INTRODUCTION OF CONSUMER FINANCIAL PRIVACY ACT -- HON. EDWARD J. MARKEY (Extensions of Remarks - May 04, 2000)

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HON. EDWARD J. MARKEY OF MASSACHUSETTS IN THE HOUSE OF REPRESENTATIVES Thursday, May 4, 2000

Mr. MARKEY. Mr. Speaker, I am pleased to join today with the gentleman from New York (Mr. LAFALCE), the gentleman from Michigan (Mr. DINGELL), the gentleman from Missouri (Mr. GEPHARDT) and others to introduce the Clinton-Gore financial privacy proposal.

The American public wants stronger privacy protections. The public wants, at minimum, the right to block a financial institution from transferring information it has gathered about them to both affiliates and third parties--an across-the-board ``opt out.'' And they want a stronger level of protection for medical information and information about personal spending habits--an ``opt-in.'' The legislation we are introducing today would provide these protections.

As Chairman of the bipartisan, bicameral Congressional Privacy Caucus, I can also say that there are many Republican members in both the House and Senate who are willing to work with Democrats to enact the type of strong financial privacy protections that are contained in the President's bill. I look forward to working with them towards that end.

But the real question is: will the House and Senate Republican leadership continue to stand with the big banks, brokerage houses, and insurance companies in opposing meaningful privacy protections, or will they allow a debate out on the floor of the House and the Senate on the President's proposal to give the people some measure of control over who gets access to the most sensitive details of their personal lives? I hope that we can have early hearings and action on this bill, so that we can close down the gaps left in last year's banking bill--as the President pledged last year.

First, with respect to affiliate sharing under last year's banking bill, consumers have no right to block a financial institution from transferring nonpublic personal information about them to an affiliate. The bill we are introducing today would change that by giving consumers an ``opt out'' right for both affiliates and nonaffiliated third parties.

Second, under last year's banking bill, consumers were given the right to ``opt out'' of having a financial institution transfer their personal information to nonaffiliated third parties. However, there was a giant loophole in this provision that allowed financial institutions to transfer such information with no consumer ``opt out'' if they were transferring it to another financial institution with whom they had a joint marketing agreement. This provision was put in at the behest of small banks who argued that since the large banks were allowed to do affiliate sharing with no opt out, that they should be able to contract with insurance companies or securities firms to cross-market to the

Third, under last year's bill, there were no protections for health care information or for especially sensitive detailed information about a consumer's spending habits. Under the President's proposal, a financial institution would have to obtain the consumers' prior consent (``opt-in'') before it could obtain, receive, evaluate or consider medical information from an affiliate or third party. An opt-in would also have to be obtained before a financial institution could transfer information about a consumer's personal spending habits (i.e., every check you've ever written and to whom, every charge on your credit or debit card and for what) or any individualized description of a consumer's interests, preferences, or other characteristics.

Fourth, last year's banking bill failed to give consumers any right whatsoever to obtain access to or to correct the nonpublic personal information that a financial institution had collected about them and was disclosing to its affiliates or to nonaffiliated parties. The President's proposal would assure that consumers would have the right to obtain such access and that a financial institution would have to correct any material inaccuracies. Institutions would be permitted to charge a reasonable fee for providing a copy of such information to the consumer.

Fifth, last year's banking bill failed to give the State Attorneys General any power to enforce compliance with the Act, in contrast to many other consumer protection statutes (i.e., the Telephone Consumer Protection Act) that provide for such concurrent enforcement. The President's proposal would make financial institutions that are subject to the jurisdiction of the Federal Trade Commission (i.e., anyone who is not a bank, an insurance company, or a securities firm; someone like a check cashing service), also subject to enforcement by the state attorneys general. In addition, last year's banking bill failed to specify whether a violation of a financial institution's privacy policies would be considered to be a violation of the Act. The President's proposal would make an action a violation of the Act, and would clarify that a violation of any requirement of the Act would be considered to be an unfair or deceptive trade practice.

Sixth, last year's bill required financial institutions to give a consumer a copy of their privacy policy at the time of the establishment of a customer relationship with the consumer. The President's proposal would require that financial institutions provide a copy of their privacy policies to any consumer upon request and as part of an application for a financial product or service from the institution. This will help consumers compare the privacy policies offered by various institutions.

While this bill does not go quite as far as the legislation I introduced last year, H.R. 3320 in adopting an across-the-board opt-in requirement, it is otherwise largely patterned after that proposal, including the provisions to close the affiliate sharing and joint marketing loopholes, provide access and correction rights, and strengthen enforcement. Moreover, I believe that the Administration's proposal to adopt and across-the-board opt-out, but then establish a higher level of protection for medical information and information about personal spending habits is an equitable compromise that gets to the most sensitive information. This is a good proposal. It deserves to become law, and I urge all of my colleagues to give it their support.
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