4 ways to opt out of credit card affiliate marketing
New law requires notification, 'simple' ways to opt out of data sharing
By Karen Price Mueller | Published: October 24, 2008
Credit card issuers and other financial companies bombard you with offers for credit cards, mortgages and other financial products you don't want. Tired of junk mail, you toss lots of unopened envelopes in the garbage. The problem is that in doing so, you also may be tossing away the chance to do away with unwelcome marketing offers.
Financial companies often share information about their customers with their affiliates, which may send you offers for additional products or services. Under a federal law that became effective Oct. 1, 2008, the companies you do business with must give you a "simple" way to opt out of receiving additional marketing offers from those affiliates.
"The big deal is that your financial transactions with one branch or one division of a company could be very valuable to another division," says Chi Chi Wu, an attorney with the National Consumer Law Center in Boston.
For example, your credit card account might show a transaction in which you bought a plane ticket. If your card's issuer is owned by a large conglomerate, that information could be shared with affiliates that sell travel insurance, hotel reservations and other services in the city you're planning to visit. Having targeted you as being likely to have an interest in their products, affiliates would contact you via e-mail, phone, mail or other means.
"Someone's credit card or bank account transactions provide pretty rich information for targeted marketing," Wu says.
Opting out of affiliate marketing
The legal landscape tilted slightly in consumers' favor in October 2008. That was the deadline for companies to comply with Section 214 of the U.S. Fair and Accurate Credit Transactions Act, commonly called the FACT Act. The section, a 2007 amendment to the act, requires credit card companies and other financial institutions to give customers easier ways to opt out of sharing their information.
Companies are barred from letting affiliates make pitches unless consumers are "clearly and conspicuously informed" that such pitches can be made, and "the consumer is provided an opportunity and a simple method to prohibit the making of such solicitations."
There is no standard form sent to customers from all these companies. They often send letters explaining the opt-out procedure and offering a telephone number to call if consumers wants to opt out. Others may provide Web-based opt-outs. Still others may provide a form to fill out and mail back to the institution, including a box to check for opting out (see a sample form).
For example, Bank of America says it notified customers during the summer that they have the option to limit marketing information from Bank of America-affiliated companies. Through letters to customers, it provided a toll-free number to call if they wanted to opt out of affiliate marketing. Most companies have provided similar options for customers.
Opt-out lasts 5 years
If the consumer does opt out, the company's affiliates can't use the information to market to the consumer for five years from the time the form is received. After five years, the company must send another opt-out form, so the consumer can decide whether to opt out again.
Companies hope that you'll choose not to opt out. After all, affiliate marketing is more than annoying mailings. It's big business.
Online affiliate marketing spending will reach $3.3 billion by 2012, according to a study by research firm Jupiter Research Corporation. That doesn't count the expense of traditional mailings that reach millions of consumer mailboxes each year.
"Merchants on both sides of the Atlantic continue to regard affiliate marketing as a cost-effective channel for driving customer acquisition,'' says Linus Gregoriadis, head of research at online publisher E-consultancy and author of the Affiliate Marketing Networks Buyer's Guide 2008.
What information can they share?
If you don't bother opting out, you're putting a lot of personal information out there for affiliate companies to analyze. Companies may share information "bearing on a consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living,'' says Wu. This could include your name, address, Social Security number, employer, date of birth, credit score, what types of credit accounts you have, your payment record on this accounts (such as your history of making late payments), your credit limits and amount of credit you have used.
Even information not typically found on your credit report could be shared, such as where you have used your credit card, your income, your assets or the value of your home or car, says Wu.
There are few limitations to the information that can be shared between affiliates for marketing purposes if the consumer does not opt out.
|-- Chi Chi Wu
Lawyer, National Consumer Law Center
"There are few limitations to the information that can be shared between affiliates for marketing purposes if the consumer does not opt out,'' Wu says. "Only discrete categories of information might possibly be restricted, such as medical information or information prohibited by fair lending laws, such as race, gender, religion, etcetera.''
The term "affiliates" is key, because this rule only covers companies considered to be affiliates. According to the FACT Act, affiliates are subsidiaries (such as a mortgage company owned by a bank) and sister companies (two companies owned by the same firm). What's not included are third parties: independent companies that are not owned or operated by the same firm. For example, if a mortgage lender has a relationship with an insurance company, but they're not owned by the same parent company, any information they share doesn't fall under these opt-out rules.
Third-party sharing is covered by the Gramm-Leach-Bliley Act, not the affiliate marketing rule. Creditors are permitted to use a combination affiliate marketing plus Gramm Leach Bliley Act opt-out notice.
How to opt out
If you don't want your information in the hands of affiliate marketing companies, follow these steps:
There's no guarantee that every company you do business with has complied with the opt-out mandate, but before you call a lawyer, make sure you do your part. Open every piece of mail you receive, and read it before you relegate it to the junk pile. You may mistake an unopened opt-out form for a solicitation.
2. Call your company
Consumer Molly Stauffer of Crowley, La., has five credit cards and a mortgage, and she says she receives lots of affiliate marketing offers. What she doesn't remember is receiving any opt-out mailings, even though she says she reads all her mail, even the unsolicited offers.
`"I don't remember such a box,'' she says. `"It was probably in hard-to-read sized text,'' Stauffer says.
Consumers such as Stauffer should first contact all the credit card issuers and other financial institutions with which they do business. Request to opt out, and the company will tell you the proper procedure, such as whether you can do it by phone or by mail.
There is no one-stop shop to make sure your opt-out requests were properly received and filed.
Consumer Raymond Estes of Hingham, Mass., says he's checked the opt-out boxes on the mailings he's received, but he's not sure if it's worked for all of his six credit cards and three store-specific cards.
"I know I've opted out before but still continue to get offers, apparently from the same companies,'' Estes says. "I am sometimes annoyingly surprised upon receiving multiple or repeat offers from the same companies.''
If, like Estes, you've opted out but you continue to receive unwanted affiliate marketing solicitations, make a complaint to the Federal Trade Commission. If you think a bank isn't complying, you can also complain to your state banking regulator.
4. Know the exceptions
Not every solicitation you receive is subject to the opt-out rule. For example, if you've contacted a lender to inquire about products or services, it doesn't have to give you an opt-out notice. Also, if you have a pre-existing relationship with a firm, such as the company that holds your mortgage, that firm can still send you solicitations.
The other exception is online transactions. The consumer may have to decide at the time of the transaction whether or not to opt out, Wu says.
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