Reading between the lines of privacy policies

Privacy policies for banks, credit-card issuers and other financial companies tend to have more similarities than differences. You have to read with a jaundiced eye to understand what they're really saying.

A couple of examples can show you what privacy policies say and mean.

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San Francisco-based banking giant Wells Fargo has an open, easy-to-understand privacy policy that recognizes "that you expect privacy and security for your personal and financial affairs." The policy explains what kind of information the bank collects and how it uses the data.

"We use information to protect and administer your records, accounts and funds; to comply with certain laws and regulations; to help us design or improve our products and services; and to understand your financial needs so that we can provide you with quality products and superior service," according to the policy.

Devil in the details
The last clause is key: the opportunity to "provide you with quality products and superior service" means the bank can use your personal information to sell you products and services, or to provide a limited amount of information about you to outside financial companies such as insurers.

Your bank probably has a similar policy.

Another example is Citigroup, the nation's biggest financial services company. In its privacy policy, the bank promises not to 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."

The policy adds that Citigroup may "facilitate relevant offers from reputable companies."

These statements mean that Citigroup can post the privacy policy in the small print of an annual notice and tell you how to opt out of information sharing with outside companies -- and if you don't opt out, Citigroup can provide some information about you to outside companies offering financial services.

How to opt out
Under the recently passed banking reform law, financial services companies such as banks, mortgage lenders, credit-card issuers and securities dealers must disclose their privacy policies annually. They must give you a way to opt out of information sharing with outside companies.

To opt out, you'll have to find out how by finding the policy in a bill or an annual statement, or by calling a phone number.

You know where to find the privacy policy or that phone number:

In the fine print.