Privacy Group Ready To File FTC Complaint Against Six Mortgage Lenders

Communications Today, August 30, 2001

The Center for Democracy & Technology (CDT) said it would likely file a Federal Trade Commission complaint today against six mortgage lenders they believe aren't complying with federal privacy law.

Ari Schwartz, associate director of the Washington-based privacy group, issued the warning yesterday during a press conference at the National Press Club, where his agency revealed CDT's findings in its survey of 100 financial institutions' online privacy policies, which Schwartz found disappointing.

CTD launched the study this summer to determine whether financial institutions were meeting legal obligations mandated by the Gramm-Leach-Bliley Act, which President Clinton signed in 1999, but became effective on July 1.

The Act requires financial institutions, as defined by the law, to provide consumers the ability to "opt-out" of - or request they be excluded from - the institution's information sharing with organizations not affiliated with it. Under the law, organizations that sell mortgages and other financial services are also considered "financial institutions."

Of the 100 banks CDT surveyed, only 22 percent of them provided customers equally convenient means of preventing information sharing with other companies, CDT says. Some banks provided no opt-out choice at all, or required consumers to jump through several hoops to stop distribution of personal financial information.

"The onus is on the consumer [to find out what he needs to do to opt- out]," Schwartz told reporters. "The mortgage companies appear to be disregarding the law altogether."

--Jay Krasnow, jkrasnow@pbimedia.com >TK