-author of the book, The
Complete Idiot's Guide to Managing Your Money. You can write to him
in care of the Bull & Bear or send e-mail to jrnl8888@aol.com.