Passive Banks Seen Inviting Rules on Data Privacy
Fickenscher, Lisa, American Banker
Bankers have been slow to react to their customers' growing privacy concerns, a report says, and they could be risking regulatory intervention.
"If U.S. banks fail to heed their customers' genuine privacy concerns, a call for detailed privacy regulation of bank marketing and on-line commerce operations by state or federal authorities is likely," said the report in the March/April edition of the newsletter Privacy & American Business.
While few people doubt the seriousness of a regulatory threat, sources close to the credit card industry, where much of the concern lies, believe banks are responding to privacy issues even if they haven't adopted formal policies.
"We shouldn't mistake a lack of public discourse on the issue (for) a lack of importance to our members," said Susan Murdy, vice president of public affairs at Visa.
Similarly, Richard Jones, MasterCard's vice president for consumer and merchant satisfaction, defended banks. The card association itself only adopted privacy principles last November, he said.
Since then, Mr. Jones said, momentum among card issuers is building to adopt such policies. Visa issued privacy principles last May.
Most of the privacy concern is centered on information gathered about consumers' buying habits from credit or charge cards. The handful of financial institutions that have privacy policies, with the exception of American Express Co., apply them solely to their card customers.
Alan F. Westin, editor of the privacy newsletter, which is published by the Center for Social and Legal Research, said he believes the credit card approach is not enough.
"Banks need to have policies that cover their full range of services," he said, "because more and more banks have one big customer data base that is feeding all of these marketing activities."
Citicorp, which has had credit card privacy policies since 1991, is working on such a broad set of principles.
"We are determined to become a global company and recognize that data protection" is imperative to this expansion, said Duncan MacDonald, group general counsel for card products, Europe and North America, at the Citibank unit.
Citibank will apply its principles to all consumer products and information, said Mr. …