You'Ll Get Mail - privacy policies of banks and why consumers should read them - Brief Article

Kiplinger's Personal Finance Magazine, April, 2001

BANKING | Financial institutions will be sending you notices explaining their PRIVATE POLICIES. Read them carefully.

BETWEEN now and July, any bank, insurer, mutual fund company or brokerage firm with which you do business is required by a new federal law to send you a copy of its privacy policy. The average household will get 18 of these notices, estimates the American Bankers Association.

You can bet such mailings won't be as glitzy as credit card offers, and they may be tucked in with your account statement or a prospectus. But don't be too quick to toss them. The notices give you some control over how financial institutions use your personal financial information.

Each notice will spell out the kinds of information the company collects and what types of firms it shares its data with. Your bank, for instance, will still be able to share information about you with its own affiliates, such as insurance companies and brokerage firms, without your consent. But you can choose to "opt out" of having that same data sold to unaffiliated third parties-- such as companies that might want to sell you lots of other nonfinancial products and services.

Most financial institutions have in their data arsenal your name, address, phone number, social security number and account balances, plus a record of your assets, income, debt level, credit card purchases and late payments. If you don't want that information circulated even more widely than it already is, send back the enclosed reply form, call the toll-free number provided, or fill out an on-line form if one is available. Opting out should also reduce the number of calls from telemarketers and mail solicitations you get.

Consumers concerned about protecting their privacy should "grab the few crumbs put their way, by taking advantage of the opt-out," says Beth Givens, director of the Privacy Rights Clearinghouse. Even then, banks can still share information with certain third parties, such as credit bureaus, check printers and law-enforcement agencies. But whatever you choose, banks can't disclose to unaffiliated third parties your account number or personal identification number.

The notice requirement has forced financial institutions to reexamine how they gather, store and share information, and that's good news for consumers. "Banks have a long tradition of confidentiality, and they don't want to be advertising to customers that they are spreading around sensitive data," says Peter Swire, professor of law at Ohio State University and former chief ccounselor to President Clinton on privacy issues. "Now organizations have to think twice or three times about who they send data to."

A handful of banks have even adopted stricter standards than are required by law. Wachovia, which is based in Winston-Salem, N.C., has elected not to share any customer information with unaffiliated third parties, so customers don't need to opt out. "We had a chance to take something complex and make it simple," says Bev Wells, head of retail financial services for Wachovia. "It's easier to say, `We just don't do it.'"

Bank of America, which will mail out 66 million notices by April, and Union Bank of California reached the same conclusion. "We think that taking the strongest possible stance on privacy will give us a competitive advantage over time," says Union Bank vice-chairman Richard Harmack.

While you're tackling the forms, call 888-567-8688 to have your name removed from the marketing lists of all four major credit bureaus. That will reduce the number of preapproved credit card offers you get from sources other than your own financial institution.

Reading between the lines

We will not reveal customer information to any external organization unless we have previously informed the customer in disclosures or agreements, have been authorized by the customer, or are required by law."

--Citibank privacy policy

TRANSLATION: If you don't opt out, we can sell your data.

Honor roll

Banks that won't sell customer data to third parties:

Bank of America

Union Bank of California

Wachovia