Privacy paradise: Vermont and Alaska
keep financial information under wraps
By Lucy Lazarony • Bankrate.com

Wondering where to go to find a financial institution that will keep your personal information under lock and key?

You might want to try a bank in Alaska.

If that's a little farther than you hoped to go, how about taking your banking business to Vermont?

These two states have financial privacy rules with real, sharp teeth.

Banks in these parts keep a lid on all the private financial tidbits they collect. Customer privacy is respected and protected in ways that folks living in the other 48 states may envy. No need to worry about information being leaked to telemarketing companies or anyone else without permission.

It's certainly not a luxury most of us enjoy. It is, simply, refreshing.

Just the way things are done
There are laws, certainly, but there is also an attitude that privacy is extremely valuable.

"We're certainly not offended by the notion of keeping our customers' information confidential. That's been our way for awhile," says Gordon White, executive vice president at Northfield Savings Bank, a community bank with branches throughout central Vermont.

"We don't even reveal if people have an account. We don't want to."

A 1995 Vermont law precludes banks from sharing customer financial information with anyone without prior written approval from the customer. It applies to all banks doing business in Vermont. The law lists 24 exceptions for things such as court orders or sharing information with credit reporting agencies.

"What this law did was clarify for folks what could be and what couldn't be done without permission," says Julie Brill, State Assistant Attorney General in Vermont. "It helped everyone understand what the rules of the road were."

People in the Green Mountain State have been keen on privacy for quite some time. Banks have been quick to respect this.

"Even before the law we were always very, very certain that we didn't share information without the customer's permission," says Carolyn Demasi, a compliance officer at Northfield Savings Bank.

And that has always meant getting permission in writing.

But isn't that a lot of work? What about the cost? The time lost? And all the other stuff banks seem to complain about whenever consumer privacy is debated. White maintains it's no hardship whatsoever.

"It's business as usual," he says.

Ignoring telemarketers
Protecting consumer privacy has been business as usual up in Alaska for decades. Customer records are confidential, under the Alaska Banking Code. Records will not be shared with anyone without a customer's written OK.

"That has been the law in Alaska as long as I can remember," says David Lawer, president of the Alaska Bankers Association and general counsel at First National Bank of Alaska. He has lived in Alaska since 1971.

The only exceptions to the state code are for court orders and subpoenas.

Lawer views the law as "a shield" more than anything else. It's helped keep private customer records away from "the ubiquitous angry spouse" and lawyers trying to shortcut the subpoena process.

"It's worked more to our benefit than our detriment," Lawer says.

What about a bank's bottom line? Has it hurt bank marketing efforts in any way? Not a problem, according to Lawer.

"I can't honestly identify how it's been harmful to banks," he says.

There have been times when telemarketing companies have called Alaskan banks requesting customer lists in the hopes of selling-who-knows-what.

"There have been incidents," Lawer says. "But it's not been prevalent by any means. I expect that it's been ignored."

'We don't share ... '
Alaska banks are just as careful when it comes to sharing customer information with other financial institutions.

"We don't share information with any other lending institution unless we have the approval of the customer," says Sharon Engle, vice president and consumer banking center manager for the National Bank of Alaska, which has been bought by Wells Fargo.

"We get a lot of requests for sharing of information, but if it's not signed by the customer it's not something we participate in."

There has been a little bit of discussion over whether the state code applies to all banks doing business in Alaska or just those regulated by the state Department of Banking. But that debate, if you can call it that, hasn't gotten very far. Nobody's ever thought to challenge the law.

"To my knowledge everybody has voluntarily complied," Lawer says.

Privacy has been respected and expected up in Alaska for as long as anyone can remember.

"That's part of Alaska," Engle says. "Alaskans are very independent, extremely friendly. But also privacy is very important ... . it's a small place."

Small is not a word most people would associate with a state one-fifth the size of the continental United States. But Engle says there's a definite small town, everybody-knows-everybody feeling. With a population of 600,000 or so it can't be helped.

"This state. People come up here to get lost. Privacy is just extremely important. It's just been very watched. With a small population it's just something that you have to do."

Refreshing, isn't it?

If you'd like to make a comment on this story,
e-mail bankrate editors.

-- Posted: Aug. 28, 2000