State officials and finance, insurance and retail industry lobbyists argued by proxy last week over what’s more important to consumers: protection from nosy, overzealous marketers or the right to be tempted with tailor-made deals and incentives.
“Consumers need control over the sharing of their information,” Massport Consumer Programs Director Deirdre Cummings said Tuesday.
The Banks and Banking Committee is considering legislation sponsored by state Rep. William Straus, D-Mattapoisett, and state Sen. Steven Tolman, D-Brighton, that would require banks, insurance companies and other retail institutions to operate on an “opt-in” basis and obtain customer permission before sharing any personal information with third-party marketers.
Current law requires that companies allow customers to opt out of personal information sharing, but the onus is on them and, as one of the two bills’ sponsors noted Tuesday, opting out can be an intimidating and time-consuming process.
“Most people, given the chance, would say ‘leave me alone, I don’t want to hear the sales pitch,'” Straus said.
The bill would not prevent different divisions of the same company from sharing information with one another, a concession to small institutions. Straus said one insurance company asked for his signature, Social Security, tax ID and daytime telephone numbers and a copy of his driver’s license to opt out of personal information sharing.
But consumers get some pretty good deals as a result of the information marketers are privy to about their spending habits and general demographics, Jon Hurst, president of the Retailers Association of Massachusetts, said Tuesday. Hurst said he and his three teenage children look forward to offers like the 10-percent-off coupons for compact discs that reach their household through the mail. The targeted marketing of goods and services by retailers to customers is good for state businesses, he said.
“The current open information flow benefits the economy,” Hurst said.
A Mass Insight consumer privacy poll determined consumers are primarily concerned about telemarketing methods, identity theft prevention and online privacy, he said. The proposed bills would not distinguish between companies that use telemarketing and the Internet to promote their products and services and those that use more traditional marketing methods like direct mail. Sensitive personal health and finance information is already protected by federal law.
Internet Issues
Businesses have until July 1 to comply with federal legislation passed in November 1999 requiring them to notify customers of their right to opt out of personal information sharing. Many local insurance companies will have difficulty complying with that legislation and would need more time to adjust to any changes in state regulation of personal information sharing, Massachusetts Association of Insurance Agents spokesman Dan Foley said.
However, Foley would not say how much time state insurance companies would need to comply with an opt-in policy when pressed for an answer by Banks and Banking Committee Chairman Andrea Nuciforo, D-Pittsfield.
The Internet and an ever-more competitive marketplace have spawned a whole new industry, necessitating greater attention to the safeguarding of personal information, Consumer Affairs Director Jennifer Davis Carey said Tuesday.
“Information itself has become a prized commodity,” Davis Carey said.
About 60 Massachusetts financial institutions have begun selling insurance since 1999 federal legislation struck down barriers to doing so, Foley said. Hurst, Foley, Greater Boston Chamber of Commerce Vice President for Public Policy Jim Klocke, American Insurance Association Northeast Region Assistant Vice President Don Baldini, Massachusetts Credit Union League Senior Vice President and Counsel Edward F. Saunders Jr., Compass Bank Vice President Tom Scalavino, representing the Massachusetts Bankers Association, and Life Insurance Association of Massachusetts Spokeswoman Jenny Erikson testified in opposition to the bills.
“The direct impact would be a higher marketing cost for all credit unions,” Saunders said.
Scalavino said the proposed bills could hurt small banks and, in the future, induce them to merge with larger banks to maintain profitability. Klocke said the Chamber believes Internet privacy should be regulated by the federal government and any attempts at excessive regulation of non-sensitive personal information by the state would set a bad precedent.
“Sharing basic customer information is something businesses have done for hundreds of years before the creation of the Internet,” Klocke said.
State Attorney General Thomas Reilly’s office is looking into whether opt-out notices consumers now receive are understandable. Cummings said the average sentence length on opt-out rights notices is 25 words, too long for many consumers to comprehend.
“Most of these notices require a graduate-level degree to try to read them,” she said.
Straus, Tolman, Cummings and Pamela Kogit, an assistant attorney general with Reilly’s office, testified in favor of the proposed bills Tuesday.
Baldini said consumers can make informed decisions based on the information the notices contain.
“Give consumers a little credit,” he said. (State House News)