WASHINGTON — The House is scheduled to vote this week on a bill that would exempt banks from sending an annual privacy notice to customers unless the disclosures have changed from a year earlier.
The Eliminate Privacy Notice Confusion Act, introduced in May by Rep. Blaine Luetkemeyer, R-Mo., is popular with industry groups because they say it would cut costs and reduce consumer confusion. The legislation would roll back a provision of the 1999 Gramm-Leach-Bliley Act that requires financial institutions to send annual mailings to consumers even if the notice remains unchanged.
"What is the value of a notice only to tell you that information has not been shared and nothing has changed with a bank's policies? You lose some of the value in that kind of notification. It becomes a regulatory burden," said Edward Mills, a financial policy analyst at FBR Capital Markets and former Hill aide. "A lot of privacy standards, and the way in which banks shared information, was a great unknown as we were coming into a new information age at that time. People are a lot more adept to how information is shared."
Mills added that the current provision requiring annual mailings is increasingly costly as more consumers sign up for "paperless" bills.
"It's more of an expense now than when [the Gramm-Leach-Bliley Act] passed," he said. "Before, you could insert it in a monthly bill or monthly mailing — but because so many customers now have electronic bills, it's a separate mailing with separate postage."
Lawmakers including Reps. Ed Markey, D-Mass., and Joe Barton, R-Texas, co-chairs of the Bipartisan Congressional Privacy Caucus, have opposed the bill, warning that it would further erode privacy protections for consumers.
But industry groups including the American Bankers Association, the Independent Community Bankers of America and the Credit Union National Association wrote letters in support of the legislation in recent weeks.
"If this bill were to become law, when a consumer receives an envelope, they're going to know something's changed and they need to take a look at this," said Ryan Donovan, senior vice president for legislative affairs at CUNA.
The bill advanced to the floor last week and was debated, but a vote was suspended because of concerns about language exempting state-licensed financial institutions from sending annual disclosures if a state already has comparable consumer protection laws on the books, according to a Hill aide.
That exemption has now been removed, along with a provision regarding information sharing with bank affiliates, so that it now mirrors legislation that passed the House last term, according to the aide, who added that the bill is slated to come up for a vote on Wednesday.
But industry sources warn that even if the bill advances in the House, there's little time for it to move through a busy Senate during the remainder of the lame duck session.
"It's got a really good shot in the House, because it's passed in previous Congresses," said Donovan, who noted that little time remains before the end of the term. "We'll touch base with folks in the Senate to see if we can get it done before the end of the year."