Wells Fargo, Bank Cross-Selling and Your Right to Privacy

By now, most people are familiar with Wells Fargo and the illegal activities they engaged in by creating fictitious accounts to misrepresent their financial operations. What Wells Fargo did is wrong for a number of reasons, including inflating the price of the stock on the basis of the false representations and improperly using the personal information of the customers that they used in creating the fictitious accounts, which constitutes a blatant violation of those customers’ right to privacy.

Now word comes out that federal and state regulators, including law enforcement agencies, are going to launch a wide-spread investigation of banks and other financial institutions to determine if such entities engaged in similar copycat illegal activity. Given the wide-spread use of cross selling by financial institutions, it would not be surprising to find such copycat illegal activity, albeit not to Wells Fargo’s extent.

Legally, the law allows banks and similar financial institutions to engage in internal cross-selling between the various divisions within their company. For instance, my personal bank would routinely send me solicitations for insurance that they sold. Despite repeated requests from me to stop such activity, the bank only stopped when I threatened legal action based on the fact that I had exercised my right to “opt out” of such activity.

While the law allows banks and similar financial institutions to cross-sell to its customers, the law does not allow them to share their customers’ personal information with non-related third parties. More importantly, banks and financial institutions that do engage in internal cross-selling are required to notify their customers of their right to opt out of such cross-selling altogether and provide a simple means for customers to do so. In most cases, the banks and financial institutions provide a means of opting out of cross-selling on their website, usually clicking a link on the web site.

Consumers should opt out of such cross-selling programs to protect their right to privacy. Banks and other financial institutions are already making money on your accounts, so there is no reason to allow them to use your personal information for further gain. Opting out of such cross-selling activity also ensures that a customer can legally enforce their right to privacy when it is discovered that their bank has engaged in Well Fargo like illegal activity.

Customers who do opt out of cross-selling should be sure to document the fact that they exercised their right to opt out of such activity. In cases where the right to opt out is provided online, usually at the bank’s web site, the site will immediately acknowledge that the customer has exercised their right to opt out. If the customer’s act of opting out is not acknowledged at the time the right is exercised, the customer should follow-up with a certified letter to the bank or other financial institution notifying them of the customer’s exercise of their opt out rights and asking the bank to acknowledge receipt of such opt out exercise.

Identity theft is one of the largest illegal activities in the U.S. Having been a victim of identity theft twice, I can personally attest to the inconvenience and problems created by identity theft. I have never engaged in financial transaction online, yet have still been victimized. Law enforcement officials have explained to me that there are various computer programs that can run random and unlimited “Monte Carlo” type searches while the identity theft perpetrator sleeps and document when a “hit,” or bank account information has been obtained.

Hopefully, one of the results of Well Fargo crime will be new rules and regulations restricting or prohibiting cross-selling programs by banks and other financial institutions or ,at a minimum, requiring such entities to actually obtain permission from a customer to involve them in such activity, rather than the “negative consent” approach currently approved which requires a customer to be aware of such activity and understand how to protect their privacy via their right to opt out of such cross-selling programs.

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