They know how much money you make, where you shop and whether you pay your bills on time.
They know where you live and the name of your doctor.
Now, banks are learning a lot more about you.
Following the demolition of decades old legal barriers that limited their reach, banks are combining with insurers, brokers and investment banks and gaining access to even more personal information about their customers.
The situation raises red flags for consumer advocates, who say sensitive information from checking accounts, car loans and life insurance applications could be used in ways that undermine consumers' privacy.
Under a new federal law, banks are required to tell you if they're going to share data--and you can tell them to stop it. Congress had been considering legislation to prevent banks from sharing their abundant information with outside parties or bank affiliates unless customers gave permission. But, according to House Banking Committee spokesman David Runkel, the privacy issue is dead as Congress rushes to finish its work for the session.
It never had much chance anyway because of strong opposition from the banking lobby and certain legislators, he said.
Meanwhile, businesses in other industries, including retailers and credit card companies, have such sophisticated technology that they can analyze individual customers' profitability, predict their buying patterns and sell them products they didn't even know they wanted.
Banks are getting there and they have far more personal information.
For their part, banks say they are careful with the personal information they handle, pointing out that the success of their businesses depends on customers' trust. Many have instituted voluntary guidelines to protect customer privacy.
But consumer advocate Ed Mierzwinski of the U.S. Public Interest Research Group in Washington is far from assured. We need privacy protection because the balance between buyers and sellers is shifting, and banks have the good Stuff, he said.
The trend alarms even some bankers, who see data-gathering as a potential land mine for the industry.
Jamie Dimon, chief executive of Bank One Corp. in Chicago, recently said at a banking conference that the industry needs to lead the way in protecting customers privacy "When the American public realizes the lack of privacy, they're going to come down hard, he said.
Consumer advocates say there are two potential problems Banks could sell customer information to marketing and other firms, or they could use it internally to make their own business and lending decisions.
Customers were shocked to learn for example, that U.S. Bancorp in Minneapolis had sold customer information, such as telephone numbers, account balances and credit limits, to a telemarketing company for several million dollars.
Officials caught the bank after customers complained that unauthorized charges were appearing on their checking and credit card accounts. U.S. Bancorp settled a suit from the Minnesota attorney general for $2 million, and paid a total of $2 million to charities and public bodies in about 30 other states where it did business.
It is harder, however, to detect the misuse of information when it happens within a bank's walls.
For example, if a bank gleans medical data from an insurance application or checks written to a cancer clinic, that information is not supposed to be used in making loan decisions. But the customer would never be told if it were used, and even bank regulators say it is difficult to police.
How are you ever going to know? said Gary Preszler, banking commissioner of North Dakota, one of only a handful of states that force banks to gain (get ) customers' permission before sharing information with outside parties.
Banks are not likely to write cancer patient as a reason for denying a loan, Preszler said. And if the lender knows about a customer's medical condition, How do you erase that information from someone's mind? It's difficult.
In recent decades, the industry has migrated from a collection of small community banks whose top executives knew their customers on sight to a pantheon of megabanks whose tellers sometimes change from week to week.
"Customers have told banks, I don't want you to act like you've never heard of me if I come in and apply for a loan,' said Charlotte Birch, a spokeswoman for the American Bankers Association, which has issued guidelines for banks regarding the responsible use and protection of customer information
One method banks have used for decades is printing on checks the month and year that customers opened their accounts, often just to the right of the name. Using that, tellers can identify longtime customers, for whom they might waive a fee or give special allowances.
Problems arise when customers lose control of who sees their private information and how it is used, something consumer advocates say will happen more frequently as banks get bigger and smarter.
Currently, 27 percent of large banks share customer information with third parties, according to GartnerGroup Financial Services, a Durham, N.C.-based research and consulting firm.
Chicago's largest bank, Bank One, is not among them, although its credit card unit, First USA, does share customer data unless customers tell it not to.
Under federal law, the burden is on the customer to tell a bank not to share information.
The legislation that's died in Congress would have reversed that situation, forcing banks to obtain permission before sharing information.
At this point, the potential for banks to use medical and other information surpasses their technical ability to do so. Many institutions are preoccupied with melding computer systems from various banks they gobbled up in the late 1990s merger frenzy. The sophistication of analysis is a quantum ahead every year, but banks still don't know if they can make it work, Mierzwinski said.
Banks are not as far ahead as credit card companies in analyzing customers' shopping habits, for example. Just as the card behemoths scrutinize past charges to determine where and what you might buy next, banks could do the same with the checks you write.
Problem is, most check-imaging software cannot yet translate scrawling on a check into database ready information, said Kimberly Collins, senior research analyst at GartnerGroup.
That lack of sophistication is one reason customers shouldn't immediately assume their bank is to blame if a telemarketer knows things they thought only the bank could know. Marketers have other ways to get some private information, as William McGurk recently learned.
McGurk, the chief executive of The Savings Bank of Rockville in Connecticut, received an unpleasant call one day from a customer who assumed the bank had sold him out. Turns out the marketer had used public real estate records to find out where consumers live, how much they paid for their houses and, through a mathematical formula, their approximate annual incomes.
I knew we didn't do it, but I'm very concerned about our reputation, McGurk said. Banks have a high level of trust.
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