Academic journal article ABA Banking Journal

Private Affairs Public Debates

Academic journal article ABA Banking Journal

Private Affairs Public Debates

Article excerpt

The "know-your-customer debate was just one issue. Privacy continues to attract the attention of Congress and regulators

ITEM: An unidentified bank tried to buy the database of digitized driver's license photos maintained by New York State for use on credit cards. Lager for a payday of as much as $2 million, the state's bureaucrats nearly made the sale, until state legislators caught wind of it. Now, the sale is not only off, but the State Senate has launched a broad investigation--the impressive sounding Senate Majority Task Force on Privacy Invasion--of what and how state government information is sold to outside parties.

ITEM: In a followup to the Federal Trade Commission's "sweep" of business Web sites a year ago (ABA BJ, March 1998, p. 7), the private Online Privacy Alliance and Georgetown University this month will sweep the Internet again for the presence or absence of privacy policies.

ITEM: Buried in the Federal Reserve Board's 100-page conditional approval of the Citicorp and Travelers Group merger was a reference, beginning on page 83, to concerns about Citibank being able to tape medical data maintained on Travelers' health insurance customers. "To address the concerns about the use of customer information for cross-marketing purposes," the Fed wrote, "Travelers has committed to implement a 'Global Privacy Promise' to provide customers the right to prevent Citigroup from sharing customer information with others, including affiliates in other lines of business, for cross-marketing purposes." Citigroup agreed not only to initial disclosures to all purchasers of Citigroup products of the ability to opt out, but also to remind them of that ability at least annually. "In addition," the Fed wrote, "Travelers stated that a customer's medical or health information will not be shared for any marketing purposes. ... it will share such information only with the customer's consent or under very lim ited circumstances."

ITEM: The latest edition of the respected Privacy in American Business/Harris Survey on Privacy Concerns and Consumer Choice found, according to an official summary, "strong consumer distrust for the policies of American businesses and a lack of awareness that there are privacy policies currently in place."

In Shakespeare's Othello, the evil Iago says: "Who steals my purse steals trash.... But he that filches from me my good name... makes me poor indeed." So you can see that for some time now, the perceived threat to one's privacy has been a source of paranoia. Even before the emergence of the World Wide Web, "one's good name" was only the beginning of what was out there for people to worry about.

There were stories like George Orwell's 1984, in which Society not only towered over the individual, but could, in the interests of the State, amend or adjust one's record or role in Society--and even erase any evidence of one's having ever existed. A popular recent movie, The Net, exploits the deepest fears of those who cruise the lanes of cyberspace.

The newspapers, TV broadcasts, and the Web, are all rife with tales of varying validity and believability that feed the fear that somebody, somewhere, out there, is watching, spying, stealing, replacing, erasing, abusing--pick your verb.

So, given such a long-standing sensitivity to privacy, it was not surprising that, in the end, the federal banking regulators' "know your customer" proposal went down in flames. The demise was even assisted by some regulators, who picked up quickly which way the wind was blowing. Yet that controversy (Compliance Clinic, Feb. 1999, p. 26), was but one skirmish out of a long; lingering war. Here are reports from several fronts.

Legislative action

The last Congress, the 105th, considered several privacy-related bills seriously but only passed one out to the President, who signed it. This was The Identity Theft and Assumption Deterrence Act of 1998, which was promoted as making it easier to prosecute criminals who steal personal ID information with which to obtain credit cards, loans, and other financial benefits fraudulently. …

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