lips with opt-out notices
Stop! Don't throw
out any "junk" mail from your bank, credit union or other financial institutions
for the next few months without carefully inspecting it. Your chance for privacy
is on the line.
in America who has an account with a bank, credit union, savings and loan or a
mortgage company, or who has an insurance policy or an investment account, can
expect to get a fistful of notices that will let him or her limit the amount of
personal information those companies can share or sell.
part of the Gramm-Leach-Bliley Financial Modernization Act of 1999.
law gave financial institutions greater leeway in conducting business, but also
put some constraints on them regarding consumer privacy.
general, there are three things the institutions have to do:
1. Tell customers what kinds of information they collect and the types of businesses
to which they sell or give that information.
2. If the institution intends
to sell or give your information to a company outside its corporate family, it
has to give you a way to "opt out" or say, "No, I don't want you to share my information."
3. The institution has to tell you how they protect the confidentiality of
The notices that enable you to opt out may be just another
piece of paper stuffed in with your monthly statement or they may arrive in a
There's no particular
format the institutions have to follow, but the word "privacy" should be fairly
prominent. Don't fling the notice into the garbage unless you don't mind being
contacted by companies trying to sell you things.
big problem is whether consumers will recognize the notices when they come," says
Tena Friery of the San Diego-based Privacy Rights Clearinghouse.
are in with account statements and ads. I hate to be a pessimist on this but I've
talked to a number of people about this and I always get the same response: a
blank look. People aren't even aware that these things are coming."
banks and the like began mailing the notices in January, but Friery says she expects
our mailboxes will be flooded with them in May and June. The American Bankers
Association says many households could get 15 or more notices.
of America, one of the nation's biggest banks, is sending out 66 million notices,
one for every account. Spokesman Scott Scredon says they haven't gotten many responses.
He attributes this to the fact that the bank began a policy of not sharing information
with unaffiliated third parties almost two years ago.
it because we thought it was the right thing to do and we think it gives us a
competitive edge," says Scredon.
applaud them if they don't sell to third-party nonaffiliates. Any company that
has adopted that practice is heads-up in terms of consumer confidence."
lets you, in most cases, stop a company from sharing your information with nonaffiliated
third-party companies and individuals. Your bank can still share your information
with a company that's in its corporate family.
There are exceptions
to the nonaffiliated third-party rule. Your information can be shared with a third
party if it's needed to conduct normal business. For instance, if your bank uses
a third party to print account statements -- or if sharing the information will
protect against fraud or if there's reason to believe the information is publicly
available -- in the phone book, in court records, etc.
also being given the chance to opt out of having information about your creditworthiness
shared with your financial institutions' affiliates.
Gramm-Leach-Bliley, Congress revisited the Fair Credit Reporting Act and said
FCRA notices have to be included with GLB," says Friery.
rights by the books
Here's what it boils down to, according to the
Privacy Rights Clearinghouse:
- Gramm-Leach-Bliley allows
you to stop institutions from selling or sharing nonpublic personal information
about you with nonaffiliated companies.
- The Fair Credit Reporting
Act allows you to stop institutions from selling or sharing credit-worthiness
information about you with affiliated companies.
Alnes of San Francisco-based Wells Fargo, which is sending out about 30-million
notices, says complying with the law is a major communications job for the financial
"My greatest concern is making certain everyone
understands what we're doing, how we're doing it and what choices are available
to the customer so we can provide a consistent level of customer service. So,
if a customer asks me or a mortgage officer or a teller a question, they get the
More than likely, the notices you get will have
a tear-off sheet that you can mail back to the bank or a toll-free number to call
if you wish to opt out. A handful of financial institutions are offering e-mail
or online responses, says Peggy Wilson of Bankers Systems in St. Cloud, Minn.
If you realize you've tossed a notice out by mistake, call
the institution and tell them you want to opt out. As of July 1, institutions
will have to inform you of your opt-out rights when you open an account and remind
you annually of your rights. Even if you don't decide to opt out now, if you change
your mind in six months, call your bank.
How important is Gramm-Leach-Bliley
to your financial privacy? That depends on where you live and where you bank.
the law creates a nationwide standard, Wilson says her company's survey of 3,900
financial institutions shows almost 69 percent of banks and savings associations
don't share customer information with nonaffiliated third parties outside of the
exceptions. On the other hand, 65 percent of the credit unions surveyed said they
share information with nonaffiliated third parties.
unions are very small and don't have the resources to provide the services themselves,
so they develop a relationship with someone else," says Wilson. "Credit unions
are nonprofit so they don't sell lists to generate revenue -- only when they feel
it brings additional value to the members."
Wilson also says
there are 21 states that have privacy laws in addition to Gramm-Leach-Bliley,
and nine of them have very "serious" limitations on what can be shared. The nine
states are North Dakota, Maryland, Illinois, Florida, Mississippi, Massachusetts,
Alaska, Louisiana and Vermont.
my opt-out notice?
If you haven't received any privacy notices yet,
don't worry. Here's the latest status survey from Bankers Systems. With more than
500 financial institutions responding:
- 9.3 percent have
sent out privacy notices.
- 27.9 percent say their privacy
policies have been drafted and printed.
- 51.6 percent are
in the process of developing their privacy policies and notices.
11.3 percent have just begun to study the requirements.
information privacy is important to American consumers. That's been shown in many
polls, says Tena Friery of the Privacy Rights Clearinghouse.
people feel they have a zone of privacy ... if they give information to the bank,
that information should be used for their car loan or mortgage or credit card.
They feel that the information is theirs.
"The property issue
is a real debate. Who does this information belong to -- the consumer or the institution
-- once the consumer hands it over? Most consumers feel they have more rights
than they actually have. People have a level of confidence about their personal
information that really doesn't exist any more."