- The Washington Times - Wednesday, November 5, 2003

The Senate yesterday passed a bill allowing companies to continue sharing consumers’ personal financial information with sister companies and barring states from enacting tougher laws against the process.

The bill, sponsored by Sen. Richard C. Shelby, Alabama Republican, and approved by a vote of 95-2, updates and makes permanent the national credit-reporting standards. It gives consumers new protections against identity theft, but prevents tougher state laws in several areas. The current national standards expire at the end of the year.

The bill now must be melded with a version approved by the House.

Sen. Dianne Feinstein, California Democrat, said the bill sets a weak national standard for privacy and that states should be allowed to enact tougher regulations. She and fellow California Democrat Sen. Barbara Boxer voted against the bill, saying it would override their state law.

“What we have before the Senate today is a weak privacy standard built for business at the expense of consumers, which legislatures in all 50 states … are forever barred from improving,” Mrs. Feinstein said.

She offered an amendment that — like the California law — would have allowed consumers to “opt out” and prevent their information from being shared among sister companies related by common ownership, called “affiliates.” It was defeated by a 70-24 vote.

The bill does allow consumers to demand that affiliate companies not use their personal information to market to them. A proposal by Mrs. Boxer, adopted unanimously, clarifies that the consumer could opt out of unwanted marketing permanently.

But Mrs. Feinstein complained the bill still allows “vast quantities” of personal information to pass among companies, including information from check and credit-card payments, as well as bank and credit-card balances.

The regulations set to expire already allowed commonly owned companies to share such information and pre-empted tougher state laws.

Supporters of the legislation say the national credit-reporting standard has worked well, giving banks, retailers and financial institutions easy access to consumer financial reports and allowing quick service to mortgage and loan applicants.

“We must not sacrifice the efficiency of our credit system in the name of privacy,” said Sen. Elizabeth Dole, North Carolina Republican.

Mr. Shelby said the bill “reflects a careful balance between ensuring the efficient operation of our markets and protecting the rights of consumers.”

Sen. Paul S. Sarbanes, Maryland Democrat, helped craft the bill. He said the legislation is “important to millions of Americans,” because it has new consumer protections.

It would allow consumers to obtain a free credit report once a year, and to put “red flags” on their files indicating they have been victims of identity fraud. It also would create tougher penalties for identity theft, require better coordination among agencies that investigate identity-theft complaints, and prohibit consumer-reporting agencies from disclosing medical information.

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