AT THE BANK

All Offshore That's Going Offshore?

The Annoyance:

I'm sick of U.S. banks tossing my private information around like so much confetti. I'm thinking about opening an offshore banking account. Is this legal? Will my money (and data) be protected?

The Fix:

It's perfectly legal to open an account in a foreign bank. Many foreign jurisdictions have much stricter privacy laws than what you'll find stateside. But it's a lot more work, you'll have fewer ways to access your money, and it can be riskier.

Opening a foreign account typically takes two to three months, says Arnold Cornez, J.D., author of The Offshore Money Book (McGraw-Hill). You'll need to submit a lot of documentation, including proof of identity and letters of reference from banks and attorneys. You'll need to vet the banks, so you can separate the safe havens from the sharks, and at some point you may need to visit the bank in person to finalize the deal. Cornez says you can find agents that will handle the paperwork for $300 to $500, such as his own Global Group Limited (http://www.global.bs/).

If you're involved in a legal tussle where your medical history may be involved say, a city bus rear ends your car, causing you whiplash your records may be subpoenaed and become part of the public record, along with other case documents. This could also happen if your doctor gets involved in a lawsuit that involves his or her patient records. If you don't want the world finding out about your medical history, ask the court to accept only those records relevant to the case, and to seal the records when the case is over.

Even then, your account will be somewhat limited. Getting a credit card on a foreign account can be nearly impossible, says Cornez, and most places of business won't accept checks based on a foreign currency. But you can get a debit card that works just as easily as it does in the U.S.

Another downside: if the bank fails, your assets won't be covered by the Federal Deposit Insurance Corporation. And don't view a foreign bank as a way to hide income from Uncle Sam or hungry creditors. If you have more than $10,000 in foreign accounts, you must file a form with the IRS and pay taxes on any interest the account earns. Any creditor collecting a judgment against you can also tap such an account provided, of course, they find out about it.

Bottom line? If you do business overseas or simply travel a lot to your favorite floating bank haven, having a foreign bank account makes a lot of sense and you can keep using it when you come back home. But if you're just looking to escape junk mail and marketing, a foreign account is probably more trouble than it's worth.

FINANCIAL PRIVACY? DON'T BANK ON IT.

By and large, your financial records are less secure than your video rental records. In 1999 Congress passed the Financial Services Modernization Act of 1999, better known as the Gramm-Leach-Bliley Act. GLBA's main aim was to break down the regulatory walls between banks, insurance companies, and brokerages, allowing them to merge into massive "financial supermarkets" that could sell products and share customer information on a massive scale.

GLBA also came with a few limited privacy protections. You can opt out of some marketing solicitations by telling the firm to not share your personal information with outside companies (see Chapter 2, "Foil Mailbox Miscreants"). If you don't opt out, the financial firm is free to sell your data to anyone. The firms must also send you a notice each year informing you of your privacy rights under GLBA, although as the Privacy Rights Clearinghouse has revealed, many firms do their best to make such notices look like junk mail.

However, under GLBA, consumers can't limit sharing among a company's many affiliates, or among companies that have a joint marketing agreement with the financial firm. So if a bank also owns an insurance company, or if it has inked a credit card marketing deal with an airline's frequent flyer program, you can't opt out. According to the California Consumer Federation, Citibank has at least 1600 affiliates, while Bank of America clocks in at more than 1400.

The Fair Credit Reporting Act (FCRA) lets you tell financial firms to not share information about your "creditworthiness" with affiliates such as your credit score and whether you pay your bills on time. The downside is that you may end up paying a higher rate of interest on your credit cards. Information on how to opt out under the FCRA should be contained in the financial firm's annual notice and found on the firm's web site.

State laws may also offer more protection. As of June 2004, financial services firms doing business in California must get your permission before they can sell your data to third parties. You can also tell them to not share your information with any of their affiliates. Alaska, Connecticut, Illinois, Maryland, North Dakota and Vermont also offer stricter rules for protecting some forms of financial data. To find out about privacy laws where you live, check with consumer advocacy organizations such as your state chapter of Public Interest Research Group (http://www.pirg.org), or the office of your Secretary of State (http://www.nass.org/sos/sos.html).

Tell Insurers to Drop Your SSN

The Annoyance:

My insurance company insists on printing my Social Security Number on my health card, which I must carry to my doctor's office every time I get a checkup. Isn't it stupid to carry your SSN around in your wallet, where any two-bit pickpocket can have access to it?

The Fix:

It sure is. While it seems innocuous to use your SSN to identify you to insurers, it can be a huge problem if your wallet is lost or stolen with your health care card inside making you a prime candidate for identity theft. Once someone else has your driver's license, your credit cards, and your SSN, you're a sitting duck.

Fortunately, some insurers such as Blue Cross and Blue Shield are voluntarily moving away from using SSNs to identify health plan members. And at least five states have banned the use of SSNs as insurance IDs.

If your SSN is on your insurance plan card, ask your insurer if they will give you a different number to identify you, or at least remove the number from your card. If they won't, take the card out of your wallet, write down your insurance plan number and take that with you to the doctor instead. You may have to train the personnel in your doctor's office to not automatically ask for your SSN every time you come in, however.

Have you received a scary email from your bank warning you about problems with your account? Odds are it's from a phisher a scam artist out to steal your account information and possibly your identity. Phisher emails can be extremely convincing looking, and may contain the same graphics used by your bank and valid links to your bank's web site. If you get any email that asks you for your account information or drives you to a web site where you must log in before continuing, stop and contact your bank to find out if that email is legit.

Safety in Boxes?

The Annoyance:

I've got a lot of valuable documents I need to keep safe and private, but I can't afford to install a private vault, an alarm system, and a kennel full of Dobermans.

The Fix:

You could stash the docs in a safe deposit box at your bank. That way, the documents are less likely to be stolen or destroyed in a fire or flood, and you get to say who can and can't open the box to get at them (with some exceptions, see below).

But while the contents of your box may be more private, they're not entirely safe. Unlike what you keep in a vault at home, the materials inside a safe deposit box may not be covered under your homeowner's insurance, says David McGuinn, president of Safe Deposit Specialists in Houston. If you use the box to store valuables such as jewelry or family heirlooms, you may need to get a separate "floater" on your homeowner's insurance covering those items.

Nor are items in boxes covered by the Federal Deposit Insurance Corporation, which protects the first $100,000 of your bank account assets. So if you stash cash inside them and a bomb goes off in the bank vault, you're out of pocket.

Note, too, that the privacy of a safe deposit box is far from absolute. They're subject to searches by law enforcement or court order. If the IRS decides you're using the box to hide assets, they can order it frozen so that you can't get inside it until they've completed their inquiry. And you can't get one anonymously (at least, in the U.S.). The Patriot Act requires you to present photo identification before you can rent a box. McGuinn suggests you add the name of someone you trust to your box rental agreement, so that if something happens to you, they will be able to get at the box's contents without having to navigate a phalanx of attorneys and bureaucratic red tape.

FREE CREDIT REPORTS

The best defense against identity theft is to keep a close eye on your bank accounts and to know what's in your credit report. Starting in late 2004, the Big Three credit reporting agencies are required to send you a free annual credit report if you ask them for one. This service is being gradually rolled out region by region; full nationwide access should be available by September 2005. To find out how to obtain a free report in your area, visit https://www.annualcreditreport.com.

But make sure you visit the right site; there are a bevy of sites with names like "freecreditreport" designed to lure you into paying for a report or scamming you out of your personal information. According to a February 2005 report in the St. Louis Post-Dispatch, there were nearly 100 imposter sites with names closely resembling "annualcreditreport"; several were owned by the big credit reporting agencies. To avoid confusion (or worse), the World Privacy Forum is urging consumers to order their free reports by phone at [phone].

PRIVACY IN PERIL: WHEN BANKS SELL TO CROOKS

You say you don't care if your bank sells your credit card number? Consider the case of Kenneth Taves. In November 1997, Taves purchased a list of 3.7 million credit card numbers from Charter Pacific Bank of Agoura Hills, California. At the time, Taves ran a service that handled billing for several web porn sites. He told the bank he planned to use the list to verify legitimate card numbers for site subscribers. Instead, he added bogus subscription charges to more than 900,000 account holders, many of whom didn't even own computers. Taves and his partners amassed nearly $46 million before they were finally caught. He pleaded guilty to fraud in January 2001 and was sentenced to 11 years.

While Taves's activity was fraudulent, it was (and still is) perfectly legal for a commercial entity to buy lists of credit card numbers. At the time of the purchase, Taves was on probation for check counterfeiting, but the bank performed no background checks. Most of the numbers on the list weren't even from customers of Charter Pacific they belonged to customers of merchants who banked at Charter. The bank refunded customer's money and stopped the practice of selling credit card numbers; it was acquired by First Banks America Bank in May 2001.

Taves succeeded for as long as he did by charging relatively small amounts typically under $20 which escaped most consumers' notice. Customers who did call Taves's companies to dispute the charges were sent into an endless voice mail loop.

Moral of the story? Examine your credit charges every month and challenge anything that looks suspicious, no matter how small. If the merchant is difficult to reach, notify the authorities the fraud division of your local police and the FTC (http://www.ftc.gov) are good places to start. And tell your banks you don't want them to sell your records to anybody, by exercising your right to opt out. (See Chapter 2, "Foil Mailbox Miscreants.")

If you use a safe deposit box to store valuables, be sure to keep copies of any appraisals or proof of ownership in a separate location. It's also a good idea to photograph the items inside and store the photo elsewhere as well. If the box becomes inaccessible say, a bomb goes off near your bank or the vault gets flooded you'll need these documents to file a claim.