Legislature debates banks’ use of client data

Seth Woehrle

A joint committee hearing between both chambers of the state Legislature wrestled Tuesday with the question of how to balance consumer privacy with financial competitiveness.

The “opt in” or “opt out” issue was discussed at the Capitol during a hearing between the House Committee on Commerce, Jobs and Economic Development and the Senate Committee on Commerce.

Currently, banks, insurance companies and other financial institutions can share or sell their client’s information unless the client opts out and tells them not to.

A bill in the House Conference Committee authored by Rep. Dan Larson, DFL-Bloomington, would reverse that process, forbidding those companies from disclosing “nonpublic personal information” unless permission is granted by the individual.

The opt out standard is enforced nationwide by a federal bill, but it allows states to enact stronger
regulations.

Assistant Attorney General Eric Lindseth spoke at the hearing, reading letters from Minnesotans who were angry their banks and insurers were sharing personal information.

“(Consumers) should not have to take any action at all to protect their information,” said Lindseth. He said the privacy notices
financial companies send to clients can be deceptive.

Jim Bernstein, commissioner of the Department of Commerce, disagreed and said the current scheme balances the needs of the public’s privacy while keeping Minnesota’s financial institutions competitive with those in other states.

He said Minnesotans wanted more information about banks, insurance and securities companies, and information-sharing between companies provides customers with direct contact to those businesses.

“One of the cries that we hear from consumers is that they want information about financial services and products,” Bernstein said.

Minnesota’s regulations must be changed no matter what, said Mary Lippert, staff attorney for the Department of Commerce.

The federal law governing information sharing precludes Minnesota law in certain areas regarding required privacy notices, Lippert said. If Minnesota’s law is not amended to include those areas within three years, she said, the federal law would be enforced by default.

Outside campus banks, several students said they never noticed their bank’s privacy letters. Those who did read them said they had trouble understanding the documents.

Many University students said they would prefer the opt-in plan, but it was low on their list of priorities, behind services such as free checking and ATM availability.

“I’m banking and I’m not a format for the banks to make money off of,” said Jeff Berg, a political science sophomore.

But he said, “I don’t know if I’d necessarily go to the extent of changing banks.”

Maria Anderson, a fourth-year natural resources management student, said she liked the idea of the companies needing her permission and thought increased junk mail wasn’t much of a problem.

“It’s only a minor annoyance,” she said. “It’s pretty easy just to toss the stuff in the recycling bin.”

 

Seth Woehrle welcomes comments at [email protected]