Academic journal article ABA Banking Journal

Public Thoughts on Privacy from Minnesota's Attorney General

Academic journal article ABA Banking Journal

Public Thoughts on Privacy from Minnesota's Attorney General

Article excerpt

The man behind last year's U.S. Bank case promises more state-level court action

Around this time last year the long-simmering stew about financial privacy finally seemed to boil over. But little did anyone know that the hot times were just beginning. As the law that eventually became the Gramm-Leach-Bliley Act lumbered toward passage, the nation's attorneys general began tackling financial services privacy in earnest.

One of the most zealous, then and since, has been Mike Hatch, attorney general of Minnesota. Hatch and his department filed last year's much-publicized suit against U.S. Bank for allegedly releasing private customer data to a telemarketer in exchange for fees plus commissions on resulting sales. While settled without the bank conceding anything, the resulting headlines were a black eye for the company and for the industry. Further Hatch and other attorneys general vowed to pursue further cases.

Since then, Congress not only produced the Gramm-Leach-Bliley privacy provisions, but continues, along with the White House, to propose and debate further privacy legislation.

In a recent interview, Hatch, who pressed unsuccessfully for a package of financial, medical, and telemarketing privacy measures in the Minnesota legislature this year. Says his agency has been conducting half a dozen investigations of larger banks on privacy-related grounds. Hatch expect to announce a new case at around the time of this issue would be published.

"Some people worry about the government having our data," says Hatch. "The one good thing about the government is that it's not competent enough to deal with it." Industry, he believes, is what should be worrying consumers.

Roots of a cause

In Washington, consumerist-banking legislation often arises because a member of Congress--or a staff member--gets personally burned by some practices.

No such anecdote lies behind Hatch's privacy campaign, however. He has no story to tell about some relative getting burned.

As for personal privacy for himself, he laughs.

"I'm a politician," Hatch explains, "so I gave up my right to privacy." Carrying on a crusade about privacy--much of his agency' website ( is devoted to privacy issues and legislation, plus tips on how to get off mailing lists and such--made Hatch a target for various sleuths, he says.

"They keep telling me it's pretty plain stuff" that they find, he chuckles.

Hatch says the source of his initial interest in financial privacy was fairly workday--a raft of consumer complaints heard about MemberWorks Inc., a Stamford, Conn.-based marketing firm. The company specialized in selling various "club plans" over the phone--dental discount clubs, merchandise discount clubs, travel clubs, and more. Hatch's suit against that firm (settled in April 2000) charged that the company, among other things, was billing consumers' financial accounts for services that the consumers had not consented to take.

Hatch says his staff investigators frequently found that consumer complainants had financial accounts with U.S. Bank that had been charged for the MemberWorks services. This led to the suit, and later settlement, with U.S Bank.

Hatch is no stranger to banking, nor the state's institutions. Attorney general since his election to the post in 1996, Hatch spent an earlier political incarnation as Minnesota's commerce commissioner (1983-1989), which included supervision of the state's banks. In Private law practice between that job and his present position, his clients included bankers.

"Most bankers I knew believed, as I did, as a bank lawyer, that there is a right to privacy as it relates to bank data," says Hatch. "And there is a good argument that certain data is private. For example, loan files. And, independent of the Fair Credit Reporting Act, there is a fiduciary duty, at least in my state, that a bank shall keep business plans private. …

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