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Inslee listens to a constituent.

Montage of Wing Point in Bainbridge Island and the Edmonds Ferry.

Jay Inslee: Washington's 1st Congressional District

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Protecting Your Privacy

Frequently Asked Questions on Banking Privacy

Q: What is the current law with regard to financial privacy?

Under current law, banks and financial institutions must disclose their intention of providing certain consumer information to outside sources for marketing purposes and give consumers the right to "opt-out" of this marketing plan; but there is a huge loophole in the law, as described below.

Q: This sounds great, so what’s the problem?

Unfortunately, current law exempts "transaction and experience" information from the disclosure and consent agreement. "Transaction and experience" information can include:

Q: So, there is no law that prevents financial institutions from sharing my banking "transaction and experience" as defined above? Even when I specifically ask them not to?

That is correct. Legally, banks can share and sell your "transaction and experience" information even if and when you ask them not to share your information, unless you have a contract with the bank that says otherwise.

Q: This sounds like a huge loophole in the law. How is this information used?

This information can be used in a variety of ways. Banks can profile their customers and provide lists to third parties (telemarketers) that fit certain demographic targets.

For example: a bank could easily search their database to find a group of people that live in a particular area code, make a certain amount of money, and get paid on the first of the month. Then the bank can use that information to market products to those consumers at the exact time when they have the money to make the purchase.

Moreover, banks can create targeted profiled lists of their customers, and make that list available to telemarketers for services and products that don’t even relate to banking services.

Q: How can I get myself removed from such lists?

You can’t, unless the bank consents. Although many banks will respect their customers’ wishes, there is no law that requires this to be done.

In fact, there is no requirement that banks have to even tell you when your information has been shared or even sold to an outside company or interest. Your information is up for sale, and may be sold or shared without your knowledge or consent.

Q: There ought to be a law!What’s being done about this problem in Congress?

U.S. Rep. Jay Inslee, along with several of his colleagues, has been working on legislation to give consumers control over their own information. U.S. Rep. Inslee introduced legislation, H.R. 1929, to require banks to disclose their privacy policies to their consumers, and to give consumers the right to say "no" to any sharing of that information.

U.S. Rep. Inslee offered an amendment to H.R. 10, the Financial Services Modernization Act, in the Banking Committee to force banks and financial institutions to disclose their privacy policies to their consumers and to give consumers the right to say no to the sharing of that information. The Republican Chairman of the Committee offered a substitute amendment, ghostwritten by banking lobbyists, that would have required disclosure of privacy policies, but would not provide consumers the right to say no. The substitute amendment passed the Banking Committee.

When the House of Representatives debated H.R. 10 on the floor, U.S. Rep. Inslee and his like-minded colleagues tried to offer a stronger privacy amendment to the final version of the bill. The Republican Rules Committee refused to allow the amendment to be offered. Inslee led a fight on the floor to adopt strong privacy language and forced the House to consider a stronger privacy protection amendment, but one still short of U.S. Rep. Inslee’s position. The final privacy amendment that passed the House would require banks and financial institutions to fully disclose their privacy policies to their customers, and would provide customers the right to "opt-out" of any information sharing plan with third parties.

Q: That sounds great. So we finally have the chance to say no to the sharing of our information?

This was a solid step forward for consumers, but there is still more work to be done. The fight for more comprehensive consumer privacy protection is not over. H.R. 10 must pass the Senate, where we expect the Senate to try and weaken the privacy language. The compromise language also leaves a huge loophole for banking affiliates and operating subsidiaries of financial institutions.

Q: What does that mean?

It means that while customers have control over how their information is shared with outside parties, banks can still freely share the information with other companies under the same corporate umbrella. If your bank and your insurance company merge, there is nothing to prevent your personal medical and financial information from being shared between these affiliated companies. Also, H.R. 10 would still allow banks to contract with third parties to provide services offered by the bank.

Q: What are you going to do about it?

U.S. Rep. Inslee continues to push for inclusive, comprehensive privacy protections for consumers. Inslee has introduced legislation on this topic (H.R. 1929) and will continue to be a privacy advocate as H.R. 10 moves forward and as other Banking related legislation is being discussed.

Q: How can I find out what my situation is?

First, contact your bank. Ask them what their privacy policy is. Ask them if they respect a customer’s right to opt-out of information sharing plans both within the affiliated structure and with third parties.

Second, contact your elected officials. There is legislation in the U.S. Congress and potentially, next year, in the Washington State legislature that would give consumers the right to control their own financial information. Tell your elected officials what you think they should do about banking privacy.