In what must have been a surprise to almost no one, Minneapolis-based U.S. Bancorp has quickly settled the privacy lawsuit brought against it by the Minnesota Attorney General.
On June 30, 1999, Minnesota Attorney General Mike Hatch and the U.S. Bancorp representatives announced they had settled the lawsuit in which Hatch and his office accused the bank of illegally selling information about bank customers, including Social Security numbers.
While admitting no wrongdoing, U.S. Bank announced it had decided to stop disclosing its customers’ information to third-party nonfinancial marketers. In addition, the bank agreed to donate all the proceeds it realized from disclosing customer information: US$1.5 million to Habitat for Humanity in Minnesota, US$1 million to other charities, and US$500,000 to the State of Minnesota. The bank will also make refunds to disgruntled customers.
Let’s see if I’ve got this straight. U.S. Bank is accused of selling its customer information—everything ranging from credit card account numbers, checking account numbers, credit insurance status, finance charges, account balances, birth dates, Social Security numbers, transactions, credit limits, marital status, occupation, and homeownership status—to the highest bidder. Reports indicate that the bank made millions of dollars on the practice. It gets caught, maintains it did nothing wrong, and agrees to give all the money back. Does that about cover it?
Something is terribly, terribly wrong with this picture.
I’ve had my fill of hearing about how we’ve got to get “tough on crime” and then getting sandbagged over the definitions of “crime.” Sell out your customers’ information and it’s a mildly embarrassing breach of etiquette; sell your friend a bag of pot you grew in your backyard and say hello to your new roommates for the next two decades, “Knuckles” and “Mad Dog.”
Sidney Jourard introduced a simple, poignant theory of behavior: “All human behavior is based on maintaining or enhancing the self-image.” That theory can easily be extended to the approach to law and commerce in the United States: “All law is based on maintaining or enhancing the corporate environment.” That’s the only way I can reconcile some of the insane things that have happened during the last two decades in the name of advancing commerce. And I challenge anyone to point to a single thing that has been done since 1980 to benefit the commonweal.
Minnesota Attorney General Mike Hatch should be ashamed of himself for not following through with the lawsuit. Anything less is abandonment of the interests of the citizenry at the pleasure of commerce. But for a few weeks, Hatch got some pretty good press clippings that he’ll surely drag out during his next election campaign.
Meanwhile, in Washington, the politicians are wrestling with bank privacy issues. Or rather, they appear to be wrestling with the issues, but it’s all clearly scripted and choreographed. In early July 1999 the House is scheduled to debate new legislation that would restrict what customer information banks can share with others, including law enforcement. The current law that requires banks to report suspicious account activity to the IRS would be tightened. Another piece of proposed legislation would increase banking industry regulation by requiring banks to let their customers decide whether or not their personal information can be shared with banking affiliates including brokerages and insurance companies. Both proposals are attached as amendments to the Financial Services Act of 1999.
Of course, before the amendments can even be considered by the full House, they have to be blessed by The House Rules Committee. That’s something not likely to happen anytime soon; the banking lobby spends a lot of money to keep things like this from ever seeing the light of day. And even if these two modest proposals should happen to slip through the cracks in the House floor, the idea that they’d be passed by the full House, and then the full Senate, and then signed into law by the President is as likely as remaining dry while pissing in the West Texas wind.
The solutions are as maddeningly simple as they are straightforward.
With regard to the use of any collected information, not just banking information, we need only follow the European Union‘s lead: no information collected for one purpose can be used for any other purpose without the informed consent of the subject of the information.
As to appropriately punishing the commerce pirates, it’s time to recognize that we’ve always had the power to revoke a corporation’s charter, and to exercise that power when warranted.
The number one strategy in Paul Hawken’s Declaration of Sustainability is “Take back the charter.” Based in large part on Taking Care of Business: Citizenship and the Charter of Incorporation by Richard Grossman and Frank Adams, the underlying notion is that corporations exist at the pleasure of the citizenry. When they misbehave, or no longer serve a viable purpose, we’re within our rights to put them out of our misery.
0 responses. Comments closed for this article.