| WASHINGTON
- September 23 - 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:
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.
###
|
