Opening Statement of Rep. Ron Paul on HR 4321, the Financial Information Privacy Act of 1998
Opening Statement of Rep. Ron Paul on HR 4321, the Financial Information Privacy Act of 1998
(J. Bradley Jansen was the legislative staffer for Ron Paul at this time for these issues)
Opening Statement of Rep. Ron Paul on
HR 4321, the Financial Information Privacy Act of 1998
As a staunch defender of privacy rights, I commend Chairman Leach and the other sponsors of this bill for bringing this important problem to light. This debate will certainly provide a great service to many people. However, I cannot support this particular approach to the problem. It is not only unnecessary but harmful.
The bill should be opposed for several reasons. The American Banker (House Panel Weighs Bill to Protect Financial Data, August 3, 1998) explains, “There are legitimate information brokers who work for lawyers in divorce cases or help gather data necessary to seize assets of people who have not paid court judgments.” Visa spokesman Michael McGarry says, “The law would have the unintentional consequence of putting criminal sanctions against people who are innocent.”
This bill would make it a Federal offense for an unemployed woman with small children, abandoned by her husband, not only to present her own lawyer’s information for alimony and child support claims but to “knowingly” accept such information herself.
The bill is obviously fraught with problems. HR 4321 would add a new, poorly-drafted Federal law where States and the federal regulators are already dealing with the problem. The new, two-tier “knowing” standard is unacceptable. Passage of the bill would truncate the process of private, self-regulatory government and private industry initiatives.
The bill ignores one of the main reasons for the problem, namely, the governments’ pervasive misuse and abuse of Social Security Numbers. Nearly all states require SSNs for driver’s licenses, and 75% of all states then sell such data to information brokers. This practice enables “identity theft” whereby they circumvent the financial institution’s privacy safeguards. Private institutions are working hard to increase those safeguards. We should pass my amendment limiting usage–and stopping abuse–of SSNs and encourage the private initiatives.
In July 1997, the Clinton Administration-issued report “A Framework for Global Electronic Commerce” supported private sector efforts to implement “meaningful, consumer-friendly, self-regulatory privacy regimes.” The White House-inspired industry “individual reference services group (IRSG)” worked closely with the Federal Trade Commission on a self-regulatory initiative to establish a set of principles that become effective December 31, 1998. These IRSG principles would impose obligations on signatories (information broker industry) regarding how they collect and provide access to information. We should examine the success of the Clinton Administration and private industry approach before rushing in with a half-baked solution.
Since “misrepresentations” are a deceptive act, the Federal Trade Commission believes that “identity theft” already violates the Federal Trade Commission Act’s prohibition of “unfair or deceptive acts or practices in or affecting commerce” and would warrant filing an FTCA Section 13(b) action in federal court to obtain equitable relief.
Most states have already passed Right to Financial Privacy Acts, and Colorado, Michigan, New York and Rhode Island have additionally pursued my approach of issuing limitations on the use of Social Security Numbers, according to American Bankers Association June 1998 report Financial Privacy in America: A Review of Consumer Financial Services Issues.
“In sum, the citizens of the United States are not only well-protected, but increasingly well-informed and aggressive in addressing perceived risks to their personal privacy, in making choices about data privacy, and in insisting that these choices are respected,” the ABA report reads. “Technology enables businesses to make sense of vast stores of information by providing consumers with new and better products and services, particularly, the ones that consumers are likely to find attractive. Businesses collect consumer information in an effort to deliver new services and products that consumers want. This is the law of supply and demand. For businesses to succeed, they must satisfy consumer needs and demands as efficiently and accurately as possible. This is a ‘market’ check on privacy.” We must respect consumer needs and defeat this bill.
The Privacy Act of 1974 made clear that there should be no problems adopting this amendment, “It shall be unlawful for any Federal, State or local government agency to deny any individual any right, benefit or privilege provided by law because of such individual’s refusal to disclose his Social Security number…Any Federal, State or local government agency which requests an individual disclose his Social Security number shall inform that individual whether that disclosure is mandatory or voluntary, by what statutory or other authority the number is listed and what uses will be made of it.”
This is not happening. Numbers are just demanded, and too many people have complied with it. This information then becomes public information. More Americans are getting upset with this abuse of privacy through the Social Security number. One cannot even get out of the hospital when one is born without a Social Security number nor even allowed to die without one because one needs a Social Security number on one’s death certificate. Talk about cradle to grave.
The question is, “What should our role be?” To protect privacy and civil liberties, or is it to protect the efficiency of the State?