— Important notices about financial privacy have been mailed to American

households this spring, and

most people are ignoring them.

Under a little-known law called the Financial Modernization Act, as of

July 1, banks, credit lenders and

insurance companies will be allowed to share clients' personal financial

data with each other — unless

you opt out by returning those forms.

Many consumers are astonished to learn that the burden is on them to stop

their financial services

providers from swapping their data.

"We just found one, and read it," said Lisa Powell, who with her husband

David has received 30 of the

notices. "I started to explain to David what's going on, and he just

thought I was paranoid, but it's our

rights."

In a recent survey by the American Bankers Association, only 36 percent

of respondents said they had

read their banks' privacy notices. Twenty-two percent said they received

the notice but did not read it,

and 41 percent could not recall receiving it at all.

"The bottom line is we want you to read it. It's not junk mail," said

John Byrne, the ABA's senior

counsel.

Byrne and other industry representatives say the forms give consumers an

unprecedented opportunity to

protect their privacy, according to Byrne. "We think that the opt-out

requirement puts consumers in the

driver's seat," he said.

Consumer advocacy groups fought to stop the companies from sharing their

customers' information in the

first place, and were not pleased with the opt-out provision.

"It makes the consumer have to do something to protect the consumer's

privacy," said Ralph Nader, who

has helped organize a Web site telling consumers what they can do. "They

should be able to say to the

financial institutions: 'Unless we give you the affirmative OK, you can't

sell this information about us all

over the world.'"

Congress passed the law with the aim of protecting consumers by requiring

financial services companies

to disclose how they use their clients' personal data.

Forms Called Complex, Hard to Read

Consumer groups are also angry about the way the disclosure forms are

written and distributed. The

forms are often long and complex, and are often folded in with regular

bank statements.

"They waited until the last minute. They wrote these awful, legalistic,

deceptive brochures that hide our

rights, and now they're mailing them out this spring right before the

July 1st deadline," said Ed

Mierzwinski, consumer program director of the Washington-based U.S.

Public Interest Research Group.

Today Mierzwinksi's group and other organizations petitioned the Federal

Trade Commission and the

Securities and Exchange Commission to delay the July 1 deadline and to

rewrite the forms.

With just nine days until the deadline, just 0.5 percent of the people

receiving the notices have opted out

by returning the forms, according to the ABA.

In Congress, Rep. John LaFalce, D-N.Y. is gathering signatures for a

letter to federal regulators

complaining about the privacy notices.

Some financial institutions "appear to have used the privacy notices to

confuse their privacy obligations,"

the letter contends. It complains that some of the notices are printed in

type "that is too small to be easily

read by middle-aged eyes and almost impossible for the elderly to read

without the assistance of a

magnifying glass. … Congress never intended that privacy notices be of

this length and difficulty to read."

Nader cautioned that consumers need more information about what's at stake.

"There is no limit to the massive bits of information about your personal

life, your health, your credit card

status, who you buy from, when you pay," he said. "And that's why these

financial corporate lobbyists

are swarming all over the Congress," he said.

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