Wes Vernon
Monday, June 25, 2001

Send consumers privacy notices they can understand.

Congress is reacting to a law passed last year that allows banks and finance companies to sell individuals' Social Security numbers and private financial data – as long as they send a bland notice to consumers telling them of their policy.

Rep. John J. LaFalce, ranking member of the House Financial Services Committee, has fired off a letter to top government officials demanding that these firms be required to send out notices that are spelled out in plain English, and without the confusing mumbo-jumbo that have been typical of the more than a billion industry notices that must go out by July 1.

Sen. Richard Shelby, a leader in the privacy fight, has called the notices a "sham." The notices require individuals to contact their banks and financial institutions to stop the selling of their data. A fairer method would be for banks to get outright permission from customers.

The notices were required by a banking regulation law that some believe was as filled with holes as Swiss cheese.

As the Washington Post describes the common complaint, many of the notices "are confusing, poorly written and few consumers have exercised their right to 'opt out' of having information about them shared with other companies."

LaFalce sent his letter to Treasury Secretary Paul O'Neill, Federal Reserve Chairman Alan Greenspan and other regulators. He wants the rules revised so that notices will be more conspicuous and, to use his words "more supportive of Congress's intent" when they are sent out again next year.

He would also like the letters to focus their attention on the many consumer complaints about the notices.

The New York Democrat acknowledges that some financial institutions have worked to create effective privacy notices, but that "too many" have not. The congressman's office says he is circulating the letter among his colleagues to encourage them to co-sign it.

Sen. Richard Shelby, R.-Ala., who co-chairs the Congressional Privacy Caucus, says the notices are "designed to be thrown in the trash" and "designed not to be understood." People need "clarity," he adds.

Millions of consumers have indeed tossed the notices into the trash as the senator indicates, because they look like "junk mail" of the sort they routinely receive in the mail. There isn't anything that really lets them know of the importance of the notice.

The banks have pounced on this meager response as evidence that their customers obviously want to be bugged by telemarketers so they can take advantage of "opportunities." To consumer organizations, that claim doesn't pass the laugh test.

John Byrne, senior counsel at the American Bankers Association, tells the Post banks have been "working diligently" on the notices, which he says were patterned after those suggested by regulators.

While that does not let the banks off the hook, it may offer a partial explanation. If government regulators gave them a pass, were the bankers aware that some government types are notorious for making something quite simple appear very officious?

Consumer groups, of course, are up in arms over this. They want Congress to give individuals more authority to prevent the sharing of account information. They've set up a privacy rights clearinghouse at www.privacyrightsnow.com.

But, Byrne adds, if regulators want different notices next year, banks and other financial institutions "would be willing to go along."

Related: Sign NewsMax's free petition to protect your medical records.

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