Limits of financial privacy on a state ballot

Limits of financial privacy on a state ballot

The battle over meaningful protections for customer information held by banks will next be fought in the wheat fields of North Dakota. There, on June 11, voters in the state’s primary election will decide whether banks may disclose customer information unless a customer objects or whether customers will have more control over disclosure of their information.

On the surface, the referendum appears to be merely a question of whether bank customers in North Dakota, which ranks 47th in population in the U.S., will have “opt-out” or “opt-in.” Optout means that a customer has to take the initiative and prevent disclosure of personal data. Opt-in provides an assurance of confidentiality unless the customer consents to disclosure.

“What they ultimately want is the full use of the financial information of their customers for marketing purposes. This is about money,” said North Dakota State Rep. Jim Kasper, a Republican businessman from Fargo who fought to preserve opt-in in North Dakota last year.

Since 1985, the state had a law requiring consent (opt-in). The North Dakota Bankers Association asked for the law back in 1985. That was in a time when banks thought that confidentiality of customer information was in the interests of banks, A half dozen other states have similar laws. Then came a federal law in 1999 permitting banks and insurance companies to get into each others’ businesses and, so that they could do so profitably, the law allowed them liberal exchanges of customer information, except for a partial opt-out.

Lobbyists for banks then persuaded the state legislature last summer that North Dakota was all alone in requiring a higher level of confidentiality than other states. It was one of the most expensive, passionate lobbying fights in the state capitol in Bismarck in many years. The banks succeeded in passing SB 2191, which watered down the state’s consumer protections. Now customers have to object to disclosures to non-affiliated organizations to stop them.

Public reaction to this action by the legislature was largely negative. A Bismarck newspaper columnist called it “financial nudity.” Steve Cates wrote, “The crux of the matter is that what used to be yours is theirs.”

Then the banks announced that now that they had the weaker protections they had sought, they did not intend to sell customer information anyway.

Kasper and an independent privacy activist named Charlene Nelson of Casselton went to work. Many legislators said that they were misinformed in the earlier debate over SB 2191 and agreed to a ballot referendum on whether to repeal the weaker law that has been on the books since last July. www.state.nd.us/sec/Elections/ 2002ballot-measures. htm.

PRIVACY JOURNAL’S Compilation of State and Federal Privacy Laws is now available in an all new 2002 edition with a new chapter on Identity Theft, more laws on telemarketing, and a 25-percent increase in new laws overall.

See page eight for ordering information.

Copyright Privacy Journal Mar 2002

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