Privacy Abuses by Banks
Banks are no longer the friendly, discreet custodians of their depositors’ money, judging by hundreds of thousands of consumer complaints to federal and state banking regulators. In fact, without public knowledge, banks are making millions peddling crucial information about their depositors. The abuse--especially by the large national banks--gives a new definition to bank robbery. Federal regulators have taken notice, and some states are hauling banks into court.
In California, Bank of America announced Friday that it will no longer sell customer information to third parties. Fine. But Wells Fargo and U.S. Bancorp say they will take only limited remedial steps. For the most part, other banks are silent on the issue. The best way to stop this abuse is through legislative protection of consumer privacy.
Financial privacy is under assault from all directions. The California Legislature, for instance, enacted a law to allow the state to sell personal income data, and only Gov. Gray Davis’ last-minute intervention blocked its implementation. As objectionable as that law is, it at least gives taxpayers some say in the release of the information. Banks are not subject to such constraints.
In a practice that Comptroller of the Currency John D. Hawke Jr., the regulator of federally chartered banks, calls unfair and abusive, some banks regularly and without any legal restraint sell data about their customers to telemarketing companies in exchange for a commission. And it’s not just names and phone numbers the banks sell. It’s Social Security numbers, birth dates, credit card numbers and purchases, occupations, marital status, credit standing and account balances.
Some banks will even allow telemarketers to automatically charge the accounts of customers who express an interest in the telemarketers’ products or services. Minnesota has filed a lawsuit against U.S. Bancorp over such practices, accusing the bank holding company of violating the Fair Credit Reporting Act.
The House Commerce Committee last Thursday adopted an amendment to force banks to disclose their privacy policies and allow consumers to block release of their personal and credit information. A much stronger provision to require banks to get their clients’ consent prior to disclosure was defeated. It is essential that, if the House bill is enacted, the rules implementing it order banks to spell out their privacy policies clearly and conspicuously and make it as easy as possible for customers to opt out.
House enactment of an “opt-out” clause depends on whether Rep. David Dreier (R-San Dimas), chairman of the Rules Committee, will allow the Commerce Committee amendment, rather than a much weaker Banking Committee proposal, to be considered by the full House. Consumers should let Dreier know where they stand.
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To Take Action: Rep. David Dreier, (202) 225-2305 or click on “Feedback” at the Web site https://www.house.gov/dreier.
