Barton Criticizes Privacy Provisions in Financial Services Bill
The personal privacy protection provisions in a bill to overhaul the financial services industry were severely criticized before a Congressional subcommittee in hearings this week. The strongest attack came from Richard A. Barton, the Direct Marketing Association’s senior vice president for Congressional Relations.
A strict reading of the amended Financial Service’s Act’s privacy provisions “would compromise the accuracy” of direct marketing and telemarketing; undermine consumer choice; and “hurt a very important sector of the American economy,” Barton said in testimony before the House financial institutions subcommittee, chaired by Rep. Marge Roukema (R-NJ).
Prohibiting financial institutions from sharing bank and credit card information with direct marketers and telemarketers Barton said “would severely limit the use of information that in encrypted or other encoded form is an important tool for marketers to ensure the accuracy of their data, assist customers and businesses in making safe and secure transactions, and protect against fraud and theft.”
Normally when this type of data is provided for direct marketing and telemarketing purposes, he explained, “it is done in encoded form so that the data cannot be read or understood by just anyone” and the encoded data is rarely, if ever seen by the people who prepare direct mail or make telemarketing calls.
Barton noted that many of the other privacy protections in the bill including a ban on the sharing of a person’s non-public information with non-affiliated third parties, is in line with the DMA’s self-regulatory policies.
Roukema called the hearings to determine what changes should be made in the bill, which is now before House and Senate conference committee. The bill is called H.R.10 in the House and S.900 in the Senate. The two versions differ slightly.
Federal Trade Commission Chairman Robert Pitofsky and other high-ranking federal officials, called for a number of clarifications to be made in the privacy section of the bill relating to the sharing of information by financial institutions with their affiliates and the role of their agencies in enforcing the act’s privacy provisions.
