It pays to be the man in charge. A financial data privacy bill introduced last week by Rep. Patrick McHenry [R-N.C.], the chair of the House Financial Services Committee, was passed out of committee yesterday, and now moves to the full House of Representatives for its consideration. The bill seeks to amend the Gramm-Leach-Bliley Act by giving consumers the right to opt out of having data about them collected while creating a national standard for companies to follow.
A copy of the Data Privacy Act, H.R. 1165, can be accessed by clicking here.
If enacted, the bill would preempt state laws that have been put in place related to financial data privacy.
Financial institutions would be required to notify unaffiliated third parties when a consumer has terminated sharing of his or her data and required the third party to also cease sharing it as well. Institutions would be required to clearly and conspicuously notify consumers when account credentials are collected and how those credentials are used or shared, and give consumers an opportunity to have those credentials shared.
Among the talking points aimed at promoting the bill are:
- Modernizing the Gramm-Leach-Bliley Act Using a Technology-Agnostic Approach
- Putting Control Back in the Hands of the Consumer
- Data Minimization
- Informed Choice and Transparency
“Republicans are putting American consumers back in control of their financial data,” said Rep. McHenry in a statement. “As advances in technology bring greater access to our financial system, the amount of personal financial information collected on Americans also increases. The financial services sector is already highly regulated when it comes to consumer data. However, it’s critical that we bring our privacy guardrails into the 21st century to match the widespread adoption of financial technology. I’m proud to introduce this legislation to secure Americans’ private financial data, without strangling innovation.”
Consumer advocates are latching on to the preemption component of the bill, especially since GLBA applies to more than just financial institutions — it also extends to debt collectors. The National Consumer Law Center pointed out that the bill could preempt state medical debt collection laws that are going into effect as well as state privacy laws.
“The potential scope of preemption by HR 1165 is breathtaking,” said Chi Chi Wu, attorney at the National Consumer Law Center, in a statement.