II

106TH CONGRESS

1ST SESSION S. 187

To give customers notice and choice about how their financial institutions

share or sell their personally identifiable sensitive financial information,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 19, 1999

Mr. SARBANES (for himself, Mr. DODD, Mr. BRYAN, Mr. LEAHY, Mr. EDWARDS, and Mr. HOLLINGS) introduced the following bill; which was read

twice and referred to the Committee on Banking, Housing, and Urban

Affairs

A BILL

To give customers notice and choice about how their financial

institutions share or sell their personally identifiable sensitive financial information, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Financial Information

5 Privacy Act of 1999’’.

6 SEC. 2. DEFINITIONS.

7 In this Act—
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1 (1) the term ‘‘covered person’’ means a person

2 that is subject to the jurisdiction of any of the Fed3 eral financial regulatory authorities; and

4 (2) the term ‘‘Federal financial regulatory au5 thorities’’ means—

6 (A) each of the Federal banking agencies,

7 as that term is defined in section 3(z) of the

8 Federal Deposit Insurance Act; and

9 (B) the Securities and Exchange Commis10 sion.

11 SEC. 3. PRIVACY OF CONFIDENTIAL CUSTOMER INFORMA12 TION.

13 (a) RULEMAKING.—The Federal financial regulatory

14 authorities shall jointly issue final rules to protect the pri15 vacy of confidential customer information relating to the

16 customers of covered persons, not later than 270 days

17 after the date of enactment of this Act (and shall issue

18 a notice of proposed rulemaking not later than 150 days

19 after the date of enactment of this Act), which rules

20 shall—

21 (1) define the term ‘‘confidential customer in22 formation’’ to be personally identifiable data that in23 cludes transactions, balances, maturity dates, pay24 outs, and payout dates, of—

25 (A) deposit and trust accounts;
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1 (B) certificates of deposit;

2 (C) securities holdings; and

3 (D) insurance policies;

4 (2) require that a covered person may not dis5 close or share any confidential customer information

6 to or with any affiliate or agent of that covered per7 son if the customer to whom the information relates

8 has provided written notice, as described in para9 graphs (4) and (5), to the covered person prohibiting

10 such disclosure or sharing—

11 (A) with respect to an individual that be12 came a customer on or after the effective date

13 of such rules, at the time at which the business

14 relationship between the customer and the cov15 ered person is initiated and at least annually

16 thereafter; and

17 (B) with respect to an individual that was

18 a customer before the effective date of such

19 rules, at such time thereafter that provides a

20 reasonable and informed opportunity to the cus21 tomer to prohibit such disclosure or sharing

22 and at least annually thereafter;

23 (3) require that a covered person may not dis24 close or share any confidential customer information

25 to or with any person that is not an affiliate or
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1 agent of that covered person unless the covered per2 son has first—

3 (A) given written notice to the customer to

4 whom the information relates, as described in

5 paragraphs (4) and (5); and

6 (B) obtained the informed written or elec7 tronic consent of that customer for such disclo8 sures or sharing;

9 (4) require that the covered person provide no10 tices and consent acknowledgments to customers, as

11 required by this section, in separate and easily iden12 tifiable and distinguishable form;

13 (5) require that the covered person provide no14 tice as required by this section to the customer to

15 whom the information relates that describes what

16 specific types of information would be disclosed or

17 shared, and under what general circumstances, to

18 what specific types of businesses or persons, and for

19 what specific types of purposes such information

20 could be disclosed or shared;

21 (6) require that the customer to whom the in22 formation relates be provided with access to the con23 fidential customer information that could be dis24 closed or shared so that the information may be re25 viewed for accuracy and corrected or supplemented;
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1 (7) require that, before a covered person may

2 use any confidential customer information provided

3 by a third party that engages, directly or indirectly,

4 in activities that are financial in nature, as deter5 mined by the Federal financial regulatory authori6 ties, the covered person shall take reasonable steps

7 to assure that procedures that are substantially

8 similar to those described in paragraphs (2) through

9 (6) have been followed by the provider of the infor10 mation (or an affiliate or agent of that provider);

11 and

12 (8) establish a means of examination for com13 pliance and enforcement of such rules and resolving

14 consumer complaints.

15 (b) LIMITATION.—The rules prescribed pursuant to

16 subsection (a) may not prohibit the release of confidential

17 customer information—

18 (1) that is essential to processing a specific fi19 nancial transaction that the customer to whom the

20 information relates has authorized;

21 (2) to a governmental, regulatory, or self-regu22 latory authority having jurisdiction over the covered

23 financial entity for examination, compliance, or other

24 authorized purposes;

25 (3) to a court of competent jurisdiction;
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1 (4) to a consumer reporting agency, as defined

2 in section 603 of the Fair Credit Reporting Act for

3 inclusion in a consumer report that may be released

4 to a third party only for a purpose permissible under

5 section 604 of that Act; or

6 (5) that is not personally identifiable.

7 (c) CONSTRUCTION.—Nothing in this section or the

8 rules prescribed under this section shall be construed to

9 amend or alter any provision of the Fair Credit Reporting

10 Act.

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