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last updated on March 13, 2008

PRIVACY

FINANCIAL INFORMATION PRIVACY

THE ISSUE IS.Should privacy protection standards that exist for financial services institutions who divulge consumers' and customers' "nonpublic personal information" be uniform across the United States, and does the current standard adequately protect consumer privacy as well as the consumer's right to make individual decisions?

IT'S IMPORTANT BECAUSE.Financial information privacy remains a controversial and politically significant issue. The continued attention on privacy is leading to increasingly restrictive and inconsistent laws that will ultimately limit consumer choices and benefits.

Identity theft is the fastest growing crime in the country and with the highly publicized security breaches, regulators have opened investigations into the data security failures. The Federal Trade Commission estimates that 10 million Americans fall victim to identity theft year, therefore costing consumers and businesses more than $55 billion annually.

Financial information privacy remains a controversial and politically significant issue. The continued attention on privacy is leading to increasing awareness of the vulnerabilities of companies and their affiliates.

The highly publicized security breaches have led the Congress to consider ways to reduce the frequency of such breaches and to ameliorate the adverse impact on those persons whose personal information has been compromised. Congress has been studying the issue and looking at ways to address such issues as: 1) what breaches should trigger notifying customers, i.e. any unauthorized disclosure or disclosures that could lead to malfeasance such as identity theft; 2) should there be state functional regulation or if not, which federal agency should have jurisdiction to enforce notifications; and 3) will federal legislation preempt state laws?

NAMIC POSITION.NAMIC supports legislation that would establish a national standard for notifying consumers when a security breach has occurred and it is likely that the information will be misused. It is also important to ensure that any legislation does not create a burdensome process on either the financial institutions or consumers.

NAMIC also supports the privacy provisions contained in the Gramm-Leach-Bliley Act (GLBA) as well as the Fair Credit Reporting Act (FCRA). NAMIC believes that consumers deserve to know that the "nonpublic personal information" they submit to a financial institution, including an insurance company, will not be used in an inappropriate manner or obtained by any unauthorized person(s). However, NAMIC recognizes that, despite the best intentions and provisions contained in GLBA and FCRA, identity theft has become the fastest growing crime in the United States.

SOCIAL SECURITY NUMBER PRIVACY

THE ISSUE IS.Legislation to prohibit the display of Social Security numbers by government agencies and the private sector.

IT'S IMPORTANT BECAUSE.Over the past few years, the incidence of identity theft has been rising. This increase is largely due to the fact that it is relatively easy for individuals to access other people's Social Security numbers. In an effort to reduce identity theft and to protect the privacy of individuals, several members of Congress have sponsored legislation to restrict the use and display of Social Security numbers by government agencies and private entities. Many in the business community argue that it is important for companies to continue to have access to Social Security numbers for legitimate purposes such as the transmission of credit reports. Insurers argue that prohibiting state governments from using Social Security numbers would make it much more difficult to access driver records for underwriting purposes. Some members of Congress are receptive to the idea of allowing the use of Social Security numbers for legitimate purposes, and it is important for any legislation to be carefully crafted to allow necessary access while protecting individuals' privacy.

NAMIC POSITION.NAMIC believes that measures should be taken to reduce identity theft. Identity theft is a crime that causes tremendous expense for individual victims and the economy each year. It is important for certain entities to be able to continue to use Social Security numbers for legitimate business purposes such as transmitting credit reports for major financial transactions and accessing driver records for insurance underwriting purposes. Requiring governments and business to create other individual identifiers to use instead of Social Security numbers would be extremely expensive. NAMIC will work with Congress to find ways to prevent fraud and to protect the privacy of individuals while making sure that information is available for legitimate purposes that will ultimately benefit consumers.