- The Washington Times - Friday, June 22, 2001

Consumer groups and Democratic lawmakers are criticizing financial institutions for sending deceptive privacy notices to consumers and failing to protect the personal information of their customers.

The consumer groups said at a press conference yesterday that the privacy notices, which must be mailed by July 1 under federal law, are difficult to understand and lead few consumers to take advantage of their right to protect personal data.

Separately, Rep. John J. LaFalce, New York Democrat and a member of the House Banking and Financial Services Committee, is gathering signatures from Democrats and will send a complaint about the privacy notices to Treasury Secretary Paul H. O'Neill, Federal Reserve Chairman Alan Greenspan and other bank regulators.

Public Citizen, a consumer advocacy group, said yesterday it will ask the Federal Trade Commission to force banks to simplify the privacy notices they are sending to consumers so they clearly state that people can restrict the use of their personal data.

"It is becoming increasingly clear that the financial conglomerates, with their far-flung network of insurance, bank and security affiliates, will be able to gather and assemble the information necessary to build a head-to-toe profile of most citizens and their buying and personal habits," Ralph Nader said.

Congress enacted the Gramm-Leach-Bliley Financial Services Modernization Act in November 1999. The law offers privacy protection for consumers by preventing unlimited sharing of personal information.

In the notices being mailed out, banks ask consumers whether they can share information with unaffiliated companies, those that aren't owned by the same corporation that owns the bank. Unaffiliated companies could include credit-card companies, mortgage lenders or telemarketers.

Since the new law says consumers must "opt out," or choose not to have their information shared, the banks assume they have permission to pass on personal information with the unaffiliated companies unless customers respond and ask that they not share the data.

So far, just 5 percent of the estimated 1 billion consumers who have received privacy notices have opted out, consumer and privacy groups said.

That's because the notices are intentionally deceptive because banks want to share consumer information with affiliates that then use the data to market products and services to people, privacy advocates said.

"Banks have hidden your right to say no," said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group, a consumer and environmental advocacy group.

But banks, which lobbied relentlessly for the opt-out provision that worked its way into the law, argue they aren't attempting to confuse consumers.

"It is in the general interest of the banking industry to protect consumers. It is in a bank's own interest to keep the customer happy," said Robert Rowe, regulatory counsel for the 5,300-member Independent Bankers Association of America, based in the District.

Still, some banks agree the policies can be difficult to understand and they plan to make changes when they have to send out privacy notices next year.

"In this first round, you have a document that's a bit legalistic. It's more wordy than we would like it," said Cliff Bussard, direct marketing manager of SunTrust Banks Inc.

Just 55,000 of the Atlanta banking company's 3.5 million customers asked that their personal information not be shared, Mr. Bussard said.

Other banks, including Wachovia Corp. of Winston-Salem, N.C., have adopted stricter standards than Gramm-Leach-Bliley requires and decided not to share any customer data.

The coalition of groups that criticized the banks yesterday said they will ask the FTC to require them to draft privacy notices that are easier to understand.

"Congress must give consumers real privacy protection. Until then, the federal regulatory agencies must implement the law in a way that gives consumers an opportunity to prevent financial institutions from selling their private personal information to the highest bidder," said David Vladeck, director of Public Citizen Litigation Group.

While the short-term goal of privacy and consumer groups is to have regulators simplify the privacy notices banks send customers, their long-term goal includes changing the law's opt-out measure to an opt-in measure. Under an opt-in approach, banks would assume customers don't want their data shared and must get their consent before sharing.

Consumer and privacy groups met last week with the senior staff of Sen. Paul S. Sarbanes, Maryland Democrat and the new chairman of the Senate Banking, Housing and Urban Affairs Committee, to seek a hearing on the current opt-out provision.

There is bipartisan support for stronger privacy laws in Congress, Mr. Nader said.

Rep. Edward J. Markey, Massachusetts Democrat, and Sen. Richard C. Shelby, Alabama Republican, last year introduced opt-in measures requiring banks to get consent from consumers before they share data. The U.S. Public Interest Research Group is working with both lawmakers to reintroduce them this year.

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