Magazine article American Banker

U.S. Bancorp Settles Suit in Minnesota with $3M and New Privacy Policy

Magazine article American Banker

U.S. Bancorp Settles Suit in Minnesota with $3M and New Privacy Policy

Article excerpt

WASHINGTON -

With surprising speed, the Minnesota attorney general's office on Wednesday settled its three-week-old customer privacy lawsuit against U.S. Bancorp.

The Minneapolis-based holding company will pay Minnesota $500,000 for legal and research expenses and donate $2.5 million to charitable causes, including the nonprofit home builder Habitat for Humanity.

The bank also agreed to let customers opt out of any cross-marketing deal with a holding company affiliate.

Representatives from both camps cited U.S. Bancorp's recently announced privacy initiative as the catalyst for the agreement.

"Given U.S. Bancorp's early industry-leading decision to stop disclosing customer information to third parties for purposes of marketing nonfinancial products, we felt it was in the public interest to resolve the lawsuit," said Minnesota attorney general Mike Hatch in a joint statement. "A settlement of the case became an attractive way of reconciling the state's dispute with the bank."

"Action by the attorney general compelled us to step back and look at this industrywide practice," said Jack Grundhofer, the bank's chief executive officer. U.S. Bancorp admitted no wrongdoing.

In its June 9 lawsuit, the attorney general's office claimed that U.S. Bancorp had earned over $4 million in revenue by illegally sharing detailed customer data with telemarketer MemberWorks Inc.

But U.S. Bancorp spokesman Donn Waage said Minnesota was "wrong" about the figure. He said the bank earned only $1.5 million from the deal and has earned just $3 million from all such third-party marketing deals. That, he said, is why the settlement was set at $3 million.

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