Eliminate Privacy Notice Confusion Act

Floor Speech

By:  Brad Sherman
Date: Dec. 3, 2012
Location: Washington, DC

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Mr. SHERMAN. I yield myself such time as I may consume in support of H.R. 5817, the Eliminate Privacy Notice Confusion Act. I want to thank Representative Luetkemeyer for his work in introducing this bill. I've enjoyed working with him on it.

Madam Speaker, this is commonsense legislation that makes a minor change to our banking laws to revise a very costly and unnecessary requirement that financial institutions such as banks and credit unions and other depository institutions must send each of their customers a copy of their privacy policy every year, even when that policy hasn't changed from the prior year when they got the same exact privacy notification. For banks, credit unions, and other financial institutions of all sizes, this means spending a small fortune to reprint millions of complicated and long documents, then mailing them to every consumer, even when there's been no change in the policy.

It is disadvantageous not only because of the time and cost in mailing these--and the trees that are no doubt consumed--but also because customers have no way to separate the wheat from the shaft. They're getting these notices every year from every financial institution with whom they have dealings without any indication as to whether there's been a change from the privacy policy that they received just a year ago. By sending out less, we attract attention to those situations where there's been a change in the privacy policy.

Our bill makes a simple fix to this problem, requiring financial institutions to provide their customers with this additional notification only when there's been a change that affects the policy or practice as it relates to that consumer. As a result, consumers will know that the privacy notices that arrive in their mailbox actually require their attention. And banks, credit unions, other financial institutions that have been spending millions of dollars to mail out duplicative notices and redundant notifications each year can redirect those savings back to providing for the consumer, to their community, or to loans to help our economy grow.

Madam Speaker, I want to thank, as I did at the beginning of my presentation, our colleague and chief sponsor of this bill, Representative Luetkemeyer of Missouri, and thank him for his leadership on this issue. I also want to thank our long-time colleague, ranking member of our Financial Services Committee, Barney Frank, for his work in getting us to this point where we can consider this bill on the floor today.

I will, in short order, be asking for a recorded vote on this bill, not because it needs a recorded vote, but because I've been informed by my leadership that it's important to this House that we have time on the floor tomorrow to confer with each other on Members and that we have a sufficient number of recorded votes. So my colleagues should not interpret my request for a recorded vote as any statement that this bill is something we have to go on record on or that I would disagree with the outcome of any voice vote, but simply as an act of collegiality, showing that I think we ought to spend more time with each other on this floor tomorrow, and I know we will all enjoy that process.

With that, I reserve the balance of my time.

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Mr. SHERMAN. I'll take a minute to put into the Record the statements of Adam Levitin, a professor of law at the Georgetown University Law School, in support of this bill. He came before our committee in May of 2012 and stated ``there are unquestionably financial regulations that do little other than add to regulatory burdens.'' He cited, in particular, the provision that this bill addresses, and said: ``I would also urge the elimination of the privacy disclosure requirement even if there is no substantive replacement for it.'' But then he added: ``And, at the very least, eliminate the requirement of an annual disclosure when there has been no change to the policy.'' I couldn't agree more with the professor.

SMALL BANKS' REGULATORY BURDENS

While many small banks and credit unions believe that their regulatory burden is too great, it has little to do with the Dodd-Frank Act. Therefore, concerns about the regulatory burdens on small banks do not provide a good justification for altering or repealing provisions of the Dodd-Frank Act. If there is a problem with the burdens created by specific regulations, then by all means, we should reexamine those regulations and decide if they make sense.

There are unquestionably financial regulations that do little other than add to regulatory burdens. For example, the Gramm-Leach-Bliley Act/Reg P privacy disclosures create an ongoing regulatory burden for financial institutions, which have to craft their privacy policies and send annual disclosures to consumers, irrespective of whether there have been changes to the policies. Yet the benefits from these disclosures are at best small and likely non-existent or negative; few consumers read the policies, and they cannot be negotiated. Gramm-Leach-Bliley Act privacy disclosures instead substitute for meaningful substantive privacy protections. While I would urge Congress to consider more substantive privacy protections rather than mere disclosure that there are few protections, I would also urge the elimination of the entire Gramm-Leach-Bliley Act privacy disclosure requirement even if there is no substantive replacement, and, at the very least, eliminate the requirement of an annual disclosure when there has been no change to the policy.

Madam Speaker, I yield 4 minutes to the gentleman from Massachusetts (Mr. Markey).

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Mr. SHERMAN. I rise again in support of this bill, and I yield to no Member in terms of my dedication to privacy.

If this bill passes, you're going to get notification of what the privacy rules are when you start with the financial institution. You are going to get notified every time they make a change. And you are going to be notified any time of the night or day when you simply go onto the Web site and look at the required privacy notification.

When Gramm-Leach-Bliley was passed, not everybody had access to the Internet. I realize today not everybody does. But a much larger percentage of Americans are familiar with the Internet, have access to the Internet, and know that if they want to see the privacy notification, the privacy rules of their financial institution, it's there on the Internet in a way that most Americans are going to have easy access to.

The idea that you are mailed a copy of something you've already been mailed a copy of, which hasn't changed, that does little or nothing to provide additional privacy, except that we can say, Oh, we're for privacy.

If we want to protect the privacy of our constituents, we ought to do so in a meaningful way, not to simply say, The same thing you got a copy of a year ago today, which is available to you any time of the day or night, is something we're going to chop down some more trees and send you a copy of again. And that's the best idea we can come up with to protect your privacy.

I think, instead, we ought to pass this bill, know that we've given everybody a copy of the privacy policy of the financial institution on paper, that they get another paper notice if there's any change, and there is a continuous notice on the Internet every day of the year, every night of the year.

With that, I yield 1 minute to the gentleman from Massachusetts.

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Mr. SHERMAN. I thank the gentleman for his presentation.

I would be happy to cosponsor legislation to require an email notification once a year to every customer who's willing to provide their email address to the financial institution. There are some who would say, I don't want to give my email address to my financial institution. But to everybody who is willing to provide that email. I couldn't agree with you more. If this was done by email, it ought to be done at least annually.

I look forward to joining with the Members who are here in this room and are interested in requiring an annual email notification. I don't know if the sponsor of the bill would be interested in that. But I will join the gentleman from Massachusetts in legislation on that.

But let's act today to end the expensive and resource-consuming annual paper notification.

And with that, I reserve the balance of my time.

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Mr. SHERMAN. Madam Speaker, I yield myself such time as I may consume.

I would just state that I agree with the gentleman from Massachusetts, that we ought to require email notification of what the privacy policy is annually as a good compromise. I would hope that some of the others here on the floor would take a minute to comment on that, or I would yield to them. Obviously, such an email could be sent only to those customers who voluntarily provide their email address to the financial institution.

When you look at the idea of an expensive postal mailing using resources to provide an exact copy of something that was previously mailed in hard copy on paper to the same consumer a year earlier, on balance, that is not a good use of societal resources nor a good use of most consumers' time. I think the fact that these policies are up on the Web and available whenever somebody takes an interest in them is also important.

With that, I reserve the balance of my time.

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Mr. SHERMAN. I have no further speakers, and I yield myself such time as I may consume.

I would just add that there are many of us who are dedicated to privacy, but not every privacy requirement makes sense. Here's a case where people are notified on paper.

Finally, I want to address the gentleman from Massachusetts' comment that maybe when you were notified on paper your financial institution only had two or three subsidiaries and 10 years later they have several more subsidiaries with whom they may share information. The fact is that isn't disclosed in another copy of the financial institution's privacy policies. It may, in fact, be that your financial institution is offering more products, sharing your information with more subsidiaries. But voting down this bill is not a solution to that issue.

What is a solution is to have a policy where you have to send it in writing once, send it in writing when it changes, provide it on the Web. And I would join with others, I would hope, in introducing legislation requiring annual email distribution.

With that, I have no speakers, I have no further comments, and I yield back the balance of my time.

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Mr. SHERMAN. Will the gentlewoman yield?

Mrs. CAPITO. I yield to the gentleman from California.

Mr. SHERMAN. This bill was passed by the House as part of a package on March 8, 2006; this bill was pretty much in this exact form and was passed by this House June 24, 2008, as part of a package; then finally, as a separate bill, H.R. 3506 was passed by this House on April 14, 2010. So the House has a strong record of passing this legislation, and I hope we continue to do so.

With that, I thank the gentlelady for yielding.

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