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Press Release Sunday, April 30, 2000 |
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WASHINGTON, D.C. - Consumers Union, the nonprofit publisher of
Consumer Reports magazine, today praised President Clinton's
proposal to give consumers new powers to choose whether financial
companies can share their personal information, calling it "an
important plan to help consumers" and urging Congress to approve it
"as swiftly as possible."
The president is unveiling the proposal today during a college
commencement address at Eastern Michigan University. It would
require a financial company to tell customers in many cases if it
were going to share information about them with affiliates or with
unaffiliated third parties, and give consumers the option of
declining to have that information shared (which is known as an
"opt-out" arrangement). The plan also would require companies to
obtain a customer's consent before sharing medical information or
detailed information about spending habits either among its
affiliates or with third parties (which is known as an "opt-in"
arrangement).
The president's announcement comes in the wake of financial
services legislation approved last year that made it easier for
banks, insurance companies, and securities firms to merge together
and share customer records to cross-market their products.
A broad coalition of consumer and public interest groups
criticized the weak privacy provisions in the law, citing its failure
to give consumers the right to choose whether their private records
were shared without their permission. When President Clinton signed
the law last November, he promised to propose broader privacy
protections this year.
Frank Torres, legislative counsel for Consumers Union, made the
following statement today about the president's privacy proposal:
"President Clinton has made good on his promise to help consumers
protect their privacy. This plan takes a reasonable approach to
privacy protection. It gives consumers greater choice in whether a
financial company can share their information with affiliates or
outside companies, like telemarketers. At the same time it lets
companies do what they need to do to market their products in a
responsible manner.
"The lengths to which some companies will go in exploiting
people's privacy is outrageous. Financial firms can collect and swap
reams of personal information about you to target you for sales or
deny you for services. This includes your personal buying habits,
your Social Security number, and your banking account records.
Consumers are fed up with these kinds of invasive practices, and the
president's proposal would give consumers the power to protect their
private information.
"This proposal is a substantial improvement over the financial
services legislation approved last year. That law has a few meager
privacy provisions, but it contains so many exceptions that it gives
consumers no real privacy protection at all. The president's
proposal ties up the loopholes in that law.
"Some say that we should wait to give the financial services law
time to work. But there is already a broad coalition of groups and
policymakers across the political spectrum that have studied the law
and agree that it erodes personal privacy to an unacceptable degree.
The longer we wait to fix the problem, the greater the erosion of
personal privacy.
"The president has offered an important plan to help consumers.
Now the ball is in Congress' court. Congress can either pass a law
this year to help consumers protect their privacy, or Congress can do
nothing and send the message to consumers that it thinks that it's
fine for companies to exploit their privacy.
"Congress has spent months working on other financial legislation,
like the so-called 'bankruptcy reform' bill that stands to help a lot
of companies and hurt a lot of consumers trapped in debt. Why can't
Congress give the same attention to citizens who just want to protect
their personal information? Consumers Union urges Congress to
approve the president's proposal as swiftly as possible."
Note: The current issue of Consumer Reports (May 2000) contains a
special report on financial privacy and online privacy, the first in
a three-part series on the privacy issue. (www.consumerreports.org)
Consumers Union, publisher of Consumer Reports magazine, is an independent, nonprofit testing and information-gathering organization, serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.
