New bill requires financial institutions to obtain customer permission to share data
Banks and financial institutions would be prohibited from sharing behavioral customer profiles without written permission under a bill introduced last month.
The Freedom From Behavioral Profiling Act of 2000, introduced by Sen. Richard Shelby (R-AL), also includes direct marketers, mass mailers and others. It amends the Financial Services Modernization Act, signed into law in December, that permits banks, insurance companies and securities firms to merge and to offer competing products to customers. It also increases consumer controls over the use and dissemination of personal financial information.
By plugging a loophole in that law, the bill provides consumers with a way to stop the dissemination of psychological and behavioral profiles based on personal and detailed buying habits without prior knowledge or approval, says Shelby, who is also a member of the Senate Appropriations Committee.
Shelby says the privacy protections in the financial services law are “porous and do not provide the consumer with sufficient information to make an informed decision, or the true ability to opt-out” from information sharing.
Requiring financial institutions to obtain customer permission before releasing personally identifiable data would enable those customers to control their “most personal behavioral profile, where they go, who they see, what they buy and when they do it,” he says.
While financial institutions could still track and record an individual’s spending habits for their own marketing purposes, some Capitol Hill observers believe the bill would put a crimp in the way the customer lists are used by direct marketers who rely on behavioral profiles when prospecting.
The bill has been referred to the Senate Banking Committee for review.
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