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#2248 - 06/12/01 04:04 AM Privacy-Account Number Sharing
Sam Offline
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Joined: Dec 2001
Posts: 1
This is a question for those of you participating in a joint marketing agreement with FISI or similar program offering new customers AD&D insurance coverage at no cost.
FISI or other service provider (I'm assuming they are similar) mails the customer a letter regarding the free insurance. The customer may also choose to purchase more insurance upon consent. Their signature would authorize the bank to provide the customer's account number to the plan administrator so that coverage could be activated and his or her account could be charged for the additional coverage.

My question is how does this fit into __.12?


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#2249 - 06/11/01 05:45 PM Re: Privacy-Account Number Sharing
Eric Offline
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Eric
Joined: Mar 2001
Posts: 28
Portland, Maine

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#2250 - 06/11/01 06:24 PM Re: Privacy-Account Number Sharing
Sam Offline
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Posts: 1
Could not get that to work.

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#2251 - 06/11/01 08:06 PM Re: Privacy-Account Number Sharing
John Burnett Offline
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John Burnett
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Cape Cod
A summary of the document referenced two posts above:
The agencies issued a joint opinion letter that says the bank cannot provide FISI Madison (or any other third party in a joint marketing arrangement) any account numbers that could be used to debit customer accounts. Only encrypted account numbers on these accounts can be shared with marketing partners.

The customers, however, are free to give their account numbers to the marketers for purposes of account debits, if they trust the third party.

[This message has been edited by John Burnett (edited 06-11-2001).]

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#2252 - 06/11/01 08:42 PM Re: Privacy-Account Number Sharing
Princess Romeo Offline

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Where the heart is
I have another question then - what about when your customer orders checks, and the check printer initiates a debit to the customer's account?

Obviously, the check printer MUST have the account number in order to accurately print the checks. But what of the charge that must be initiated?

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#2253 - 06/12/01 02:39 AM Re: Privacy-Account Number Sharing
Andy_Z Offline
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This is going to turn into a real process. The way we do things may be impacted. Here is the last paragraph from the PDF opinion quoted above. I think it says a lot and should answer the question posed.

"While a financial institution may not provide a customerís account number
to a third party under the circumstances you describe, a financial institution may
initiate charges to its customerís account for a [ ] product where the customer
has agreed to purchase the product. Of course, an individual is free to provide
[ ], or any other merchant, with his or her own account number to purchase a
product."

The customer can release the account number, and the bank can initiate the debit.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

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#2254 - 06/12/01 12:24 PM Re: Privacy-Account Number Sharing
Sam Offline
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Joined: Dec 2001
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It appears that a data file containing the customer's name, address, account number are sent to a data processing provider and FISI does not see the name, address, account number until the customer has accepted the coverage and consented release of the account number. A tape is then sent through ACH, periodically, for debiting the premiums.


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#2255 - 06/12/01 01:38 PM Re: Privacy-Account Number Sharing
D. Whitney Offline
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Joined: Nov 2000
Posts: 22
Hermitage PA US
Sam, what is your position after your last comment? Are you saying current procedures in dealing with FISI are OK under the OCC letter or that the process still needs to be changed?

We too have a relationship with FISI and I am also concerned about the OCC's letter. I've told our Retail Services Dept. that we can no longer provide tapes to FISI in the manner you described - that the customer's application/agreement to purchase add'l insurance will need to contain a blank line for the customer to provide their checking account number to the insurance provider for ACH debits (just like customer arrangements for car payments, mutual fund drafts, etc.). But my Retail Dept. doesn't want to believe me (doesn't want to hassle with changing forms). We are scheduled for an OCC compliance exam in early Aug. I don't want to be the first bank the OCC cites for being out of compliance with their opinion letter!!

Lucy - I've accepted your opinions as "gospel" for years - any thoughts on this issue?

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#2256 - 06/12/01 03:39 PM Re: Privacy-Account Number Sharing
Lucy Griffin Offline

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Lucy Griffin
Joined: Nov 2000
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I don't know that there is yet any "gospel" on privacy unless it comes from Rick Fisher or a regulator. But here's my two bits.

The biggest sin a bank can commit under the new privacy law is the sharing of customer account information. The method described for FISI, providing encrypted information and then allowing FISI to open it if the customer purchases the product, comes too close, in my opinion, to a prohibited practice. This is where the real customer sensitivity is and it is not at all wise to play with it.

In this vein, I spoke with someone Saturday night who, when she found out what I did for a living, started asking me about privacy notices ("they seem to be dropping like flies every time the mail comes") and what is going on. I explained the July 1 deadline. But she also expressed serious concern that her information could be shared at all and objected to the fact that she had to opt out instead of opting in. She thinks the requirement is too loose. Unfortunately, I think her opinion is not unlike that of many people. So I think banks need to tread very carefully here. The industry could become a bad guy simply because of borderline minimalist compliance. This is not the time to use that approach!


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#2257 - 06/13/01 04:24 AM Re: Privacy-Account Number Sharing
Anonymous
Unregistered

Lucy, any suggestions for remedying this?
Is this not a common practice among institutions?
Thanks.

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#2258 - 06/12/01 09:24 PM Re: Privacy-Account Number Sharing
Sam Offline
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Joined: Dec 2001
Posts: 1
I'm still wondering too. For one, does it make a difference if the name, address, and account number go to a "data processing provider" initially. They would not be considered a marketing company would they?
Any other advice would be appreciated!

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#2259 - 07/16/01 07:45 PM Re: Privacy-Account Number Sharing
Jim T Offline
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Joined: Mar 2001
Posts: 6
Forest, MS USA
Sam and D. Whitney,
My bank is considering entering into the AD&D insurance program with FISI. I also have questions about FISI's process in using a data processing provider to send the customer information file (name, address, and account number) to. I feel that this process is in conflict with the Interagency Interpetive Letter #910 that says you cannot share the customer's account number with anyone.

Have either of you resolved the issue with FISI? Will you send the information to the data processor or have you worked out some other process. I would appreciate your comments.


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#2260 - 07/23/01 10:24 PM Re: Privacy-Account Number Sharing
In the middle of it Offline
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In the middle of it
Joined: Oct 2000
Posts: 276
Central US
From what I'm encountering, I'd say FISI is not going to back down on this. It's sounding like they now have introduced other entities in this insurance marketing/information routing to the point where there are going to be multiple contracts and service providers. (I've got three on my list that we'd have direct contact with, plus the insurance company and the printer.) Their rep told me today FDIC is OK with it. I'm interested in how the OCC would view it. Anyone still pursuing this and have you received any more information? I did speak briefly with a compliance examiner and we agreed that sending the account numbers out to a separate file to await the possibility of a customer choosing to buy a policy was NOT in agreement with the opinion letter as mentioned above. Also, from another angle, consider whose product is being marketed here. There are arguments for a joint marketing agreement with FISI, but are service provider contracts with other entities really a good idea if the point is to induce a customer to buy a financial product without having to supply their account number for the debit? I do believe I'm having one of those days when I want to quote John Stossal and say "Give me a break!"

[This message has been edited by Susan Bartel (edited 07-23-2001).]


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#2261 - 07/25/01 04:19 AM Re: Privacy-Account Number Sharing
Anonymous
Unregistered

In the case of check ordering and the check company initiating the charge, couldn't that be justified by saying that by ordering the checks, the customer has consented to the company debiting their account? Why should there be more restrictions when ordered in the bank than when ordered from the same company on their internet site?

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#2262 - 07/25/01 04:51 AM Re: Privacy-Account Number Sharing
rlcarey Offline
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Galveston, TX
Wouldn't check printing fall under the service provider exception, not to be confused with joint marketers or marketing agents?
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#2263 - 07/24/01 06:47 PM Re: Privacy-Account Number Sharing
Angel Eyes Offline
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Angel Eyes
Joined: May 2001
Posts: 4,599
This really isn't an answer to the question, but we recently terminated our relationship with FiSi and the insurance. We did this so that we could say that we were not sharing our customers information with anyone. I also thought that althought the account number was encrypted it was not in compliance with the law.
I also had a problem stating that this was a product that our bank endorsed and backed. We expected an uproar from customers because we were terminating a service. Ultimately cancelling the free insurance was a nonevent. We even had calls from people thanking us for non sharing their information.
I guess my point is to really evaluate this program carefully. Are you in support of the product? Is it really of any value to your customers? Are you in compliance with the law?
I am rambling here, but I guess if I was ABC Company calling to obtain your customer's account number so that I could initiate a charge to the account, would you give me the account number? I would hope not! I think that the customer should always be the one to provide the number joint marketing aggreement or not.

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#2264 - 07/24/01 06:50 PM Re: Privacy-Account Number Sharing
Angel Eyes Offline
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Angel Eyes
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P.S. rlcarey, is correct Deluxe (or any check printing service) would fall under the definition of a service provider not a joint marketing agreement!

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#2265 - 07/24/01 11:31 PM Re: Privacy-Account Number Sharing
rhurlbert Offline
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rhurlbert
Joined: May 2001
Posts: 29
Spokane, WA
We are in the process of stopping our bank's participation with the FiSi insurance offer. Does anyone have any good examples of letters to customers (telling them the free insurance offer is withdrawn) they would be willing to share? Thanks.

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Randy at Washington Trust

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#2266 - 07/25/01 11:52 AM Re: Privacy-Account Number Sharing
Anonymous
Unregistered

Check printer a service provider? Earlier opinion/discussion arguably said a check printer was not a service provider of the institution....but rather a service provider of the customer. Anyone know what the regulators think on this?

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#2267 - 07/25/01 01:23 PM Re: Privacy-Account Number Sharing
Angel Eyes Offline
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Angel Eyes
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Posts: 4,599
We consider Deluxe to be our (the Bank's) Service Provider, because we do contract with them and offer our customers checks through them at our customer service desk. However our customer may choose to use Current, or anyone else for that matter, that company would then be the customer's service provider.
I have always felt pretty confident in this understanding. I would love to hear what others thoughts are!
I guess this is somewhat mute, because under either senario there is no further disclosure to the customer.

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#2268 - 07/25/01 03:27 PM Re: Privacy-Account Number Sharing
redsfan Offline
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redsfan
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The Pennant Race
The questions to ask yourself are "Self: Who places the order?" and "Self: who does the printer bill?"

If the customer places the order, the checkprinter will bill the customer.
Clearly the service provider relationship attaches to the customer.

But if bank personnel process the order and send it to Deluxe, Harland, etc., then the checkprinter will bill the bank, who will pass the bill on to the customer. The printer is printing those checks for the bank, even though the customer is ultimately charged.

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#2269 - 07/25/01 07:29 PM Re: Privacy-Account Number Sharing
Rubaiyat Offline
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Joined: Jun 2001
Posts: 1,373
Lido Deck
We also recently ended our relationship with FISI and just in time too! We did a survey of our customers and found out that most didn't even remember having the benefits associated with the FISI program. We offered the customer the option of continuing with FISI (for a fee) if they wanted to, but THEY had to contact FISI to do this and the fee became an ACH transaction - not something associated with the bank. We only received one letter in response to the change. Randy, if you send me an email I'd be happy to share the letters we used to do this. cwilliams@btcdmia.com
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#2270 - 07/26/01 01:23 PM Re: Privacy-Account Number Sharing
Anonymous
Unregistered

In response to PBrinker thoughts. Our bank orders the checks from Clarke American on behalf of the customer and Clarke automatically debits the customers account. It does not go through the bank first. The customer can go on-line and place their own order and their account gets debited in the same way, so my question is why should it be a big deal if we place the order on behalf of the customer? When they ask us to order their checks, they are told that they will be charged directly from Clarke American and their statement states "Clarke American check order". Where is the harm?



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#2271 - 07/26/01 02:17 PM Re: Privacy-Account Number Sharing
John Burnett Offline
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John Burnett
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Posts: 39,684
Cape Cod
More on Customer Check Orders, IMHO :

In most cases where the customer can order directly from the vendor/printer via a Web site (as is the case with Clarke (see above) and Deluxe), the customer can only re-order with the same address and account number information. If they want to change the address, or anything other than the check style, they normally have to go to the bank.

So, we either have a situation in which the bank provides the vendor with information to provide a service to the customer, or the customer is giving the vendor a re-order, with no new personal information. It still appears to be well within the allowable exceptions.

In cases in which the customer deals directly with a check vendor (Current is one example), it's the customer, not the bank, that provides the personal information. So there's no applicability of the privacy rules at all as far as the bank is concerned.


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BankersOnline.com
Fighting for Compliance since 1976
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#2272 - 01/29/02 07:01 PM Re: Privacy-Account Number Sharing
In the middle of it Offline
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In the middle of it
Joined: Oct 2000
Posts: 276
Central US
I'm dusting off this string for the background discussion it offers on FISI and the Customer Appreciation Program (AD&D insurance marketing). The position I've taken continues to be the one discussed here - that we can't send customer account numbers out the door. But since Marketing would like to continue with FISI, I keep getting information from them. What about the ABA endorsement? I thought maybe the letter was old and I checked the web site. The endorsement is there. We're not an ABA member, so I don't know much about how that process works, but if bankers are discontinuing their relationship with FISI due to privacy concerns, but ABA is endorsing their service, doesn't that seem a little strange? (I did try to address my question to ABA last night, but our external e-mail is apparently out of service for awhile. Knowing some of you are on ABA advisory boards, perhaps you have some insight or can pass this on.)

[This message has been edited by Susan Bartel (edited 01-30-2002).]


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