Privacy Legislation Signed into Law

Washington, DC, November 26, 2003 - President Bush signed into law H.R. 2622, the Fair and Accurate Credit Transactions Act of 2003. H.R. 2622 establishes uniform, national standards for information sharing, and enhances consumer protections in areas such as identity theft and credit report accuracy.

Background
H.R. 2622 was introduced in April 2003 to establish the privacy standards set forth in the Gramm-Leach-Bliley Act of 1999 (GLB Act) as the uniform national standard for financial privacy. Under the GLB Act, financial institutions may share customer information with affiliates, but must provide customers an opportunity to opt-out of sharing with nonaffiliated third parties unless otherwise exempted.

The key component of the H.R. 2622 is the reauthorization of a provision in Fair Credit Reporting Act that preempts state laws regulating the sharing of information among affiliates. Absent the permanent extension of this provision, a uniform national standard for financial privacy would be jeopardized.

The legislation will also add to federal law a new provision governing the sharing of consumer information among affiliated companies for purposes of making marketing solicitations. The new provision will prohibit the sharing of information unless the consumer is provided notice of such sharing and allowed to opt out of receiving such solicitations. Entities with preexisting customer relationships, affiliates that provide certain servicing functions, and contacts that are initiated by the consumer or otherwise authorized are exempted from the opt-out provision.

ICI Position
The Institute supports the creation of a single, nationwide standard for the sharing of customer information that does not unduly burden fund shareholders or the financial institutions that serve them.

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