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N.D. to Vote on Financial Privacy

June 7, 2002

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BISMARCK, N.D. (AP) _ North Dakota will take a leading role Tuesday in the debate over financial privacy when its voters become the first in the nation to decide whether banks must get written permission to sell customer information.

``North Dakota really has an opportunity to strike a major gain for privacy for all Americans here,″ said Evan Hendricks, who publishes the Washington newsletter Privacy Times. ``It would put the wind at the back of the privacy movement.″

Voters will decide whether to require North Dakota banks and credit unions to get written permission from their customers to sell account data to other businesses offering everything from mortgages to health club memberships.

Under North Dakota’s current law, financial institutions must notify customers that they plan to sell data. If the customer does not object, the institutions can take that as a go-ahead.

``The bankers are working on the assumption that their customers’ information is theirs to do with as they please,″ said Charlene Nelson, a leader of the effort to repeal the current law. ``This information belongs to us.″

North Dakota required express written permission until last year, when banks and credit unions pushed the current law through.

Lawmakers in several states, including California, New York, Massachusetts and Iowa, have debated the issue of customer consent. Alaska, Connecticut, Vermont and Illinois already have laws similar to the one on Tuesday’s ballot. But those protections were adopted by legislators or regulators, not the voters themselves.

North Dakota’s banks and credit unions have said they are not selling customer information to outside companies. David Wolsky, president of the First State Bank of Cando, called the issue ``one of the real big misperceptions″ of the campaign.

But supporters of repeal have said banks are pressing so hard because they want to profit from the information they hold.

Former Gov. Ed Schafer said repealing the current law would put North Dakota out of step with banking rules in most other states. He said that could throttle the growth of bank service centers in North Dakota. Three banks maintain centers in Fargo that employ about 1,500 people altogether.

``Any other financial institution that looks at North Dakota is going to say, `Why bother?‴ Schafer said.

Opponents of North Dakota’s current law complain that it exposes their private lives to others.

Jane Junkert of Mandan, N.D., received $5,000 three years ago as part of a $2.9 million settlement with U.S. Bancorp of Minneapolis. The bank was sued on behalf of more than 32,000 North Dakota checking account and credit card customers for selling information to telemarketers.

``They can just about read your whole life by looking at your bank statement,″ Junkert said. ``They can tell where you write your checks. You go to church, how much you give. They can tell if you gamble. They can tell how you live.″

The dispute was born almost three years ago in a congressional overhaul of financial services laws that let banks, insurers, brokerages and other companies sell customer information if they gave notice beforehand. States, however, were given the option of enacting more stringent privacy rules.

Political observers are uncertain about how the vote will go.

Financial interests have poured more than $135,000 into promoting the current law, buying TV ads implying that a ``no″ vote would mean economic isolation for a rural state that already has problems creating jobs.

The law’s opponents have raised $27,450, nearly all of it from the American Civil Liberties Union.

Bank executives have sought to portray Nelson as a political extremist. She is chairwoman of the North Dakota Constitution Party, which advocates U.S. withdrawal from military alliances and repeal of the income tax.


On the Net:

Repeal supporters: http://www.protectourprivacy.net

North Dakota Bankers Association: http://www.ndba.com

North Dakota Credit Union League: http://www.ndcu.org

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