Privacy Woes.(Brief Article)

If you don't yet know who Mike Hatch is, you soon will. Mr. Hatch, attorney general for the state of Minnesota, is making a name for himself as one of the nation's strongest advocates for consumer privacy rights. And he's done it, in large measure, by taking on the mortgage banking industry.

Mr. Hatch's first salvo was aimed at a banking giant based in his own state - U.S. Bancorp (currently merging with Firstar). More recently, Mr. Hatch has launched a case against Fleet Mortgage Group. In both cases, the crux of the issue was a charge that customer rights were being violated when information about them was sold to or shared with telemarketers (the big villains in most debates about consumer privacy). As we all know, cross marketing is big business for the mortgage industry.

While Federal privacy safeguards that were enacted as part of a broad banking bill contain "safe harbors" that permit lenders to market products and services to their customers, lenders increasingly will find that it is tricky to comply with all the requirements for protecting customer information. One likely hot spot for litigation: account numbers.

Lenders may find it convenient to use loan account numbers to identify potential customers in a marketing campaign. But if they give marketing firms access to those account numbers, lenders may find themselves at risk for lawsuits. Just ask Fleet or U.S. Bancorp.

Another issue to watch out for is state law - and not just in ...