U.S. Bank will pay $3 mil. to settle suit

ST. PAUL, Minn. -- U.S. Bancorp has agreed to pay states and charities $3 million to settle claims that it illegally sold confidential customer information to a telemarketer.

The amount equals the commissions the bank earned on the sale of the information. U.S. Bancorp, the nation's 13th-largest bank holding company and parent company of U.S. Bank, did not admit any wrongdoing in Wednesday's announcement.

The allegations were contained in a lawsuit filed earlier this month by Minnesota Attorney General Mike Hatch.

Hatch said about 1 million people in 17 Midwestern and Western states were affected.

Federal and state agencies require banks to publish privacy policies telling consumers how their personal information will be used, who has access to it and if the bank intends to give the information to others.

Since January 1996, U.S. Bank provided Member Works Inc. of Stamford, Conn., with names, Social Security numbers, marital status, occupation, account balances, homeownership status and credit limits, Hatch said.

Hatch contended the bank violated the federal Fair Credit Reporting Act and engaged in consumer fraud and deceptive advertising.

U.S. Bancorp agreed to give up the $3 million in commissions it earned on sales that the telemarketer made to bank customers. Habitat for Humanity in Minnesota, which builds houses for the poor, will receive $1.5 million, the state of Minnesota will get $500,000 and other charities and states will get $1 million.

The other states affected are California, Colorado, Iowa, Idaho, Illinois, Kansas, Montana, North Dakota, Nebraska, Nevada, Oregon, South Dakota, Utah, Washington, Wisconsin and Wyoming.

U.S. Bancorp also will compensate customers who are dissatisfied with services they purchased from the telemarketers.

U.S. Bancorp Chief Executive Jack Grundhofer said the lawsuit compelled the bank to reconsider what it believes was an industrywide practice.

After Hatch filed the lawsuit, Wells Fargo and Bank of America voluntarily agreed to limit the practice. However, both banks were sued in California for passing customer information on to third parties.

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