From Thursday's Congress Daily
LaFalce Letter Asks Review Of Financial Privacy Notices
House Financial Services ranking member John LaFalce, D-N.Y., is urging federal regulators to undertake an "immediate review" of the clarity and wording of customer financial privacy notices to determine whether the privacy rule needs to be revised to make those notices "more conspicuous and more supportive of Congress' intent that consumers understand and exercise their privacy rights." LaFalce has drafted a letter to that effect to the heads of all the major federal financial regulators, including Treasury Secretary O'Neill and Federal Reserve Chairman Greenspan, but had not sent it at presstime because he was in the midst of collecting signatures from his Democratic committee colleagues. Financial institutions have until July 1 to inform customers of their privacy rights and options in adherence with the 1999 Gramm-Leach-Bliley banking deregulation law. In the letter, a copy of which was obtained by CongressDaily, LaFalce said those notices "are critical to how well consumers understand the privacy protection practices of their financial institutions, their rights regarding their personal financial information, and how they can exercise those rights." However, a review by his own staff of a large number of privacy notices "generally confirms" that the privacy notices are "overly complex, difficult to read and understand and designed to discourage consumers' exercise of their privacy rights," LaFalce said.
Moreover, he added, many notices have key sections "printed in 7- or 8-point type that is too small to be easily read by middle- aged eyes and almost impossible for the elderly to read without the assistance of a magnifying glass." As for the actual wording, LaFalce said "most of [it] . is ponderous and legalistic." But of greatest concern, he added, is the "general tone" of many notices "that minimizes the importance of the consumer's opt-out right, and the use of wording that appears to thwart Congress' intent that consumers understand and be able to readily exercise this important right." Noting that the development of financial privacy rights "is a new experience for both Congress and the financial regulators . [i]t would be unreasonable to expect that any initial effort could produce the ideal approach," he said. In addition to asking the regulators to "initiate an immediate review of the complaints consumers are expressing about the privacy notices and opt out procedures," LaFalce also has requested agency heads direct their staff "to take these and other concerns into account as they begin examining institutions for privacy compliance."
- by Pamela Barnett