Regulator Tells Banks Not to Sell Data to Telemarketers
Comptroller of the Currency John D. Hawke Jr. called for banks to stop selling customer information to unaffiliated telemarketers, saying that legislative cures such as the Truth in Lending, Fair Credit Reporting, and Fair Credit Billing acts are “more painful that the disease.” The comments were made during a presentation to bank lending officers on Monday.
Hawke condemned the sale of personal customer financial information such as social security numbers, dates of birth, credit card numbers, checking account numbers, account balances, and credit scoring information. This data, Hawke said, allows telemarketers to profile bank customers and offer trial membership programs that are converted to paid monthly charges and deducted from bank accounts, without the knowledge of the consumer.
“The disclosures provided to a customer about the need to opt out in order to avoid continuing charges often leave much to be desired, and the bank’s published policies frequently fail to make reference to this use of confidential customer information,” said Hawke.
Hawke indicated that concern over the transfer of customer information has already prompted proposals for new federal legislation, and as the information practices he described come to light, the likelihood of new legislation will be increased.
He urged industry leaders to let both Congress and consumers know that it will “take the steps necessary to clean up its act.”
“In my view, the banking industry’s response must be prompt and unambiguous in order to stem the tide of corrective legislation,” Hawke said.
