NU Online News Service, June 8, 2004, 5:54 p.m. EDT – Federal agencies have proposed a set of rules that would regulate financial institutions’ disposal of consumer credit information.[@@]
The Federal Deposit Insurance Corp., the Federal Reserve System, the Office of the Comptoller of the Currency and the Office of Thrift Supervision have drafted the rules to help banks and savings institutions comply with the Fair and Accurate Credit Transactions Act of 2003.
The rules would not apply directly to life insurers, but they would apply to life insurers’ bank and thrift affiliates and subsidiaries.
The 4 agencies proposing the rules, which have developed a common set of interagency guidelines for protecting and disposing of customer information, are updating the guidelines to require each affected financial institution to use similar precautions when disposing of consumer information, according to a discussion of the proposed rules that appears today in the Federal Register.
The agencies have suggested changing the interagency guidelines by adding a definition of “consumer information,” adding the proper disposal of consumer information as an objective and adding a provision that would require a financial institution to dispose of consumer information in a manner consistent with the procedures used to dispose of customer information.
The term “consumer information” refers to financial information about prospects and people who communicated with a company but ended up taking their business elsewhere as well as information about a company’s customers, agency officials write in the Federal Register discussion.
The proposed rules define “consumer information” to mean “any record about an individual, whether in paper, electronic, or other form, that is a consumer report or is derived from a consumer report and that is maintained or otherwise possessed by or on behalf of the [institution] for a business purpose,” officials write.
The term “consumer information” would include “any record about an individual?that is a consumer report or is derived from a consumer report,” agency officials write.
The definition would exclude information derived from consumer reports that does not identify particular consumers, such as the average credit score for a group of loan applicants.
The proposed rules do not describe proper methods of record disposal, agency officials write.
But “the agencies expect institutions to have appropriate disposal procedures for records maintained in paper-based or electronic form,” the officials write.
The officials warn that financial institutions will have to use special methods to eliminate any “residual data” that might survive ordinary efforts to erase data from computer record storage systems.
The text of the proposed regulation is on the Web at http://www.regulations.gov/fredpdfs/04-12317.pdf
Members of the public can submit comments about the proposed regulation at http://comments.regulations.gov/EXTERNAL/index.cfm?action=comment&docketId=04-12317