Consumers Concerned About Financial Privacy

Despite laws designed to keep consumers’ financial information from falling into advertisers’ hands, a new survey shows it’s still a big concern.

A Gallup survey of 1,000 Americans conducted for American Banker found that 23% thought a bank had violated their privacy within the past year. But even more telling, 62% were concerned that their bank would release personal data to other companies without their permission.

“Clearly, consumers are saying, ‘Look, we’re very concerned about financial services giving out information,’” said Marian Raab, special reports editor at American Banker. Tuesday, the banking industry’s daily newspaper will publish a special section interpreting the results of the annual survey looking at consumer confidence in the industry.

Raab said the privacy concerns are especially telling considering the 1999 passage of the Gramm-Leach-Bliley Act, which required financial institutions to notify customers of its information-sharing policies.

The law requires financial institutions to mail each customer an annual notice detailing the policies. Consumers can tell their banks to release no information by mailing back a form. But the notices are notoriously difficult to read and may confuse more than enlighten consumers. And more than a few bankers blame the forms themselves for scaring consumers into believing there’s a financial-security problem that doesn’t exist.

The survey, conducted between Feb. 6 and March 10, provides other information about the banking industry:

  • Nearly 7% of respondents have “very little confidence” in the banking system, up from 5% in 2001’s survey. And only 40% have a great deal of confidence in the system, down from 47% in 2001. Raab said American Banker attributed the decline to the lackluster economy and high profile economic problems like the fall of Enron.
  • One-third those surveyed with a computer at home use it for online banking transactions, up from 22% the year before. The survey found 15% used the World Wide Web to pay bills, up from 10% in 2001.
  • People under 34 – the so-called Generation X and Generation Y – are more likely to consider banks for “one-stop shopping” like financial planning and life insurance. “Younger consumers are generally more confident about buying things through their banks than their parents,” Raab said.
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