WASHINGTON -- The privacy notices going out to customers from banks and brokerages often are confusing and hard to read and may discourage people from exercising their rights, Democratic lawmakers are telling regulators.
Rep. John LaFalce of New York, senior Democrat on the House Financial Services Committee, is gathering signatures from Democratic colleagues for a letter to Treasury Secretary Paul O'Neill, Federal Reserve Chairman Alan Greenspan and other bank regulators complaining about the privacy notices.
Many of the notices, required by law, have "a general tone that minimizes the importance" of a consumer's right to block financial companies from sharing their personal data with other firms, according to the letter.
"While a number of financial institutions have worked constructively to create effective privacy notices ... too many others appear to have used the privacy notices to confuse their privacy obligations."
Many of the privacy fliers are printed in type "that is too small to be easily read by middle-aged eyes and almost impossible for the elderly to read without the assistance of a magnifying glass," the letter says.
The rules governing the notices, drafted by federal regulators, provide specific guidelines on how to make them clear and conspicuous, such as using type that is easy to read and concise sentences.
The banking industry defended its notices.
"This is a legal document that is being sent out by the banks," American Bankers Association spokeswoman Catherine Pulley said Thursday. "Banks have to please their customers but they also have to please the regulators."
Mailing some 500 million notices by banks is "a huge, daunting" and expensive task, she said. A very small percentage of customers have chosen to block the sharing of their data, the bankers' group has found.
The consumer's right to block data-sharing was included in the sweeping 1999 legislation allowing the creation of financial "supermarkets" and removing Depression-era barriers keeping banks, securities firms and insurance companies out of each other's businesses.
Banks and other financial companies are required to send the privacy notices to all their customers by July 1. They most often come as envelope stuffers with customers' statements and bills.
Consumer groups have also criticized the notices.
"The banks don't speak English and they do it on purpose," said Ed Mierzwinski of Public Interest Research Group. He called the notices "unintelligible, hiding your limited right to say 'No' at the end of pages and pages of gibberish."
In his letter, LaFalce asked the regulators to review consumers' complaints and to require more conspicuous privacy notices.
Spokesmen for the Treasury and the Federal Reserve declined immediate comment because O'Neill and Greenspan had not yet received the letter.
On the Net:
Bankers association: http://www.aba.com
Form letter for consumers who want to tell financial companies not to share their data: http://www.PrivacyRightsNow.org
Brainerd Dispatch ©2013. All Rights Reserved.