Would 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.
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.