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Sharing Is Not Always Good

May 5, 2011

By: Jim Oosterman
Melrose Bank

Recently, there have been several online security breaches resulting in the theft of millions of consumers’ personal and sometimes financial information. These increasingly frequent occurrences have pointed a spotlight toward those companies, including some financial institutions, which share their customers’ personal information with third parties. Sharing this data can put your personal information at risk so it’s important for you to be aware and fully informed about which personal information will be shared.

The Importance of Privacy Policies
The more people who have access to your personal information the greater your risk for having that information compromised. If you are doing business with a financial institution or other company that requires you to provide any type of personal information, investigate their privacy policy, usually located on their website or available in paper format. Also, ask if the company has had any prior history of online security lapses and what the company has done if any information was compromised. Remember that while some security breaches pose more of a threat than others, they should all be taken seriously.

Reasons Why Companies Share Your Personal Information
It is important to actually read and understand the privacy policy of a company to learn about who they share your information with and why. Companies frequently share your information with their affiliates and with third parties for the following reasons:

  • For the company’s everyday business purposes - such as to process your transactions, respond to court orders, or report to credit bureaus
  • For the company’s own marketing purposes - to offer you products and services
  • For affiliated and non-affiliated companies to market products and services to you

Whether you realize it or not, when you do business with a company that shares your information with other companies, you are allowing your personal information to be shared with many more people than you intended. Being aware of why and how companies share information will enable you to limit your risk.

How Sharing Your Information May Put You at Risk
One recent example comes from the marketing data firm Epsilon. The company announced that customer information from some of Epsilon’s email clients had been exposed by an unauthorized entry into its email system. Though this did not include social security numbers, credit card numbers, or account information it does prompt concern over whether the email addresses might be used by criminals in phishing scams to gain additional personal information.

Most phishing scams start with a criminal contacting you via phone or email, posing as a legitimate person or organization asking you to share key information such as social security numbers or financial account information. One key point to remember is that if anyone contacts you claiming to be a representative of your bank or other financial institution, they would never ask you to provide personal information via telephone or email – this is definitely a red flag. If you get such a request, you should call the toll free number of your bank or financial information directly.

The Federal Trade Commission has good advice online about how to avoid phishing scams and what to do if you feel you may have been a target at ftc.gov/bcp/edu/microsites/idtheft.

Is Your Financial Institution Sharing your Information?Since your financial institution is a hub of where much of your personal information is stored, rest assured that the banking regulators enforce strict security measures to comply with federal laws, and all banks are required to notify you of their privacy policy and how information may be shared. It is not unusual for banks to share your personal information for joint marketing with other financial companies, affiliates and also with non-affiliates. Many smaller, community based financial institutions do not share your personal information for joint marketing with other financial companies, or non-affiliates. Each financial institution must also inform you of your options to limit this sharing. Federal law gives consumers the right to limit some, but not all, sharing. As a consumer you may feel more comfortable banking with an institution that shares as little personal information as possible.

When it comes to taking actions that will reduce your own privacy risk, be sure to frequently monitor all of your bank accounts. Most financial institutions will notify you if there is unusual activity happening with one of your accounts. However, as a consumer, you should always monitor your accounts for unauthorized activity. Online banking tools make this process fairly easy since you can check in and review account activity in real-time, any time when it’s convenient for you.

If you discover that you’ve been the victim of an identity theft crime, contact the police as soon as possible, place a fraud alert on your credit reports, and review your credit reports. Fraud alerts will help prevent an identity thief from opening accounts in your name. Contact the toll-free fraud number of any of the three nationwide consumer reporting companies to place a fraud alert on your credit report. The sooner you can report the problem and have someone taking action, the better. You should also contact your bank to make them aware of the situation so they can close your accounts.

The Points to Keep in Mind 
Read and understand your financial institution’s privacy policy and ask which types of sharing you are able to limit. If you don’t want your personal information shared, opt out whenever possible, or move your accounts to a financial institution that limits the sharing of your personal information.

James Oosterman is the Vice President of Melrose Bank. He can be reached by telephone 781-665-2500, online at melrosebank.com or on Facebook at facebook.com/MelroseBank.


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