Rep. Henry B. Gonzalez called Wednesday for aggressive congressional action to protect consumers in the emerging world of electronic banking.
Releasing a blueprint for legislative action, the Texas Democrat urged Congress to:
*Adopt public policy standards relating to privacy, disclosure, access, equity, and financial reliability for electronic banking products and services.
*Hold oversight hearings to assess how well the industry is serving the consumer in these five areas.
*Enact laws if the industry's performance falls below minimum congressional standards.
*Define financial transactions to include the exchange of financial information as well as cash.
*Consider revising current consumer protection laws. "Many of the federal consumer protection laws are nearly 30 years old, and they were not designed to deal with the effects of these new technologies," said Rep. Gonzalez, the House Banking Committee's ranking minority member.
The report, "Connecting Consumers: Consumer Issues and Emerging Financial Technology," recommends subjecting banks and nonbanks to the same laws and regulations in this area.
Republican committee members and banking regulators have been reluctant to issue rules that might hinder the development of new electronic banking products. But Rep. Gonzalez argued against delay.
"The appropriate time to deal with these issues is now, before major transformations occur and more sophisticated products are introduced into the marketplace," he said.
The Gonzalez report recommended that the issuers of new bank products tell consumers whether they must pay interest or transaction fees and if they are covered by deposit insurance.
Disclosures, at a minimum, should tell consumers the procedures for resolving disputes and errors, and what happens if the product is lost, expires, or can't be used because of computer problems. Disclosures "must be in plain language and a user-friendly format," it stressed.
When financial service providers ask consumers for personal information, they should state why they are collecting that information, how it will be used, and how its confidentiality will be protected, the report stated.
Rep. Gonzalez also called for equal access to the benefits of electronic financial transactions for all consumers.
"That means that the use of automated teller machines, stored value cards, debit cards and Internet transactions must be available and affordable," the report stated. "The business plans of providers should specifically address strategies for equitable distribution across demographic and geographic boundaries."