|March 31, 1998
Donald S. Clark, Secretary
Dear Mr. Clark:
The Independent Bankers Association of America (IBAA) is pleased to respond to the Federal Trade Commission's ("the Commission") notice requesting industry guidelines and principles regarding online information practices. IBAA is the only national trade association exclusively representing the interests of the nation's community banks. IBAA represents 5,500 independent community banks nationwide with more than 15,000 locations that hold nearly $375 billion in insured deposits, $445 billion in assets, and more than $240 billion in loans for consumers, small businesses and farms in the communities they serve.
The Commission is preparing a report to Congress on the effectiveness of self-regulation with respect to protecting consumer privacy online. The Commission will report the extent to which Web sites are disclosing a company's information practices and offering consumers choice regarding the online collection and use of their personal information. The Commission will also report its assessment of existing industry guidelines and principles on the online collection and use of consumers' personal information.
IBAA is pleased to submit copies of the banking industry's privacy principles and IBAA's own privacy statement for inclusion in the Commission's report. Technological innovations in computers and telecommunications are rapidly transforming bank operations and financial services. Bank customers are increasingly concerned about their personal financial privacy, particularly when they conduct transactions electronically. IBAA believes it is critical for the banking industry to let customers know through the adoption of industry-wide guidelines that their financial privacy will be respected and protected when they conduct business with commercial banks.
Community banks have a tradition of protecting their customers' personal financial information. One of the key foundations of community bank success is the attention to customer service that often differentiates community banks from larger banks. For this reason, community banks have long recognized that their success in maintaining relationships with their customers is dependent on the bank's commitment to protect customer privacy.
Privacy Principles and Implementation Plan
In taking steps to implement a strong set of safeguards on customer financial privacy, the IBAA is supportive of self-monitoring and self-regulation. Trade associations representing the entire banking industry endorsed a uniform set of customer privacy principles last September. These principles are for the use of the associations' member banks in meeting customer needs to understand and protect the use of personal information. A copy of the press release issued by the bank trade association regarding the privacy principles is attached for your reference.
The privacy principles cover eight separate areas: recognition of a customer's expectation of privacy; use, collection and retention of customer information; maintenance of accurate information; limiting employee access to information; protection of information via established security procedures; restriction on the disclosure of account information; maintaining customer privacy in business relationships with third parties; and making an institution's privacy principles known to the customer.
In parallel with the development of the privacy principles, the Banking Industry Technology Secretariat (BITS) adopted a "Privacy Principles Implementation Plan." The BITS board of directors is made up of the chairs of 11 large U.S. bank holding companies as well as representatives of the IBAA and American Bankers Association.
IBAA has publicized the privacy principles and strongly urged all community banks to adopt and implement them for their own banks. In addition, we have encouraged those community banks that have a Web site to include a privacy statement and disclosures on the site.
Both the banking industry privacy principles and the BITS implementation plan are located on our public Web site at www.ibaa.org/publicpol.html#privacy/. We have attached a hard copy and a diskette of the privacy principles and implementation plan for your reference.
We continue to keep our members informed about the FTC's efforts to randomly visit commercial Web sites, including bank Web sites, to determine the extent to which Web sites are disclosing privacy policies and offering consumers choice regarding the collection and use of their personal information.
We understand that there is no prescribed language for the privacy disclosures at this time; however, we have recommended visiting Web sites to use as examples such as, www.FTC.gov, www.EPIC.org and www.McGraw-Hill.com. In addition, IBAA has developed its own privacy statement for our Web site. We have a link to the privacy statement from our home page at www.ibaa.org. A copy of IBAA's privacy statement is attached in hard copy format and on diskette for your review.
IBAA has attended all the FTC hearings on privacy to keep apprised of privacy issues and how the issues impact our membership. We continue to keep our membership informed of new developments and the importance of consumer privacy through articles in our weekly newsletter, "Washington Weekly Report."
IBAA continues to urge all community banks to adopt and implement their own customer privacy principles. In taking steps to implement a strong set of customer privacy safeguards, community banks can demonstrate their commitment to self-monitoring and self-regulation. IBAA also strongly encourages community banks who have a Web site to provide a privacy statement for consumers. Community banks understand that their relationship with their customers is strongly dependent on the responsible treatment of personal information and are committed to protecting customer privacy.
We appreciate the opportunity to provide information pursuant to your notice.