Electronic ‘Opt-Out’ Often Isn’t an Option

Many banks that let people open accounts and pay bills online still make customers do things the old-fashioned way--by paper--when they ask for limits on sharing of their personal financial data, a new study by a privacy advocacy group says.

Several big banks have cumbersome ways for customers to exercise their privacy rights while some mortgage companies have offered no privacy notices at all, according to the survey released Wednesday by the Center for Democracy and Technology.

By federal law, July 1 was the deadline for banks, thrifts, credit unions, insurers, mortgage firms, brokerages and other businesses that collect personal financial information to mail notices telling people how that information is handled.

And if companies want to sell that information to nonaffiliated businesses, they have to give consumers a chance to say no--known as “opting out.” Buried in the fine print, many of the notices offer toll-free numbers to call or forms to mail back.

The new study found that several mortgage providers that offer online services have failed to provide the required privacy notices. The group said it had written to the companies and will file a complaint with federal regulators if they do not take action voluntarily.

Also, of 100 banks and financial companies offering customers online services, only 22 also allow customers to opt out electronically, the study found. Still, some banks gave customers a wide range of ways to register privacy preferences, it found.

“Some banks are leading the field in offering customers the choice they are demanding regarding privacy,” said Ari Schwartz, the group’s associate director. “Others are making it difficult for customers to opt for privacy.”

John Byrne, senior counsel for the American Bankers Assn., disputed the group’s conclusions and said it is just as convenient for consumers to express their choices by mail or telephone as it is online. “We reject the notion that the current system makes it cumbersome,” Byrne said.

In addition, he said, consumers’ privacy rights are equally protected whether they make the request by mail, phone or over the Internet.

A recent survey by the bankers’ group found that just 36% of Americans said they had read their privacy notices, 22% hadn’t bothered and 41% didn’t remember getting them or hadn’t received them. Few people had opted out.

Bankers say many customers see advantages in having their personal information spread around: They can get catalogs, discount offers and other enticements directly tied to their interests.

The data-sharing provides a gold mine of information for telemarketers, direct mailers, retailers and others who want to identify the people most likely to buy their products or services.

But consumer groups say they believe the opt-out rate is low so far because many of the privacy notices are deliberately densely written.