Privacy Digest

Citi issuing new credit cards on inactive Macy's accounts -The Clarion-Ledger- Real Mississippi: Citi, the nation's largest bank, is issuing 3.5 million credit cards to department store customers who didn't request them - a step that consumer groups say raises privacy concerns and could expose consumers to identity theft.

This month, Citi is sending general-purpose MasterCards to Macy's customers with credit card accounts that have been inactive for two to four years. Citi bought those credit card accounts last year.

Citi and Macy's describe the new cards as a way to "replace" inactive Macy's accounts. But the new Citibank MasterCards aren't Macy's branded; they can be used anywhere MasterCard is accepted. Macy's cards can be used only in-store.

Consumer advocates worry that automatically sending cards to consumers - rather than doing so only if they request the cards - could expose consumers to information-stealing scamsters.

"In my view, it's a privacy violation and a customer violation," said Mari Frank, author of "Safeguard Your Identity. Privacy builds trust. Lack of privacy destroys trust."

Samuel Wang, a Citi spokesman, said customers were notified about the cards in advance and must activate them to use them. Wang adds that even in case of fraud, customers wouldn't be liable for the charges.

Wang wouldn't say how many of the millions who received the cards have activated them. He said only that a "favorable" number had, indicating the product's "value."

But advocates questioned whether the new cards violate a federal law that says banks can't issue credit cards unless customers request them or they're meant to replace existing cards.

"It's of questionable legality," says Chi Chi Wu, staff attorney at the National Consumer Law Center. At the least, "it certainly violates the spirit of why the prohibition against unsolicited cards was enacted."

Citi and Macy's said they don't think they're violating the law. Federal regulators said they haven't seen the card materials and can't comment.

(Read Original Article - Via The Clarion-Ledger- Real Mississippi.)