Vocalist.org archive


From:  sopran@a...
sopran@a...
Date:  Sun May 6, 2001  2:09 pm
Subject:  Re: [vocalist] credit


No, not handy. But here's more information about it.


PRIVACY-U.S. pushes envelopes on financial privacy


By Andrew Clark


WASHINGTON, April 24 (Reuters) - Americans who keep a bank account, own
stocks, or have an insurance policy, and that's most of the population, have
got mail. Lots of it.

Working under a deadline of July 1, U.S. financial services companies
have been sending out a tidal wave of mail telling customers how their
personal information is collected and protected, and to give limited control
over how it is used.

Simply tossing the notices in the trash -- an understandable response to
the coming paper onslaught -- could cost consumers the chance to keep the
details of their financial lives out of the hands of telemarketers and other
outside firms.

'I don't think it's unfair to estimate there'll probably be close to half
a billion notices mailed,' said John Byrne, senior counsel at the American
Bankers Association.

For major U.S. financial firms, complying with the consumer privacy
protections included in the landmark law that broke down Depression-era
barriers between banks, brokers and insurers has been a massive logistics
challenge.

Citigroup (C.N) expects to send out around 90 million privacy notices to
its customers. Bank of America (BAC.N) is working its way through over 60
million.

For consumers, it has meant the need to look carefully at a growing
number of pamphlets showing up as inserts in monthly bank, credit card and
investment account statements, or as stand-alone mailings. Average,
middle-income households are expected to receive as many as 12 to 15 separate
notices.

Apart from detailing their privacy policies, the new rules also require
financial firms to give customers the chance to opt out of having personal
information -- like account balances, account numbers or spending records --
shared with or sold to outside companies, such as telemarketers.

Most are expected to offer the option through a toll-free number, while
others may include a return mailing with their notices. If customers do not
respond, they are assumed to have agreed to the dissemination of their
personal data.

READ 'EM AND WEEP

Putting the onus on consumers irks many privacy advocates, who sparred
bitterly with the financial industry over the scope of the new law shared
within increasingly-diversified U.S. financial conglomerates, that companies
should have to get customers' explicit consent, as they do in Europe, before
releasing any personal data, and that the current rules are full of holes.

'These companies can share information with all of their many third
parties, even if you do say no,' said Ed Mierzwinski, consumer program
director Public Interest Research Group.

Mierzwinski and others also say they fear many consumers are not going to
understand the limited new rights they do have because the privacy notices
being sent out are too confusing. Privacy notices from major U.S. banks,
concluding they were written, on average, at around a third- or fourth-year
college reading level. Literacy experts usually recommend that materials
aimed at the general public be written at around a high school reading level.

On the widely-used Flesch Reading Ease scale -- which calculates
readability based on factors such as average syllables per word and average
words per sentence -- the notices recorded scores ranging from 43, rated
'difficult,' to as low as 22, 'very difficult,' Hochhauser found.

Several U.S. states already use the scale to set plain English
requirements for insurance policies, with Connecticut and Florida requiring
minimum scores of 45 and Maine mandating a 50. None of the privacy notices
would meet those standards.

'That's pretty difficult reading for most people,' Hochhauser said. 'And
if people have a hard time reading something, either they're not going to
read it at all, or they'll quit partway through, or they'll misunderstand it.'

UNDER SCRUTINY

That sort of predictions have both consumer and industry groups watching
closely to see how Americans actually do respond to the deluge of notices,
anticipating that could itself become a factor in their ongoing debate.

And while they remain deeply divided whether new steps are needed to
protect privacy in an increasingly wired financial world, they appear united
in one thing: low expectations.

'Anecdotally, banks that have sent out the bulk of their notices are not
getting a lot of response -- either questions about the notice or opt-outs,'
the ABA's Byrne said.

A similar opt-out under the U.S. Fair Credit Reporting Act allows
consumers to tell companies that get their credit reports not to share them
among affiliates, but typically only around 0.5 percent have chosen to do so,
he added.

'I think this will have a low opt-out rate because, firstly, the rights
are so weak and, secondly, companies are sending out gibberish,' U.S. PIRG's
Mierzwinski said.

Political analysts see the prospects for more congressional action in the
financial privacy area as remote for the time being, with lawmakers focusing
on more general concerns relating to the Internet and the use of electronic
databases.

Skirmishes are expected to continue at the U.S. state level, with at
least 30 considering proposals going beyond the requirements of the new
federal law. But concerted industry lobbying succeeded in beating back
similar moves last year.

'Barring a hue and cry from bank customers, it's going to be hard to make
the policy case that we need additional laws specifically directed at
financial services,' Byrne said.

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