Chase, InfoBeat to Stop Sharing Customer Data

FRAMINGHAM (01/28/2000) - At a time when consumers and privacy advocates are calling for more stringent online privacy regulations, two companies this week settled pending litigation by agreeing to stop sharing customer information with third parties. Neither company admitted wrongdoing, though.

Under a settlement with the New York attorney general's office, The Chase Manhattan Bank in New York agreed to stop sharing detailed financial information about its credit-card customers with telemarketers and advertisers.

Bank officials also agreed not to share the names, addresses and telephone numbers of customers without first notifying those customers.

In a separate settlement, Denver-based online newsletter InfoBeat Inc., a subsidiary of Sony Music Entertainment Inc., also agreed to not disclose personal information about its customers to third parties.

Neither company admitted doing anything wrong, but both agreed to cover the costs of their respective investigations. InfoBeat will pay the state $75,000 and Chase will pay $101,500.

Software Flaw

At InfoBeat, a software flaw in October inadvertently allowed advertisers to have access to subscribers' e-mail addresses, according to InfoBeat spokeswoman Liana Miller. She said the flaw was corrected as soon as it was discovered.

In Chase's case, the bank violated its own privacy regulations by providing customer information, including credit line and account balances, to third-party telemarketers, according to New York Attorney General Eliot Spitzer's office. The bank received a commission on each business transaction between the customer and the vendor, Spitzer said.

Chase said it was always in compliance with the law - such disclosures of confidential information aren't illegal - as well as with its own internal privacy policy.

Moratorium in Effect

"When the attorney general began his inquiry last summer, Chase had already put in effect a moratorium on releases to third parties," said Chase spokeswoman Judith Miller. "At that time, we were responding to an increased sensitivity to privacy issues, and after an extensive review we found we were in compliance with our internal privacy policy. We made some changes to reassure our customers and give them more of a choice [to allow their personal information to be shared with third parties]."

Consumer privacy advocates hailed Spitzer's decision to tackle such cases as a step in the right direction.

"We're pleased to see the attorney general take action in these cases ... especially in the absence of activity [on this issue] in Washington," said Marc Rotenberg, executive director of the Electronic Privacy Information Center, a Washington-based privacy research group.

Russ Haven, legislative counsel at the New York Public Interest Research Group, said Spitzer's actions help shine a much-needed spotlight on the privacy issue.

Spitzer has crafted a seven-part legislative agenda aimed at expanding privacy protections for New Yorkers.

On the national level, Congress is considering legislation that would require Internet companies to give people the right to opt out of having information about them collected or shared with third parties.

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