We need to protect the public against the type of abuses of bank customers' privacy that this episode has so dramatically exposed. In addition, the SEC letter indicates that there are gaps in SEC authority to protect the privacy of mutual fund investors and investment adviser customers. The legislation I am introducing today would address problems in each of these areas. I think we should all be able to agree that consumers have a right to know when personal information is being collected about them. They should receive adequate and conspicuous notice whenever any personal information collected is intended to be reused or sold for marketing purposes.
Current law provides consumers very little protection for their private financial records.
The Right to Financial Privacy Act applies only to the federal government. The Fair Credit Reporting Act applies only to consumer reports provided by consumer reporting agencies. It generally exempts a bank's disclosure of its customers' account records. Moreover, a 1996 amendment to that Act has weakened the restrictions on transfers of financial information among persons related by common ownership or control. State law is also inadequate, because the vast majority of states lack laws which establish any meaningful restrictions on banks disclosing customers' records to non-governmental entities.