Magazine article American Banker

Docket: Court Rules against Banks in Privacy Case

Magazine article American Banker

Docket: Court Rules against Banks in Privacy Case

Article excerpt

The federal appeals court in Atlanta has ruled that two banks must face charges that they improperly revealed customer account data to the government.

The decision, by the U.S. Court of Appeals for the 11th Circuit, is the third major ruling in two years holding banks responsible for violating the confidentiality of account data.

Lawyers said the decisions should serve as wake-up calls to banks that a 1992 law intended to shield the industry from these types of suits is not as effective as many assumed.

"You really have to be careful in what you release," said John J. Byrne, senior counsel at the American Bankers Association. "You can't be stupid about it. You need to have procedures and follow them."

The latest case involves Coutts & Co., International Bank of Miami, and NationsBank Corp., all three of which were served a warrant in 1996 requiring them to turn over accounts held by Maria Del Carmen Miranda De Villalba and "all related individuals and entities."

As part of its submission to the government, the banks included stored electronic information and other data for individuals not specifically named in the subpoena. These individuals sued the banks, claiming willful violations of the Electronic Communications Privacy Act on 1986, the Right to Financial Privacy Act of 1978, and Federal Reserve Board Regulation J.

A federal judge dismissed the suit in August 1996, ruling that Congress explicitly barred the public from suing banks that disclose account data to the government in response to a government order. …

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