The House Financial Services Committee recently passed a bill which would create a national consumer data privacy standard.
The bill, which passed the House Financial Services Committee by a 26-21 vote on March 1, would require entities to disclose to consumers why they are collecting their data, and only use that data for its stated intention. The legislation, intended to modernize a section of the 1999 Gramm-Leach-Bliley Act, would allow consumers to opt out of data collection, if it is deemed unnecessary for the product or service the provider is offering. Consumers could also ask providers to delete the data they have collected.
“We know this data can help inform the development of new products or ensure an entity can better serve its customers — but it is critical that this personal financial data is appropriately protected,” said Financial Services Committee Chair Patrick McHenry (R-N.C.). “As with most issues in the financial system, we need to balance fostering innovation with protecting consumers.”
Minnesota Bankers Association General Counsel Tess Rice noted the bill does not have a hearing scheduled, has no Senate companion bill and is unlikely to move forward this session.
During a Financial Services Committee hearing last month, Ranking Member Maxine Waters (D-Calif.) said the bill would preempt state laws that already offer tougher consumer protections and prevent states from adopting new safeguards in response to future technological advances.
“Republicans often like to tout the importance of empowering states to make decisions and to be the laboratory for innovation, but when Wall Street or payday lenders come knocking, Republicans are quick to preempt any state law that provides greater protections for their constituents,” Waters said in an American Banker article.
Iowa Bankers Association President and CEO John Sorensen said he supports having an overarching national standard to avoid states having a patchwork of requirements. The American Bankers Association also supports the provision but cautioned that the opt-out amendment could be changed to require bank customers to affirmatively consent to providers collecting personal data.
The Consumer Bankers Association supports the bill. “As the banking industry rapidly evolves, Congress must take steps to ensure all Americans receive the high level of protections they deserve and have come to expect from their bank, regardless of where they live or go,” said President and CEO Lindsey Johnson. “CBA applauds Chair McHenry for advancing legislation that would further this shared objective by establishing uniform national standards for consumer data privacy.”