Congress introduces new legislation to protect consumer dataMortgagePress.comConsumer data protection
Two bills, HR 3374 and HR 3375, have been introduced in the U.S.
House of Representatives to increase protections for consumer
financial data.
HR 3374, also known as the Consumer Notification and Financial
Data Protection Act of 2005, would require financial institutions
to maintain reasonable procedures and policies to protect sensitive
consumer financial information. In addition, financial institutions
that become aware of an actual or possible breach of data security
would be required to conduct an investigation. Upon conclusion of
that investigation, if the financial institution determined that
the security breach may result in harm or substantial inconvenience
to any consumer, the financial institution must:
†Promptly notify appropriate law enforcement
agencies;
†Promptly notify the institution's regulator;
†Take measures to restore the security of the information
involved in the breach;
†Take measures to prevent further breaches;
†Notify all critical third parties necessary to investigate
the breach further or to take further actions to protect the
information; and
†Notify each consumer whose information was involved in the
breach.
The disclosure to the consumers would be required to include the
date of the breach, a description of the financial institution's
actions to restore security, a toll-free telephone number where the
consumer may obtain additional information about the breach, a
description of the information accessed and a summary of rights for
victims of fraud or identity theft. Finally, a financial
institution required to notify a consumer about a breach of
financial data would be required to provide each consumer with free
credit monitoring services for a 12-month period upon the
consumer's request.
HR 3375, also known as the Financial Data Security Act of 2005,
would amend the Fair Credit Reporting Act (FCRA) by adding section
630, entitled "Data Security Safeguards" to FCRA. The proposed
legislation is similar to HR 3372, but places the duties on a
"consumer reporter," which would include a consumer reporting
agency, as defined by FCRA. The bill would grant a safe harbor
provision for organizations that comply with and are subject to the
regulations and guidelines issued in accordance with the
Gramm-Leach-Bliley Act.
Both bills have been referred to the House Committee on
Financial Services.
For a copy of HR 3374 or HR 3375, visit www.house.gov.
