Spitzer Secures Privacy Agreement With National Bank

Attorney General Spitzer today announced a landmark settlement with a national bank that will provide significant privacy protections for its New York State customers.

Chase Manhattan Bank USA, N.A. has agreed to alter its privacy policy by ceasing to share personal customer account and credit information with non-affiliated third party marketers. Under the agreement, Chase is limited to sharing names, addresses and phone numbers. This limited information can be shared only if a third party cannot identify a customer's personal financial information and the customer is first given an "opt-out" option.

"This agreement advances important privacy protections for consumers not adequately addressed last year on the federal level," Spitzer said. "The right to control who is scrutinizing information about one's buying habits and purchasing decisions is a vital component to protecting a fundamental American right and in fostering consumer trust in the credit industry."

Spitzer's office alleged that Chase, based in Wilmington, Delaware, was sharing personal information about its credit card holders and mortgagors with third party marketers without adequately disclosing this fact to customers. The types of information shared with marketers included: the type of credit card and card number; last transaction date; credit line and whether it is delinquent or has exceeded the credit amount; number and amount of purchases per year and number and amount of purchases for year-to-date; cash advances; the amount of finance charges per year; and the consumer's card balance.

Chase had contractual agreements with marketers to receive a percentage commission of any sales generated through the telemarketing and direct marketing campaigns.

The issue of financial privacy was a component of the federal debate for the recently signed Financial Services Act of 1999 which allows the flow of personal financial information from a financial institution to non-affiliated marketers unless a consumer opts-out. Spitzer's agreement with Chase, however, provides more comprehensive protection for New York consumers because, unlike the new federal law, it prohibits Chase from sharing a consumer's personal financial information, such as account credit histories, balances and transactions. An opt-out is necessary only if Chase customers do not want their non-financial information, such as name, address and phone number, disclosed.

Congressman Ed Markey of Massachusetts, a leading advocate for strong financial privacy protections said: "I applaud Attorney General Spitzer for advancing strong financial privacy protections in New York. It is clear that this is an important issue nationwide, one that also requires a federal response. I will continue to urge my Congressional colleagues to act on comprehensive financial privacy legislation."

Spitzer acknowledged Chase's cooperation in reaching this voluntary agreement and commended the bank for setting a privacy standard for other banks to follow. In entering into the agreement, Chase denied any violation of law and agreed to pay $101,500 to the Attorney General's Office to cover the costs of the investigation.

This case was handled by Assistant Attorneys General Stephen Mindell, Jane M. Azia and Shirley Stark in the Consumer Frauds and Protection Bureau.

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