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Companies must tell customers how they share information

Consumers can benefit from new privacy procedures

Customers of insurance companies, banks and other types of financial companies are currently receiving notices of the privacy policies regarding sharing customer information with other companies. It may be tempting to throw the notices away, but consumer advocacy groups say that is a bad idea.

Instead, it is a good idea to respond, particularly if you want to prevent unwanted telephone and direct mail solicitations or if you are concerned about the possibility of identify theft from the sharing of your social security number.

Mississippi Banking Commissioner John Allison said some of the privacy notices are very long and printed in type so small it discourages anyone from reading it. He said the main result of the requirements of the Gramm-Leach-Bliley Act of 1999 is that customers be notified of companies’ privacy policies that may be “killing 10 or 12 million trees.”

Still, he thinks the intent of the legislation is good. “The concept, if done properly, would probably be beneficial,” Allison said. “It will certainly cut down on some of the unwanted solicitations.”

Allison said it isn’t just banks, brokerage firms and insurance companies but anyone who lends money who is being required to go through the procedure. That includes small loan companies, pawn shops, credit card companies, title loan operations, etc.

Nationally there have been complaints by some in the banking and insurance industry that the regulations are burdensome and unnecessary. Allison said here in Mississippi he has had few complaints from banks and insurance companies, possibly because they are accustomed to these kinds of regulations. But some of the other businesses are less than thrilled about being forced to meet the requirements.

Allison advises people to take the time to read the privacy notices.

“If you haven’t started getting them, you will soon be inundated with a lot of documents depending on how many businesses you do business with,” he said. “You may get more than one notice from the same company.”

Paul Maxwell, corporate communications manager for Hancock Bank on the Coast, said the bank has sent communications to customers twice. One was a statement stuffer. But since many customers might overlook that, they also sent some direct mail pieces to customers that went into more detail.

“One of the purposes of the direct mail pieces as opposed to statement stuffers was to make sure customers actually read the information,” Maxwell said. “The thing we are trying to do within the parameters of the legal requirements is to make the language as straightforward as possible.”

Hancock Bank doesn’t share any information with outside companies. The information is only shared within the family of Hancock Bank companies. So the privacy notices sent confirm that the bank doesn’t sell lists to outside vendors, and that customers have the right to opt out of information sharing within the bank.

Maxwell said they haven’t had a lot of response from customers except those who call for more information. Some are concerned that by opting out they could lose out on receiving information about special offers and campaigns in other areas of the Hancock Bank. That kind of information is available from marketing and advertising done by the bank, and Maxwell said most of the bankers will let customers know if there is a product they can benefit from.

Gray Wiggers, senior vice president of marketing for Trustmark Bank in Jackson, said few customers have shown much interest in the privacy statements. That may be largely because the bank doesn’t sell customer information to outside companies. Wiggers said they were able to simplify privacy notice messages sent to customers as a result of not selling lists.

The privacy laws will also extend to companies that deal with health information such as health insurance companies, said Mark Haire, special assistant attorney general representing the Mississippi Department of Insurance.

“Customers will be given the opportunity to completely opt out if they don’t want information shared,” he said.

The regulations provide the opportunity to cut down on the risk of identity theft where a person’s name and Social Security number are used fraudulently, said Haire.

“This is an opportunity for customers to be knowledgeable about the policies of insurance and financial companies, and take advantage of federal law and say, ‘I really want to cut down on my risk,’” he said.

Companies have until Aug. 1 to notify customers about the privacy provisions.

The privacy notices must give you a reasonable right to opt-out by filling in a simple form, calling a toll-free phone number, or using an e-mail or Web form. The Public Interest Research Groups (PIRG) says if your financial institution only offers the right to opt out by writing a letter, it is likely in violation of the law.

The notices generally describe two types of information banks and other companies collect and share and the right to opt-out of sharing either or both types of information. One type of information is “experience and transaction” information, everything the bank or other entity knows about you from your account relationship.

If you opt-out of third-party “experience and transaction” sharing, you can prevent the company from sharing all of this confidential information with nonaffiliated third parties. The most important nonaffiliated third parties are telemarketers and companies that sell Social Security numbers. Note, however, that the bank will still retain the right to share your “experience and transaction” information with both its own affiliates and certain third parties that are selling services directly on behalf of the bank, as if they were, in fact, affiliates.

The second type of information is “other” and is all other information the bank or other company obtained about you from outside the company, such as from your application, from your listed references and from your credit report. If you opt-out of “other” information sharing, your bank cannot share this information, even among and with its affiliates.

Credit bureaus sell banks lists of consumers who meet certain pre-screened credit criteria. These lists result in 3.5 billion credit offers mailed out annually, or an average of eight per household per month. Under a separate law, the Fair Credit Reporting Act, consumers have the right to opt-out of receiving these offers. You can make one phone call to 1-888-567-8688 [1-888-5-OPTOUT].

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

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