Fleet Sued for Privacy Violations

The Minnesota attorney general has sued the mortgage group of FleetBoston Financial Corp., alleging that it had illegally 1) divulged personal financial information about consumers having mortgage loans to telemarketers and 2) participated in their deceptive sales tactics. The suit filed in the state District Court in Minneapolis charges that Fleet Mortgage Corp., Columbus, S.C. violated state consumer-fraud, consumer-protection, and consumer-advertising laws. In addition, the suit charges that Fleet violated state law by allowing the telemarketer to bill charges against customers' mortgage loan accounts.

In his article in The Wall Street Journal, James Bandler cites the experience of Loren Jennings, a state representative. He alleged that he had received a call from a telemarketer urging that he purchase insurance on his home appliances. Mr. Jennings said that he repeatedly rejected the offer of insurance. However, he later found a charge for the unwanted insurance on his Fleet mortgage loan bill.

A spokesperson for Fleet Mortgage said that it was "disappointed" that the attorney general had filed the suit and that it contained allegations "that are inaccurate and based on incomplete facts." The spokesperson noted that Fleet would "vigorously" defend itself. The suit against Fleet is similar to that filed by the Minnesota Attorney General in 1999 against U.S. Bancorp (reported in Spotlight, October 2000.)

In a related development, Fleet announced in mid-January that as part of its consumer privacy policy it would no longer share customer data with unaffiliated firms unless it had explicit permission from the customer. In adopting an "Opt-In" approach Fleet joined two other large banks (Wachovia and Bank of America), which had previously announced such limits on their third-party data sharing. Under the Gramm-Leach-Bliley Act of 1999, financial institutions are allowed to exchange customer data with non-affiliated companies so long as customers are informed and given a chance to opt-out of such sharing. Financial institutions must notify their customers and offer them the opportunity to opt-out by July 1 of this year, and annually thereafter.