Bank of AmericaWould you trust a stranger to keep your financial secrets? That's exactly what customers do every time they pick up the phone to call their bank, brokerage, or credit card company and talk with a customer service representative.

Obviously such companies must follow strict protocol when handling sensitive consumer data. But how much oversight can a company really have when the people whom they entrust with customer information aren't even in the same country?

Please Hold While We Pilfer Your Data

The absence of strict data privacy laws and enforcement structures in countries popular for outsourcing raises concerns about the security of our personal information in the hands of contractors abroad. These concerns came to a head in March when England's Sunday Times published the results of an undercover investigation that caught corrupt Indian call-center workers selling customers' personal information to criminals and marketing firms.

Despite rising concerns about data security under the management of foreign contractors, Bank of America (BAC) is the latest bank to decide to outsource call-center jobs -- a move that puts customers' personal information in the hands of contractors abroad. A spokesman for the bank claims it has "employees and operations where we can ensure that we best serve our customers and clients."

But is this move really in the best interest of consumers?

It's Hard to Enforce Upstanding Behavior

Bank of America is outsourcing its call-center jobs to the Philippines, not India. However, there are reasons to fear similar violations in Philippine call centers.

While the deputy majority leader of the country's House of Representatives, Roman Romulo, is pushing for a law requiring businesses to comply with international privacy standards, this law is not yet in effect. And even if it is, our worries aren't over.

If the law is passed, successful enforcement will require effective regulatory structures with sufficient authority and funding. And because it takes time for businesses to set up new compliance measures necessary to meet new standards, it's unlikely that Philippine contractors will meet these legal standards immediately after they are passed.

ot the Only One

Bank of America isn't the only bank to outsource customer service to the Philippines. It's following the lead of Wells Fargo (WFC), Citigroup (C), and JPMorgan Chase (JPM).

While B of A claims that it is moving "employees and operations where we can ensure that we best serve our customers and clients," it is likely that this move will impose costs on consumers in the form of lower-quality data security and customer service. Also, it's unclear that this move will do anything to help consumers unless the bank passes its cost savings on to consumers.

Time will tell if this occurs.

Motley Fool contributor M. Joy Hayes, Ph.D., is the Principal at ethics consulting firm Courageous Ethics. She owns shares of Bank of America. Follow @JoyofEthics on Twitter. The Motley Fool owns shares of Citigroup, Bank of America, JPMorgan Chase, and Wells Fargo, and has created a covered strangle position in Wells Fargo. Motley Fool newsletter services have recommended buying shares of Wells Fargo.

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With all the new banking regulation,
Why is this still legal??
Most of Europe (and Asia/SA) prohibit any finalcial and personal data on citizens being stored or accessed outside of the respective countries.
Also to make matters worse many high paying jobs for analysing customer information has bee outsourced to Asia.
YES your credit scored is being analyzed in China for most of the major financial institutions.
Alexander Krzyston

June 14 2012 at 11:31 AM Report abuse rate up rate down Reply

Any company that outsources their work doesn't deserve mine or anyone elses business. Seriously..why would anyone have anything to do with BOA....they have NEVER been customer friendly. They always just find new and novel ways to rip people off.

June 14 2012 at 6:32 AM Report abuse rate up rate down Reply

Perhaps it's time to boycott B of A?

June 13 2012 at 10:00 AM Report abuse rate up rate down Reply