Senate Banking Committee Fails to Give Consumers
Meaningful Financial Privacy Protection (Oct.
2003).
Boxer/Feinstein Amendment Needed To Battle Identity Theft,
Unwanted Marketing, Discrimination and Fraud
(Washington, D.C.) – Despite its characterization that
today’s amendments to the Fair Credit Reporting Act
help protect consumers’ financial privacy, the Senate
Banking Committee approved a bill that does nothing to prevent
consumers’ personal information from being spread among
thousands of affiliated financial institutions, leaving them
vulnerable to identity theft, unwanted marketing, discrimination
and fraud.
"The Senate Banking Committee missed a real opportunity
to pass meaningful legislation that would give consumers the
power to keep their personal financial information private,”
said Janell Mayo Duncan, legislative and regulatory counsel
for Consumers Union. "How can a consumer be protected
when hundreds of companies and their employees will have access
to their Social Security number or their buying habits?
"However, we are encouraged that some members voiced
interest in strengthening financial privacy rights as the
bill moves to the floor," she added.
Senators Feinstein and Boxer will be offering an amendment
to the bill when it hits the Senate floor in coming weeks
giving all consumers the right to limit the sharing of their
private financial information among affiliated businesses.
"By voting for the Feinstein/Boxer amendment, senators
can empower all consumers to protect their private financial
information,” Duncan said.
“California’s recently enacted financial privacy
law provides these protections to consumers residing in the
state. But every person in the nation deserves these same
rights."
Supporters of the measure passed today claim it gives consumers
control over their personal financial information because
they can “opt out” of marketing by affiliates
of banks, securities and insurance companies. But it does
not keep thousands of related companies and their employees
from having access to that information, which could result
in identity theft. It also fails to prevent financial institutions
from profiling consumer spending habits and payment histories
and using the information to make important decisions about
credit and insurance products. As a result, consumers could
wind up paying higher rates and be denied insurance, credit
and other financial services under a veil of secrecy.
The Feinstein/Boxer amendment would help:
- Prevent Identity Theft
By stopping the bulk of information sharing, consumers'
sensitive information will be in fewer places – meaning
fewer opportunities for an identity thief, computer hacker
or unethical employee to steal a consumer's identity.
- Prevent Discrimination Based on Consumers' Buying
Habits
An insurance company could use information gleaned from
a consumer’s buying habits – such as charging
a weapon at a gun shop – to decide that the customer
is too great a risk for a home insurance policy. By curtailing
this type of information sharing, consumers could prevent
this type of discrimination.
- Prevent Fraud and Abuse of the Elderly and Other
Vulnerable Consumers
There have been several instances in which seniors with
low-risk certificates of deposit have been targeted by a
bank's affiliate for a riskier investment based on the sharing
of their financial histories. These consumers – often
the elderly – didn’t realize that the new product
is not insured, and they lost significant sums of money.
Empowering vulnerable consumers to stop the sharing of their
information could prevent similar abusive marketing practices
in the future.
- Prevent Unwanted Marketing
By giving consumers the right to tell their banks
and other financial institutions not to share their information,
consumers would not be bombarded with so many offers of
insurance, credit cards, stocks, bonds and potentially dozens
of other financial services products from affiliated companies.
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