These are scenarios privacy experts worry about every day, and they say the rest of us should be concerned, too. Financial giants hold every detail of your financial life, and they’re mostly free to spread it around at will. Now, thanks to the consolidation of banks, insurance companies and brokers–and their investment in massive software systems–they are poised to start using that information more profitably than ever.
Consumers can’t do very much about it, but that may change. A 1999 federal law requires companies to send privacy policies to their customers once a year. These mailings offer the opportunity to “opt out,” which would prohibit companies from selling information to unrelated firms. Those notices are starting to show up in the mail now and will inundate many households before a July 1 due date. Consumer groups are underwhelmed: The same law still lets firms share data with their own subsidiaries and with any outside company they strike a deal with. That’s why Vermont and New Mexico regulators recently went beyond the Feds to tighten privacy restrictions. In North Dakota, a referendum on the ballot this June could reinstitute tougher rules.
Financial companies, fearing these acts will render their billion-dollar databases unprofitable, have filed suit in Vermont and are pressing Congress to stop the states from acting. The biggest fight is in California, where a tough new bill may influence the rest of the country. It would require that financial firms get consumers’ permission before using their information to market any nonfinancial products. California almost passed a similar measure last year.
Most consumers haven’t seemed to mind putting their personal information out there. Fewer than 3 percent of customers opted out when given the chance last year. Some people will even volunteer their household income in exchange for a handful of supermarket coupons. Companies say consumers benefit. The Financial Services Roundtable, a group of 100 firms formed to fight privacy restrictions, said customers saved $17 billion with cross-selling deals made possible by the flow of information. For example, companies discounted auto insurance for people making timely lease payments.
But as your data starts flying farther and faster, there could be a dark side. Banks know how you spend your money, and could start slicing and dicing consumer profiles in more dangerous ways. Information can be misused, and already has been. Just last month Citibank agreed to pay $1.6 million to settle complaints by 27 states that it had been providing private data to telemarketers who were tricking customers into unwittingly buying club memberships, roadside assistance and dental plans.
Consumers can protect some of their own data by taking the time to read the privacy notices. Some banks–notably Bank of America–are voluntarily declining to sell information, and you can choose a financial-services company that handles information that way. Two privacy groups, the Privacy Rights Clearinghouse (privacyrights.org) and Junkbusters Corp. (junkbusters.com) have posted sample opt-out letters and mailing addresses. All four credit-reporting agencies run one toll-free opt-out number that will take you off their marketing mailing lists: 888-567-8688. When telemarketers call, a simple “Please take me off your call list” should stop the conversation and keep them from calling again. It’s not just your privacy–it’s your dinnertime peace.
