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Senate Fails to Give Consumers the Right to Control Their Private Financial Information

Tuesday, Nov. 4, 2003
Contact: Shelley Curran (415) 431-6747, Janell Mayo Duncan (202) 462-6262

Senate Fails to Give Consumers the Right to Control Their Private Financial Information

Americans Expected to Continue to Demand Rights as Problems Arise

(Washington, D.C.) – Consumers were dealt a blow to their financial privacy today as the Senate failed to approve a measure that would have given them the right to limit the sharing of their personal financial information by banks, financial institutions and insurance companies. Yet Americans are expected to continue to demand such protections as companies take advantage of the weak federal law to spread intimate details of their financial lives.
“We are extremely disappointed Congress failed to give consumers control over the sharing of their most personal financial information,” said Janell Mayo Duncan, legislative and regulatory counsel for Consumers Union. “Consumers are growing increasingly concerned about the handling of their personal information by their financial institutions. Congress will eventually have to deal with these legitimate concerns as problems arise due to this type of widespread information sharing.”
The Senate failed to support an amendment by California Senators Dianne Feinstein and Barbara Boxer to S. 1753 that would have given consumers the right to decide if they want their private financial information – including Social Security numbers, bank account balances and even their buying habits – shared with the hundreds of companies affiliated with their bank or financial institution, such as insurance, mortgage, finance and housing companies.
Currently, this unrestricted information sharing contributes to unwanted marketing, identity theft, fraud and possibly discrimination, as financial institutions can develop profiles of an individual’s lifestyle, spending habits and payment histories in order to make discriminatory decisions about credit and insurance services. Consumers ultimately can wind up paying higher rates or be denied insurance, credit and other financial services.
The amendment would have extended a key part of California’s recently enacted landmark financial privacy law to the entire nation. Yet the banking and financial industry, which worked on the California law and called it “reasonable and workable,” lobbied to undermine it in Congress. Consumer advocates are concerned that by approving S. 1753, the Senate may have undercut states’ rights to step in and deal with financial privacy issues.
“The Senate had the opportunity to make it crystal clear that it doesn’t want to limit the ability of states like California to enact tougher financial privacy reforms, yet it failed to do so,” said Shelley Curran, legislative analyst for Consumers Union. “Worse yet, it missed an opportunity to extend some of the important protections offered by the California privacy law to consumers throughout the country.”
The Senate bill, which amends the Fair Credit Reporting Act, offers some substantial steps forward for consumers in preventing abusive marketing, enhancing medical privacy rights, providing greater federal oversight of credit report accuracy and identity theft, and enhanced consumer access to credit reports and scores.
The Senate approved an amendment by Sen. Boxer that strengthened consumers’ rights to opt out of marketing by affiliates of banks and financial institutions. Originally, consumers request to opt out would expire after five years; but that time limit was eliminated. Also, a loophole that would have allowed a business to market to any consumer who they had previously done business with was narrowed to exempt only business relationships in the past 18 months.
“More consumers will now be able to say ‘no’ to unwanted phone calls and annoying junk mail from banks, insurance companies and their affiliates due to this amendment,” Mayo Duncan said.
Also approved were consumer-friendly amendments by Sen. Maria Cantwell to give identity theft victims the right to obtain business records from firms where thieves opened accounts in their names in order to help clear their credit; and an amendment by Sen. Feinstein that increases the privacy protections on the sharing of consumers’ medical information.
The bill also would: require credit bureaus to place fraud alerts on the accounts of identity theft victims, and in many cases, prohibit the sale or transfer of debt associated with identity theft; allow consumers to block the reporting of credit lines associated with identity theft; require mortgage lenders to provide credit scores to consumers applying for mortgage loans; and require some credit bureaus to make free credit reports available to consumers once a year upon request.
“While lawmakers have given identity theft victims help in clearing their credit and good names, and improved consumers’ rights to prevent abusive marketing, they unfortunately turned their backs on the overwhelming majority of Americans who want greater control over their financial privacy,” Curran said.
“Consumers — not banks and insurance companies — should decide who has access to their personal financial information. We intend to continue to help consumers get the financial privacy protection they want and deserve,” she added.