A groundswell of state and federal regulatory measures related to consumer privacy appears imminent despite the lack of consensus between business and consumer groups.
Alabama state Sen. Lowell Barron introduced financial privacy protections this week. Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group, Washington, said he hopes actions at the local level will force federal lawmakers to take the lead. The same legislation was characterized by Matthew McDonald, an attorney at the Alabama Retail Association, as being “a crude, blunt instrument,” one that will cause “business and commerce [to] stop literally dead in its tracks.”
The Clinton administration this week reiterated its intention to add more provisions to federal banking reform and financial privacy protection legislation passed late last year – a move sure to reignite harsh rhetoric among leaders in the banking services industry.
“As the president has indicated, our new proposals will address information sharing within financial conglomerates,” said Gary Gensler, undersecretary for domestic finance. “We are also looking at a range of other options, again with the desire to find balanced proposals that will both enhance privacy protection and allow financial institutions to provide quality services.” He said the Clinton administration will consult with lawmakers at both the state and federal level.
The House this week passed H.R. 2086, the Networking and Information Technology Research and Development Act, which authorizes the National Science Foundation to begin researching the feasibility of developing technology and standards for the protection of consumer transactions and privacy on the Internet. The investigation will include an analysis of the policies, laws and practices that have been passed or are being formally considered in other industrialized countries.
The privacy debate also has lead to serious concerns among technology experts who claim overly draconian legal measures may thwart innovation of new products only marginally connected to people’s personal information.
“A number of the current online privacy bills could cripple the development of smaller Internet appliances,” said Mark Uncapher, vice president and counsel for information services and electronic commerce at the Information Technology Association of America, Washington. He predicted some products containing personal information that don’t have the display capability of PCs – such as smart cards or cell phones – may be required to communicate clear and conspicuous notices of their contents to consumers. “It makes sense for the National Science Foundation to look at how such proposals could impact the future of the Internet,” he said.
A challenge for policy-makers, however, is that technology is becoming inextricably linked to consumers’ personal information, their financial transactions, and the commercial institutions responsible for safeguarding them.
As Gensler noted at the Treasury Department, “Americans want the ability to earn, invest and spend their money without having to expose their lives to those who process their transactions. Just as they would not expect a letter carrier to read their mail or record their correspondence, they do not expect a bank processing a check to record, store and evaluate their personal behavior.” He said that additional consumer choice should be provided as part of protecting financial privacy, but that “consumer choice for sharing with third parties should be a floor, not a ceiling.”
