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Panelists Lobby for Stricter Financial Privacy Protection RulesBy Catherine Hubbard, M.A., CCH Washington News Bureau. The current restrictions under the Gramm-Leach-Bliley Act do not go far enough in protecting the privacy of individuals’ financial information, according to a panel that spoke before a Sept. 19, 2002, hearing of the Senate Banking Committee. Committee Chairman Paul Sarbanes, D-Md., said the amount of financial data that financial institutions can collect has increased rapidly since enactment of the law in 1999. He added that modern technology makes the sharing cheaper than ever, noting that much of the information sharing “is done without the knowledge or approval of the customer.” Financial privacy “is a fundamental right that all consumers should enjoy.” Sen. Richard Shelby, R-Ala., added that people are becoming increasingly wary of information sharing. “Just about anyone can collect private information,” he said. Shelby advised lawmakers to “carefully examine the pros and cons” of the use and disclosure of private financial information. Sen. Debbie Stabenow, D-Mich., said, “consumers want to know that they have the basic level of privacy.” The GLB Act did not provide as much protection as people would have liked, she said. “It’s appropriate to reflect on the legislation” and look at “where we should go from here,” she said.Several panelists called for changes in the way financial companies provide an opt out of information sharing. Vermont Attorney General William H. Sorrell said that average consumers cannot work through the “obtuse notices and then make informed choices” with regard to opt outs. He called for a new government standard of “much simpler notices.” Phyllis Schlafly, president of the Eagle Forum, said information should be accessible only to those who are given authority by the individuals. “The information about what I do and what I buy is my property,” she told the chairman, in response to a question about the federal government’s role in protecting privacy. “We should consider this a property rights issue,” she said. “People have a strong right to privacy,” said Edmund Mierzwinski, consumer program director at the U.S. Public Interest Research Group, adding that “privacy should be based on fair information practices.” The GLB Act’s opt outs are “not enough,” he said, contending that opt out notices of financial institutions are unclear and unreadable. He said opt outs should be placed up front on financial documents, easier to understand and in larger type. The stronger opt in notice would work even better, he said. Mierzwinski lauded the provision in the law that enables states to enact their own privacy laws. “The states’ right fail safe is the best part of Gramm-Leach-Bliley. We need to protect the rights of states to pass stronger privacy laws,” he said. In contrast, Fred H. Cate, a professor at the Indiana University School of Law, said an opt in would prevent people from finding out useful information from their banks and other financial institutions. “If they don’t opt in at the start, they might not be aware of something that might be of real benefit to them,” he warned. The current opt out rate is consistently less then 5 percent, Cate said. In addition, he said, complying with the GLB Act’s privacy laws costs the industry between $2 and $5 billion per year, which is passed on indirectly to consumers. He noted that he was speaking on his own behalf. John Dugan, representing the Financial Services Coordinating Council, said that although people value the privacy of their financial information, “they also want benefits that are available through information sharing.” He said the GLB Act “struck the right balance.” Under the bill, he said, consumers have much more information, choice and security with regard to their information. |