Proclamation: Plan to Enhance Consumers Financial Privacy

Office of the Press Secretary

For Immediate Release May 1, 2000

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President Clinton today, in his commencement address to Eastern Michigan University graduates and their families, announced a new legislative proposal to protect the financial privacy of American consumers. This proposal, which the Administration will send to Congress next week, fulfills the promise that the President made on November 12, 1999, when he signed historic legislation modernizing our financial system. While that bill took significant steps to protect the privacy of our financial transactions, the President made clear upon signing that he did not believe the protections were strong enough. He directed the NEC, Treasury Department, and Office of Management and Budget to develop a new legislative proposal. Setting out the theme of today's proposal, the President said at the time: “We cannot allow new opportunities to erode old and fundamental rights.”

PRESIDENT CLINTON AND VICE PRESIDENT GORE BELIEVE THAT WE MUST KEEP OUR PRIVACY PROTECTIONS AS UP TO DATE AS OUR NEWEST TECHNOLOGY: Breakthroughs in technology should not break down the walls of privacy. Special protections are needed for Americans' most sensitive information – about health, children, and our personal finances. The Clinton-Gore Administration has taken steps to enhance privacy for medical information and for children on the Internet. Today, President Clinton and Vice President Gore challenge Congress to provide Americans with comprehensive financial privacy protections.

· Consumer choice: Give consumers the right to choose whether a firm can share consumer financial information with third parties or affiliated firms.
· Enhanced protection for especially sensitive information: Require that a consumer give its affirmative consent before a firm can:
· Gain access to medical information within the financial conglomerate; or
· Share detailed information about a consumer's personal spending habits.
· Access and Correction: Give consumers a new right to review their information and correct material errors.
· Effective enforcement: Provide effective enforcement tools for financial institutions subject to FTC enforcement of privacy rules.
· Comparison Shop on Privacy Policies: Give consumers privacy notices upon application or request, so they know how information is protected before a customer relationship is established.
· Study Privacy Issues Raised by Bankruptcy Data: The President directed a study of the privacy impact of electronic availability of detailed bankruptcy records, containing financial information of vulnerable debtors.

PROTECTING FINANCIAL PRIVACY FOR AMERICAN CONSUMERS WHILE REAPING THE BENEFITS OF TECHNOLOGY, COMPETITION, AND INNOVATION: The financial services industry has changed dramatically in recent years, due to greater integration of banking, securities and insurance firms, new technologies that speed and expand access to information, and growing reliance on electronic payments systems (credit cards, debit cards, and even so-called digital wallets (on-line accounts that pay for purchases and bills) instead of cash. Such innovation has helped provide consumers with added convenience, lower prices, and more choices.

The challenge is to take advantage of these benefits without threatening privacy. The Clinton-Gore Plan strikes the right balance between the need for consumer privacy protection and the benefits that information sharing can provide to consumers and the economy. Firms will be able to share information to serve customers needs in new and innovative ways -- for example, through customized statements and call centers that include all of a customer's accounts. Firms' risk management practices also will be unaffected, which will also benefit consumers: lower losses mean lower prices for everyone in the financial system.


· Consumer Choice: Consumers should have meaningful choice -- the opportunity to opt-out -- before a financial services firm can share their private financial data with anyone. Last year's financial modernization legislation granted important rights to opt-out of information sales to telemarketers and other unaffiliated firms. Today's proposal extends those protections to information shared within financial conglomerates. The plan also closes an unnecessary exception for "joint marketing" from last year's bill. We will preserve, however, financial firms' ability to share the information that they need to develop new products and manage their risks, subject to appropriate confidentiality and reuse limitations.

· Enhanced Protection for Especially Sensitive Information:

· Affirmative Consent Before Sharing Medical Information: A consumer applying for a loan or other financial product should not have to worry that the lender is making decisions based on personal medical records received from an insurance affiliate. The Clinton-Gore plan will ensure that companies would not gain any special access to insurance medical records by being part of a financial holding company. The consumer would be required to affirmatively consent (“opt-in”) before any financial firm could receive medical information from a life insurance company or other affiliate.

· Affirmative Consent for Personal Spending Information: Just as we do not expect a postal worker to read our mail, we do not expect a bank processing our checks or credit card payments to take our most sensitive financial information and share that information with others. Under the Clinton-Gore plan, a financial firm will not be permitted to transfer individualized, personal spending habits (where we spend our money, where we earn our money, and what we buy) unless a customer affirmatively consents.

· The Right to Access and Correct: As financial conglomerates collect more and more data about us, it is increasingly important that consumers have the ability to review that information and correct material errors. Expanding on a protection already provided for credit reports, the Clinton-Gore plan would allow a consumer to ensure that firms are not deciding whether to offer them products or special services based on mistaken information about their financial status.

· Effective Enforcement: The Clinton-Gore plan makes these protections fully enforceable against banks and other regulated financial institutions. For institutions not subject to bank, securities, or insurance regulation, the Administration proposes to provide the FTC with clear authority to seek monetary damages and to grant State Attorneys General the authority to work with the FTC to halt deceptive practices by those institutions.

· Allow Consumers To Comparison Shop: Consumers concerned about their privacy should be able to choose the firm that offers the best protection. But today, consumers often get privacy policy information after they have already decided to do business with a firm. The Clinton-Gore plan would enable consumers to learn about any firm's privacy practices up front, before committing to a customer relationship.

· Study of the Privacy Needs of Vulnerable Debtors in Bankruptcy: Bankruptcy records contain detailed sensitive information about debtors (including account numbers, social security numbers, account balances, income sources, and payment histories). Aggregation and electronic distribution of this information could lower bankruptcy costs, but it also could make information easily available to neighbors, employers, marketers and predators looking for those most likely to be lured by scams. The President today directed the Departments of Justice and Treasury and the Office of Management and Budget to conclude a study this year on how best to handle privacy issues for sensitive financial information in bankruptcy records.


Rapid changes in technology, and the vast increases in access to information that they make possible, are enormously important to our future prosperity. To ensure that such growth is consistent with our core values including privacy, Vice President Gore announced an Electronic Bill of Rights in 1998, calling for private sector leadership where possible, on legislation when necessary, on responsible government handling of personal information, and on an informed public. Today's announcement continues the great progress already made toward achieving those goals. The Administration continues to encourage self-regulatory efforts by industry to address privacy issues posed by emerging technologies. But, as the Vice President underscored in 1998, certain medical, financial, and other information is so sensitive that legal protections are needed.

· Medical Privacy: Last year, the Clinton-Gore Administration announced historic proposed rules that would legally guarantee the key privacy protections: notice of data uses; consent before records are used for non-medical purposes; patient access to records; proper security; and effective enforcement. Final rules will be issued later this year.

· Children's On-line Privacy: The Administration worked with Congress to pass the Children's Online Privacy Protection Act of 1998. Rules went into effect this month to ensure that web sites aimed at children will not gather personal information except with the consent of the parents.

· Genetic Discrimination: In February, the President issued an Executive Order that prohibits federal agencies from using genetic information in hiring and promotion. He also called on the Congress to ensure that these same rights apply to employees in the private sector and to individuals purchasing health insurance.

· Government Privacy: The President and Vice President believe that the Federal government must also continue to build privacy protections into its own activities. All Federal agencies now have privacy policies clearly posted on their web sites, and we are making privacy impact assessments a regular part of the development of new government computer systems.

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