Washington, DC - Saying a proposed reauthorization of the Fair Credit Reporting Act would "deny American consumers basic privacy protections," U.S. Senators Barbara Boxer and Dianne Feinstein (D-Calif.) today called upon their Senate colleagues to close loopholes that would permit "mega-corporations" to share extremely personal information among their affiliates.

In addition, Senators Feinstein and Boxer announced that they would oppose any time limitations for consideration of such new legislation and that they will "exercise all their options" to prevent the measure from being attached to an omnibus appropriations bill.

Citing limited time left in this session of Congress, the two California Senators suggested that the Senate approve a 1-year reauthorization of the existing Fair Credit Reporting Act (FCRA) instead of considering new legislation to overhaul the credit reporting system.

One of the critical issues that the Senators believe need to be debated is the sharing of sensitive, personal information between unrelated corporate affiliates. Under current federal law, financial institutions are permitted to share "transaction and experience" information with affiliates without restrictions. Senators Feinstein and Boxer believe, however, that citizens of all states should have the right to opt-out of affiliate sharing, similar to the protections found in the bill recently signed into law in California.

Earlier this year, Senators Feinstein and Boxer announced plans to offer an amendment that would give consumers this right.

In a letter to their Senate colleagues, Senators Feinstein and Boxer wrote: "We have grave concerns about proceeding to the National Consumer Credit Reporting System Improvement Act of 2003 and to suggest an alternative to what will surely turn into a lengthy and contentious Floor debate over this bill and amendments to it.

This bill, in its current form, would deny American consumers basic privacy protections. It allows huge conglomerates, with just limited restrictions on marketing, to freely share vast quantities of personal customer information with their affiliated partners even if a consumer asks that the information not be shared. To make matters worse, the bill permanently preempts states from taking stronger action.

We are particularly dismayed that financial institutions negotiated and signed off on a resolution to this issue in California, and are now trying to preempt the law with national legislation.

To ensure that we have the opportunity to fully and fairly debate the bill, we intend to oppose any time limitations on Floor consideration. We also want to make it clear that our concern with the legislation not only involves affiliate sharing, but a number of other substantive topics.

The following are just some of the areas where we believe the current bill is inadequate and requires amendments.

• National Opt-Out for Affiliate Sharing: We intend to offer an amendment to give consumers the opportunity to opt-out of the sharing of their information among unrelated affiliated companies.



• Health Privacy: While the bill purports to protect medical information, whole categories of medical information are not covered such as the medical data collected by financial or insurance companies directly from consumers (for example, data from insurance applications). We will offer an amendment to ensure sensitive consumer medical information is truly protected from unwanted disclosure.



• Social Security numbers: This bill has some provisions to combat identity theft like free credit reports and fraud alerts, but it fails to address a root cause of the problem - the theft and misuse of Social Security numbers. Senator Feinstein will offer an amendment to prohibit the sale of Social Security numbers to the general public, remove the numbers from identification cards people carry in their wallets, and make sure that any free credit reports given to consumers have the consumer's Social Security number redacted.



• Protection for Consumers from Affiliates Sharing Erred Information: The amendment would require financial institutions to notify consumers if they make an adverse decision based on information they received from an affiliate, grant the consumer access to that information, and give him/her the opportunity to correct the information if it is flawed. Access to information used to deny credit and the right to correct that information exist for consumers under the FCRA when an institution get information from a credit bureau.

• Marketing Loophole: The Banking Committee-passed bill has a provision that allows consumers to direct companies not to share their sensitive information among affiliates for marketing solicitations (opt-out). This provision has several serious loopholes, which we propose to close. Most notably, the bill prevents a customer from opting out if the company has a "pre-existing business relationship" with the consumer. "Pre-existing business relationship" is undefined, which means a bank could be exempted from the opt-out if the consumer conducted a transaction with the company five years ago.

Identity Theft Penalty Enhancement: We will offer an amendment enhancing sentences by two years when anyone commits identity theft in order to facilitate other serious crimes like firearms violations or immigration violations. The sentence enhancement goes up to five years if anyone engages in identity theft to commit a terrorist act. This legislation has previously passed the Senate, and is currently pending in the House.

We would ardently oppose any efforts to attach this legislation to an Omnibus appropriations bill, and will exercise all our options to prevent such an effort. At the same time, we recognize that the Fair Credit Reporting Act expires on December 31, 2003. To avoid unnecessary disruption to the operation of the Senate, we propose an interim measure of extending the Fair Credit Reporting Act by one year. This extension would allow the Senate to fully debate the merits of the legislation early next year without the constraints forced on all of us by the end of the Session."

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