Even as Visa U.S.A. and MasterCard International continue to peck away at credit card fraud, new dangers to consumer financial privacy are lurking, according to testimony before the House Banking Committee last week.
The committee is weighing legislation aimed at curbing information brokers, who often try to gain access to financial information illegally.
The Financial Information Privacy Act of 1998, which House Banking Committee Chairman Jim Leach introduced two weeks ago, would make it a federal crime to obtain customer information from a financial institution through fraudulent means.
There are legitimate information brokers who work for lawyers in divorce cases or help gather data necessary to seize assets of people who have not paid court judgments.
But experts said that all too often, shady brokers get data illicitly or for illegal purposes.
"The problem is so extensive that no citizen should have confidence that their financial holdings are safe," said Robert S. Douglas, president of Douglas Investigations in Alexandria, Va., which specializes in digging up consumer information for lawyers.
Mr. Douglas testified before the committee last Tuesday.
Most often, thieves pose as account holders seeking information about checking and credit card accounts.
"It is the latest wrinkle in identity theft," said Visa spokesman Michael McGarry.
Visa and MasterCard largely support the legislation but express concern that the current draft of the bill could impede consumers who are legitimately requesting their own financial information.
For example, consumers may not want to disclose that they are asking for information in connection with a tax audit or a divorce proceeding.
"The law would have the unintentional consequence of putting criminal sanctions against people who are innocent," Mr. McGarry said.
The bank card associations also advocate broader definitions of the situations in which a person could be prosecuted for credit theft, maintaining that perpetrators of fraud will find loopholes if the legislation is too narrow.
Bankers worry that they will be perceived as offering poor service if they make access to account information too difficult.
Consumer advocate Evan Hendricks, editor of the Washington-based newsletter Privacy Times, contends that banks should bear some responsibility for the problem and should require more extensive training of customer service representatives.
Mr. Hendricks is working with an information broker to develop training programs.
"We are not going to solve the problem unless banks know what to look for and how to guard against it," he said.
In many cases, information brokers cajole or intimidate bank employees into disclosing sensitive data during telephone conversations.
Mr. Hendricks said banks have "kept their heads in the sand" regarding this type of fraud. "If they refuse to do something about it, they should be held liable."