2 Banks Halt Controversial Marketing Deals

Two major banks have suspended participation in a telemarketing program that has fueled a national debate on whether financial institutions should sell customer information to third parties. San Francisco-based Union Bank of California instructed MemberWorks Inc., which sells health- and dental-care discounts, to stop marketing to Union Bank customers pending a review of the arrangement, a spokeswoman said. MemberWorks was criticized this week by the Minnesota attorney general for allegedly deceptive practices. The allegations came in a lawsuit--which did not name MemberWorks--against U.S. Bancorp, which is accused of illegally releasing sensitive customer data. Minneapolis-based U.S. Bancorp announced it would cancel its agreement with MemberWorks to market non-financial products to its customers. Shares of UnionBanCal Corp., parent of Union Bank, fell 25 cents to close at $35.94 on Nasdaq. Shares of U.S. Bancorp fell 25 cents to close at $31.50 on the New York Stock Exchange.