Customer Privacy Becomes the Hot Button Voluntary Action Regarding Online Privacy of Customer Information is Encouraged

Little has captured the attention of the banking regulators lately as much as electronic banking. And consumers' concerns about the information gathered by banks when using the electronic channel has prompted the regulators to advise banks on how to handle such information. The Federal Trade Commission and the Consumer Electronic Payments Task Force (comprised of federal banking agencies) both recently issued reports highlighting consumer privacy interests, and recommended voluntary industry action and self regulation.

In addition, a group made up of bank trade associations has developed "U.S. Banking Industry Privacy Principles" to encourage their members to voluntarily adopt privacy policies. Also, the FDIC recently sent a letter to bank Chief Executive Officers, which advised banks to take specific action to protect consumer information obtained electronically. These steps include notice to consumers about information practices before any personal information is collected, giving consumers a choice about how information collected about them may be used by the financial institution, and taking measures to protect against unauthorized access to consumer information.

The hope is that banks' voluntary efforts to address privacy concerns will head off formal regulation of how banks must handle consumer information obtained electronically.