Draft FCRA Reauthorization Could Limit Companies Marketing Efforts
Marketing efforts of financial institutions could be limited under a draft Fair Credit Reporting Act reauthorization currently pending in the Senate.
The draft, which is still subject to change, would impose new limitations on financial institutions that share customer information among affiliates for solicitation and marketing purposes.
Under these proposed new limits, financial institutions would have to provide their customers with clear and conspicuous disclosure that their personal financial information may be communicated among affiliates for solicitation and marketing purposes.
In addition, financial institutions would have to provide their customers with an opportunity and “simple method” for prohibiting any solicitation or marketing.
The federal banking agencies and other federal government agencies would develop regulations to implement the new limitation within six months after the enactment of the act. The regulations would become effective three months after they are issued.
In addition to the marketing limitation, the draft calls for a federal government study of the information-sharing practices of financial institutions.
The study would focus on the purposes for which institutions share information, the types of information they share with affiliates and the choices available, if any, to consumers that allow them to control information sharing.
Moreover, the study would examine the extent to which financial institutions use shared information for the purpose of making underwriting decisions.
Catherine Willis, director of government relations with the Des Plaines, Ill.-based National Association of Independent Insurers, a large property-casualty trade group, says the proposed marketing and solicitation limitation is overly broad.
There are few definitions associated with the limitation, she says, and moreover, the nine-month compliance deadline will be impossible to meet.
Willis says the staff of Senate Banking Committee Chairman Richard Shelby, R-Ala., is working on some of these technical problems.
An FCRA bill approved recently by the House, H.R. 2622, does not contain the marketing and solicitation language.
Banking Committee consideration of FCRA reauthorization originally was scheduled for Sept. 18. However, because Congress shut down due to Hurricane Isabel, the committees session was rescheduled for Sept. 23.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 19, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.