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WASHINGTON, D.C. -- Consumer groups are calling on Congress today to pass legislation to better protect people's financial privacy, pointing to the growing concern over financial institutions sharing personal financial data without the customers' knowledge or permission.
Consumers Union (CU), Consumers Federation of America (CFA), and the U.S. Public Interest Research Group (PIRG) are asking members of the House Banking Subcommittee on Financial Institutions and Consumer Credit to approve legislation that would fill the gaps in current financial privacy law.
U.S. PIRG's Ed Mierzwinski is testifying before the subcommittee today at a hearing on financial privacy on behalf of U.S. PIRG, CU, and CFA.
"People take their personal privacy very seriously, especially when it comes to their personal finances," said Mierzwinski. "A recent survey by AARP found that 81 percent of its members are opposed to financial firms sharing their personal information with their affiliates. Yet the fact is that, under current law, your video rental records are better protected than the confidential 'experience and transaction information' kept by your bank."
The consumer groups say that Congress should enact legislation that:
· Gives consumers the right to opt-in for all information sharing, whether to affiliated organizations or outside parties, such as telemarketers
· Gives consumers clear notice and full disclosure of a bank's privacy policies for both internal sharing and outside distribution of information, as well as notice of the consumer's right to choose
· Provides consumers with enforceable legal rights against violators
The House recently approved a bill to modernize the laws that govern financial services (H.R. 10). While some lawmakers claimed that the bill contained new and substantial privacy requirements, the bill is actually riddled with loopholes demanded by financial industry lobbyists, leaving consumers with no real protections. The House rejected a bipartisan measure introduced by Reps. Edward Markey, D-Mass., and Joe Barton, R-Tex., that would have let consumers say "no" before their information was shared with affiliates or outside parties. The White House has also advocated strong financial privacy protections.
"Congress should, at the very least, approve the kind of protections that were advocated by Congressman Markey and Congressman Barton," said Frank Torres, legislative counsel for Consumers Union. "Until consumers are given a say in whether their personal information is shared among a firm's affiliates, we are not truly addressing the privacy problem.
"The issue comes down to privacy versus piracy," Torres said. "Should you be able to keep your private information private, or should the industry be able to profit from sharing your information without your permission?"
The consumer groups emphasized that they are not opposed to financial firms sharing information. They simply believe that consumers should have a say in the use of their own confidential information for secondary purposes, such as selling them overpriced and deceptively marketed goods.
"Consumers must have control over their personal financial information," said Jean Ann Fox of Consumers Federation of America. "Consumer choice does not defeat the purpose of financial modernization. We believe that consumers have a right to decide whether their personal financial data is for sale to the highest bidder or can be shared with a multitude of affiliated companies. Too often, information from consumers' financial transactions is used against them to market worthless or over-priced products such as credit insurance or credit card 'protection.'"
