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5 August 1998
--Support Modified LaFalce Amendment To HR 4321 To Improve Consumer Rights--
Dear Member of the House Banking Committee,
We are writing on behalf of the undersigned consumer organizations to urge your support of improvements to HR 4321, the Financial Privacy Act, to ensure that it accomplishes its stated goal of protecting consumer financial information. While we commend Chairman Leach and other committee members for introducing the bill to address the serious problem of persons obtaining personal information under false pretenses, the bill needs to be improved in the areas of civil liability and compliance duties of financial institutions to ensure consumer privacy is protected.
As introduced, HR 4321 does not hold accountable to the consumer wrongdoers who obtain personal information under false pretenses or financial institutions that fail to protect the information. Further, the bill did not establish any compliance duties or standards to ensure that financial institutions protected information at all. Financial institutions would continue to be free to divulge information about consumers to private parties unless such information is requested under false pretenses.
We strongly urge you to support the LaFalce bill, HR 4388, as an amendment to HR 4321,which would go a long way to address the gaps in HR 4321 by establishing an affirmative duty for financial institutions to protect consumers’ financial and personal information. The LaFalce amendment's goal to require financial institutions to comply with the Code of Fair Information Practices is commendable.
While the LaFalce amendment also includes a provision to hold accountable those who violate consumers’ privacy, the standard of "knowingly" and the additional test of "substantial financial injury and inconvenience" are huge hurdles and virtually impossible to meet in many cases in which a consumer’s privacy is violated. To ensure that financial institutions have an incentive to comply with the law and that consumers whose privacy is violated have recourse, wrongdoers should be subject to liability if they violate the law, subject to safe harbors and affirmative defenses to protect against any frivolous or unfounded lawsuits, as most other consumer banking laws provide. Also, the liability provisions must apply to persons who obtain information under false pretenses or receive such information in violation of HR 4321.
Privacy is a fundamental concern for consumers, particularly in a rapidly expanding financial services marketplace in which your banker may also be providing your health insurance. More and more sensitive information is at risk of being disclosed to the wrong people or for the wrong purpose. We urge you to not just address those information brokers who obtain the information under false pretenses but also the institutions that disclose the information. Unless the legislative approach addresses all aspects of the problem, consumers will still be at risk of having information about them in the wrong hands.
Sincerely,
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Mary Griffin |
Evan Hendricks |
Edmund Mierzwinski |
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Privacy Times |
U.S. Public Interest Research Group |
