New Financial Privacy Report Card Finds Improved Consumer Control
The Consumer Federation of California Education Foundation today issued its 2008 Financial Privacy Report Card. It surveys the privacy policies of 61 major California banks, insurers and financial services companies.
Over one-third of the businesses surveyed in 2008 received grades in the ‘A’ range. The CFC Education Foundation’s first Financial Privacy Report Card in 2004 found that 14.5% of financial institutions received a grade of ‘A’. Low or failing grades of ‘D’ or ‘F’ decreased from 27.2% in 2004 to 8.2% in 2008.
The 2008 Report Card examined financial institutions that operate in California as well as other states to determine the extent to which California’s strong privacy laws have affected institutions’ policies in other states that are governed by the weaker federal law. 35 financial institutions surveyed in 2008 were also surveyed in 2004. California-only institutions surveyed in 2004 were not included in the 2008 survey.
‘During the past four years, many financial institutions have adopted stronger privacy policies. That is good news for consumers,’ said Richard Holober, Executive Director of the CFC Education Foundation. ‘California sets the standard for financial privacy. Consumer privacy options offered in other states have also improved, but still lag behind California.’
The Report Card is based on the institutions’ stated privacy policies. It did not examine any company’s compliance with their stated policy. The Report Card examined the industry policies in California and in other states regarding sharing of confidential consumer information with affiliated businesses and with third parties. Highest grades were given to companies that did not sell or share personally identifiable information without prior consent of the consumer (known as ‘Ask Me First’ or ‘Opt-In’).
The Report Card gave a financial institution credit for providing consumers a level of control over information sharing that exceeded the requirements of law. Banks and other financial institutions that merely complied with California or federal law received failing grades.
The Report Card found that the banking sector made the greatest improvement in privacy policies. The 22 banks surveyed in 2008 received an average grade of ‘B’. The 19 banks surveyed in 2004 received an average grade of ‘C’. The insurance sector made no improvement from 2004 to 2008. The 22 insurers surveyed in 2008 and the 16 insurers surveyed in 2004 both averaged a grade of ‘B-‘.
‘Financial privacy is a fundamental consumer right that should be protected by law. Outside our state, too many institutions offer only the inadequate federal privacy protections. It is time to adopt a federal financial privacy law modeled on California’s superior law,’ Holober stated.
The Consumer Federation of California Education Foundation is a non-profit education and research foundation. The report was funded by a grant from the Rose Foundation.
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