JUNE 1999 · VOLUME 20· NUMBER 6

U.S. Bank allegedly released customers' private banking information to a telemarketing company in exchange for a fee of $4 million plus commissions, Minnesota Attorney General Mike Hatch alleged in a lawsuit filed in June against the bank.

   Hatch alleges that U.S. Bank, a unit of U.S. Bancorp, violated the federal Fair Credit Reporting Act and engaged in consumer fraud and deceptive advertising by providing the telemarketing vendor with such private information as Social Security numbers, account balances, transactions and credit limits.

   "People are appropriately careful about protecting their Social Security number, checking and credit card information," says Hatch. "When a bank hands out this information to the highest bidder, it has to answer to its customers and to the attorney general."

   Hatch alleged that U.S. Bank provided Member Works Inc. with its customers' name, address, telephone numbers of the primary and secondary customer, gender, marital status, homeownership status, occupation, checking account number, credit card number, Social Security number, birth date, account open date, average account balance, account frequency information, credit limit, credit insurance status, year to date finance charges, automated transactions authorized, credit card type and brand, number of credit cards, cash advance amount, behavior score, bankruptcy score, date of last payment, amount of last payment, date of last statement and statement balance.

Since November 1996, U.S. Bank has received over $4 million plus commissions -- commissions equal to 22 percent of each sale Member Works made -- from the provision of its customers' private information to Member Works.

Member Works used the U.S. Bank customer data to sell memberships in a health program that allowed members to get discounts on dental and health care visits.

 Hatch also alleges that in addition to providing confidential customer information, U.S. Bank approved telemarketing scripts that contained deceptive information.

For example, if a customer asked a telemarketer if U.S. Bank had given the customer's credit card or checking account number to the telemarketer, the script instructed the telemarketer to answer "No, I personally do not have your account number."

   Hatch alleges that U.S. Bank violated federal law and banking rules by allowing the telemarketing company to automatically withdraw payments from a checking account without written authorization from the consumer.

   Federal and state regulatory agencies require banks to publish privacy policies telling consumers how their personal information will be used, who has access to the information and if the bank intends to give its personal information to non-affiliated third parties.

U.S. Bank has a privacy policy printed in its U.S. Bank Customer Agreement that says, "We share your concerns about the privacy of your personal information and strive to maintain its confidentiality."

Nothing in the bank's agreement reveals that personal, confidential information is being sold to companies that are not affiliated with U.S. Bank.

Hatch says that none of U.S. Bank's consumer brochures disclose to customers that their names and account information could be sold to a third party.

   Hatch is asking that the court prohibit the bank's exchange of customers' personal information and order the bank to pay civil penalties to consumers. Hatch is also calling upon Congress to enact legislation to protect consumers' rights to financial privacy.

   In June, U.S. Comptroller of the Currency John Hawke condemned such practices as "seamy," unfair and deceptive.

-- Russell Mokhiber