Nearly all 50 state attorneys general are investigating the legality of credit-card issuing banks selling their consumer information to direct marketers. Meanwhile, Congress considers legislation that would overhaul the financial services industry by giving their customers and credit cardholders a say in who can access their personal financial data.
California Attorney General Bill Lockyer confirmed published reports of the multi-state investigation, and said, “It’s not clear yet whether there is adequate law to prosecute criminally or civilly for the sale of private financial information from customers.” If there is a law, “it ought to be strengthened,” he added.
Vermont Assistant Attorney General Julie Brill, one of the leaders of a national task force conducting the probes, explained that the attorneys general will decide what actions, if any, they will take after “assessing what the banks are doing” regarding the sale of customer information to marketers.
While there was no information available about the number of banks being investigated, Reuters news service quoted Connecticut’s Attorney General Richard Blumenthal as saying that authorities were looking to determine if there were widespread “violations of both state and federal law…violations of the trust and profound privacy interests that should be respected” by those institutions.
Many banks, it was noted, provide third parties–generally direct marketers–with detailed information about their credit cardholders for a variety of solicitations, ranging from assorted financial services to pre-paid legal services and dental services, insurance programs and vacation packages.
Many believe the combination of a lawsuit against U.S. Bancorp, Minneapolis, by Minnesota’s Attorney General Mike Hatch, and last January’s introduction of the Financial Service’s Act by Rep. James Leach (R-IA), prompted the state probes.
Hatch’s suit, which U.S. Bancorp settled for $3 million while admitting no wrongdoing, alleged the firm sold information to a telemarketer about its customers that it promised would be kept confidential. No action was take against the telemarketer.
Meantime, a Congressional conference committee continues to try and blend two different versions of the financial services overhaul bill. The House bill, HR-10, sponsored by Leach, gives consumers greater control over their personal financial information than the Senate version (S-900), sponsored by Senator Phil Gramm (R-TX)
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