[ISN] Banks Must do More to Protect Customers' Privacy

From: mea culpa (jerichot_private)
Date: Fri Oct 30 1998 - 01:34:28 PST

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    Bank Customers' Privacy Stressed
    Consumers: U.S. official tells gathering that pressure is building
    for regulation because some banks are doing a poor job.
    >From Associated Press
    VENTURA, Fla.--Commercial banks must do more to protect their customers'
    privacy or submit to federal regulation that would force them to do so,
    acting comptroller of the currency Julie L. Williams said Monday. 
    Addressing a meeting of the Consumer Bankers Assn., Williams said her
    office has found that while some banks do a good job of protecting
    confidential financial information, many do not. 
    To the extent that banks are not living up to customers' expectations for
    privacy, "pressure will continue to build for government action that could
    lead to restrictions on your ability to use precious information
    resources()," Williams told 250 top-level consumer bankers gathered here
    for the final day of a four-day conference. 
    Privacy has emerged as a major issue for banks and regulators as the wave
    of financial industry mergers has been largely driven by companies'
    ability to compile vast amounts of personal financial data that can be
    shared between newly merged operations. 
    The banking operations of the new financial services giant Citigroup have
    every intention of sharing their customer information with Travelers
    Group() insurance operations. 
    Bank customers are increasingly worried about data sharing within
    companies and how easy it is for people outside their bank to obtain
    private information about them.  In congressional hearings over the
    summer, legislators and regulators learn ed the ease with which
    information brokers and scam artists were able to pry loose personal data
    from bank customer service personnel. 
    Congress passed legislation in the recent session that criminalizes
    identity theft, gives victims the ability to seek restitution and
    establishes in the Federal Trade Commission a central clearinghouse to
    receive complaints and assist victims. That bill is awaiting President
    Clinton's signature. 
    The Fair Credit Reporting Act requires banks to inform their customers how
    their data are being used and that the customers may instruct their banks
    to not share the data within the company. 
    But, Williams said, too many banks are not complying with the spirit or
    the letter of that law. 
    Williams encouraged banks to adopt voluntary privacy guidelines that have
    been suggested by her office and endorsed by banking groups such as the
    Consumer Bankers Assn. 
    Further, she said, banks need to make sure their customer service
    personnel know about the guidelines and monitor their operations to make
    sure the guidelines are followed. 
    Joseph Belew, president of the association, asked Williams whether
    non-bank financial service companies such as insurers and brokerages that
    are not federally regulated will be required to comply with the same
    privacy standards. 
    Implying that companies that don't have to abide by the guidelines could
    get a competitive edge, Belew said, "I'm sure I don't have to explain to
    you the realities of the competitive marketplace." 
    Williams responded by saying bankers should view the safeguarding of
    private information as a marketing asset, not a liability. 
    "Doing well conspicuously on privacy ought to be something that you can
    turn into a positive marketing tool," she said. 
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