Financial institutions are trumpeting this effort, which was required by the 1999 Gramm-Leach-Bliley Act, as a huge privacy advance. And in a way, it is. Right now, these companies have the right to sell personal data about their customers to almost anybody they wish. The new opt-out forms will, for the first time, give people the ability to do something about it.
But you'll notice that privacy advocates aren't cheering. Most of the privacy-disclosure forms that have been sent out so far -- institutions have until July 1 to comply with the law -- look like car warranties. They're densely worded, packed with small-type legalese, and forbiddingly designed.
MAKING IT HARD. In fact, some of the forms are downright misleading. Several of the ones that have been mailed out so far stress the costs of opting out but make no mention of the benefits. Consider this quote from the privacy notice mailed out by one leading national lender: "In today's ever-changing, competitive market, opting out may mean missing timely information about money-saving products and services that help you accomplish your home-owning and other financial goals. It's something to think about carefully. We don't want you to miss out on any opportunities."
The companies mailing out the forms aren't making it easy for people to exercise their rights, either. Rather than letting consumers make their opt-out choice on a preaddressed postcard with prepaid postage -- what you might do if you wanted to encourage people -- most companies are forcing consumers to do some work. They have to get an envelope, write a letter to a designated address, and pay for postage themselves.
"Based on prior experience, my guess is that fewer than 10% of people "will exercise the opt-out option," says Beth Givens, an advocate at the Privacy Rights Clearinghouse in San Diego, Calif. "A lot of people will simply roll their eyes and throw it away."
PUT IT IN PLAIN ENGLISH. This is a serious problem. An opt-out system can work only if people are given enough information to make an informed choice. If they aren't, then any alleged choice about the use of their private data is meaningless. And that, so far, appears to be the case with the financial-services industry's privacy-disclosure forms.
It's not as though designing a fair opt-out form is impossible. Various "plain English" rules have been applied to mutual-fund advertisements, credit-card statements, and securities disclosures. If the financial-services industry really wanted to give people a meaningful choice, it would send a disclosure form that read something like this: "We know how much money you earn, where it is invested, where you work, and your Social Security number. We sell this data to other financial companies that want to market you their own products. Do you want us to continue doing this? Yes or no."
My guess is that, if this language were printed in sufficiently bold type and attached to a post card with prepaid postage, lots of Americans would decide against letting their banks, brokers, and insurers toss around their private financial data. But since the forms are so unclear, people likely will continue to allow their personal information to be used in ways they don't like. France covers Legal Affairs for BusinessWeek in New York