WITH THE CLOCK running down on the Nov. 13 implementation of the Financial Services Modernization Act (FSMA), three lawsuits have been filed to prevent the Federal Trade Commission from defining names, addresses and phone numbers as financial information.
This so-called credit header data would be included in the opt-out process, potentially limiting the availability of such data to information services companies.
In September, Chicago-based Trans Union LLC’s lawsuit followed similar legal actions this summer by information service bureau Experian and the Individual Reference Services Group (IRSG), an industry organization based in Washington.
“Our position is basically that the credit header information is identifier and not financial [data],” says Experian spokesman Donald Girard. “We’ve been using it since 1993, and we are confused by the new interpretation that came out in May.”
What has these three entities in a tizzy aren’t the original provisions of the act, but rather a series of interpretations rendered by the FTC known as the “final rules.”
Nestled within the FSMA is a bomb of a phrase: non-public personal information. The bill also refers to it as personally identifiable financial information.
This, according to Trans Union and IRSG court papers, was nebulously defined in the act as any data provided to a financial institution by a consumer, or resulting from a transaction between the consumer and the institution, or otherwise obtained by the institution.
In May, the FTC issued its final rules, which stated that credit header information – such as name, address and telephone number – was considered to be financial information.
Girard said that Experian filed its suit separately because it operates under a 1993 FTC consent decree in direct conflict with the commission’s Final Rules. Issued to company predecessor TRW, it stipulates that credit header information is acceptable for use.
The plaintiffs’ position is that this data is public information. “We have not changed our operation in the last seven years. What has changed is the interpretation,” Girard says.
Counsel for Trans Union declined to comment on the case.
The papers further hold that the FTC did not justify its position as to why it included credit header information as part of the regulation.
As written, the FSMA requires direct marketers to disclose their privacy policies regarding sharing of all consumer information, both with affiliates and third parties.
It also says that marketers must let consumers opt out of sharing non-public personal information with unaffiliated third parties. In addition, they must issue notice of their privacy policies when parties become customers.
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