Citi sends unrequested credit cards

— -- Citi C, the nation's largest bank, is issuing 3.5 million credit cards to department store customers who didn't request them — a step that consumer groups say raises privacy concerns and could expose consumers to identity theft.

This month, Citi is sending general-purpose MasterCards to Macy's M customers with credit card accounts that have been inactive for two to four years. Citi bought those credit card accounts last year.

Citi and Macy's describe the new cards as a way to "replace" inactive Macy's accounts. But the new Citibank MasterCards aren't Macy's branded; they can be used anywhere MasterCard is accepted. Macy's cards can be used only in-store.

Consumer advocates worry that automatically sending cards to consumers — rather than doing so only if they request the cards — could expose consumers to information-stealing scamsters.

"In my view, it's a privacy violation and a customer violation," says Mari Frank, author of Safeguard Your Identity. "Privacy builds trust. Lack of privacy destroys trust."

Samuel Wang, a Citi spokesman, says customers were notified about the cards in advance and must activate them to use them. Wang adds that even in case of fraud, customers wouldn't be liable for the charges.

Wang wouldn't say how many of the millions who received the cards have activated them. He says only that a "favorable" number had, indicating the product's "value."

But advocates question whether the new cards violate a federal law that says banks can't issue credit cards unless customers request them or they're meant to replace existing cards.

"It's of questionable legality," says Chi Chi Wu, staff attorney at the National Consumer Law Center. At the least, "it certainly violates the spirit of why the prohibition against unsolicited cards was enacted."

Citi and Macy's say they don't think they're violating the law. Federal regulators say they haven't seen the card materials and can't comment.

Robin Gardner, 43, of Manassas, Va., says she was "flabbergasted" this week when she received a new Citi MasterCard she hadn't applied for. She closed the account.

Joe Ridout, a spokesman for Consumer Action, says the advocacy group is receiving a growing number of complaints from consumers about unwanted credit cards.

It's not just Citi. This year, GE Money reissued JC Penney store cards as general-purpose MasterCards that can be used anywhere, not just at the department store. GE declined to disclose the number of cards affected.

"The credit card companies have become overzealous in their marketing" because of the difficulty in finding new customers, says Avivah Litan, a senior analyst at Gartner.

Mark Johnson, 47, of Walnut Creek, Calif., says it's "absolutely wrong" that he got an unwanted Citi credit card. As a result, he says, "I'll no longer shop at Macy's, and my wife won't, either."