IP: Dan Gillmor on Technology Wed Apr 11 13:00:25 EDT 2001

[David Farber <dave@farber.net>]

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>Wednesday April 11, 2001
>
>Banks share privacy policies, but examine them carefully
>
>
>
>BY <mailto:dgillmor@sjmercury.com>DAN G<mailto:dgillmor@sjmercury.com>ILLMOR
>Mercury News
>
>Watch your mail carefully for the next few weeks. Financial institutions 
>of all kinds will be telling you, sometimes deviously, how much they care 
>about your privacy.
>
>After you stop snickering, start paying attention to what they say -- if 
>you can understand the obscure language some of them will use -- and then 
>take some defensive steps to limit the damage that a new federal law is 
>doing to everyone's privacy.
>
>The Financial Services Modernization Act, as its sponsors named this 
>creepy piece of legislation, tore down the Depression-era walls that 
>prohibited some kinds of financial institutions from owning other kinds. 
>Insurance companies couldn't own banks, for example.
>
>There were good reasons for the previous policy -- to protect customers -- 
>but the powerful financial industry got the old law repealed. Bad idea, 
>but money rules in Congress these days.
>
>The lawmakers also looked at data privacy as they considered the bill. As 
>you'd expect, they mostly did the money folks' bidding in this case, too. 
>The act gave the up-and-coming financial conglomerates the right to share 
>your data among all companies under any single corporate umbrella. In 
>other words, your life insurer may soon be able to learn how you spend 
>your money using a credit card issued by a bank owned by the same 
>corporate parent.
>
>That was horrible, but the law also gave financial institutions the right 
>to pretty much do as they pleased with your data outside their corporate 
>families -- unless you explicitly tell them not do share it.
>
>By July 1, all financial institutions have to notify you of your minimal 
>privacy rights. The way they're doing it, as you might expect, raises 
>suspicions about how much they really want you to exercise those rights.
>
>First, the privacy advisories are likely to look like junk mail or some 
>stuffer that comes with your monthly bill. If you're like me, you tend to 
>toss out direct-marketing mail and the extraneous stuff that shows up in 
>monthly bank or credit-card statements. I'm sorry to say that we all need 
>to examine everything for the time being.
>
>Second, institutions are cloaking the advisories as helpful new guides and 
>services rather than compliance with federal law. The non-profit Privacy 
>Rights Clearinghouse 
>(<http://www.privacyrights.org>www.privacyrights.org), based in San Diego, 
>faxed me some examples. US Bancorp proudly declares its ``Consumer Privacy 
>Pledge'' while Wells Fargo and Wal-Mart's credit-card unit call it a 
>``Privacy Policy.'' Invariably, they tell you how much they value your 
>business and your privacy, but forget to note that they're telling you all 
>this because the new law requires it.
>
>Third, they're writing the policies in obscure ways. ``According to the 
>law, these new financial-privacy notices are supposed to be written in a 
>`clear and conspicuous' style,'' says a readability study commissioned by 
>the Privacy Rights Clearinghouse and posted on its Web site. ``This means 
>that the language used should be `reasonably understandable,' a term which 
>is not defined. But based on the readability statistics, none of these 17 
>notices was even close to meeting that criterion.''
>
>Could it be that the financial institutions don't want you to know what 
>they're doing? Or is it just the result of lawyers mucking with disclosure 
>forms? Either way, customers need better disclosure.
>
>I strongly advise you to look carefully for these notifications, and then 
>do whatever it takes to inform the financial institutions that your data 
>is not theirs to share. Remember, your inaction is their go-ahead to treat 
>your information as a commodity.
>
>Note to readers: If you get a privacy notification that's especially 
>well-disguised or obscurely worded, please send me a copy. I'll create a 
>gallery of the worst offenders and post it online.
>
>SPEAKING OF OBFUSCATION: Microsoft's ``Passport'' system, which 
>authenticates users of Hotmail, Microsoft's Instant Messenger software and 
>other products, is also designed to be the entry point to the 
>``Hailstorm'' world of pervasive Web-based services. But our favorite 
>monopolist has come under well-deserved fire for Passport's amazing 
>``Terms of Use,'' which were so broadly favorable to the company as to be 
>ludicrous.
>
>These kinds of documents are common, and outrageous. They give customers 
>few rights, if any, and give sellers practically total license to sell 
>defective goods with impunity.
>
>In the Passport case, the terms of use could have been interpreted to mean 
>Microsoft had permission to use its customers' patents and other 
>intellectual property without reimbursement. After a furor, which began 
>when the Register (<http://www.theregister.co.uk>www.theregister.co.uk), 
>an online publication, reported the terms, Microsoft revised them, saying 
>the document was out of date.
>
>The terms are still not what you'd call consumer-friendly. And if you want 
>to learn just how these kinds of terms get written, you may want to stop 
>by Stanford University this afternoon for a colloquium where Jack Russo, a 
>Silicon Valley lawyer who specializes in intellectual-property issues, 
>will deconstruct the Microsoft document from several points of view.
>
>Line up the 15 major points in the terms of use, Russo said Tuesday, and 
>look at them from a consumer's side and Microsoft's side. ``They're 180 
>degrees apart,'' said Russo, of Russo & Hale in Palo Alto.
>
>The colloquium is open to the public. It starts at 4:15 p.m. today in the 
>NEC Auditorium, which is located in -- you guessed it -- the Gates 
>Computer Science Building. It will also be available afterward in a 
>streaming media format 
>(<http://www.stanford.edu/class/ee380/>www.stanford.edu/class/ee380/).
>
>
>Dan Gillmor's column appears each Sunday, Wednesday and Friday. Visit 
>Dan's online column, eJournal (weblog.mercurycenter.com/ejournal). E-mail 
><mailto:dgillmor@sjmercury.com>dgillmor@sjmercury.com; phone (408) 
>920-5016; fax (408) 920-5917. PGP fingerprint: FE68 46C9 80C9 BC6E 3DD0 
>BE57 AD49 1487 CEDC 5C14.
>
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