Star Systems Inc., the largest electronic funds network, is making privacy its first task in a new, more aggressive lobbying stance.

Historically, Star's efforts "have been more of a rifle approach, rather than a shotgun approach," said Ronald Congemi, president and chief executive officer of Star. "I think this industry has done a historically average or less-than-average job of making what we do and how we do it known to the various associations that operate on the behalf of the banking industry and the credit union industry."

Issuing its first in a series of promised "white papers," and devoting one of its executive vice presidents to government relations full-time, Star is aiming to speak louder about the pitfalls of too much consumer privacy regulation and to raise its legislative profile in Washington.

The network is particularly interested in protecting its financial institution members against the possibility of more regulation on the state level that may be inspired by the landmark financial modernization act recently passed in Congress.

"Unfortunately the act leaves open the door to individual state laws that could create all kinds of problems with inconsistencies in compliance and enforcement," said Paul Schmelzer, who recently assumed the title of executive vice president for industry and government relations.

Additionally, Star plans to tackle a modernization act proposal to mandate that all "foreign fees" - the charges assessed by a cardholders bank for going to an outside ATM - be disclosed at the time of the transaction. The General Accounting Office has been assigned to conduct a study to determine the feasibility of such a regulation. Star is expected to submit a second white paper to the GAO next week.

Star's first white paper is to be distributed at a Thursday hearing on regulations that have been proposed to accompany the modernization act. Mr. Schmelzer said Star, which merged with Honor Technologies Inc. last year, is one of the few networks big enough to afford such dedicated resources.

"My job is to go out and establish relationships with our principal public constituencies," said Mr. Schmelzer. Those constituencies include federal regulators, trade associations like the American Bankers Association, the Financial Services Roundtable, and the National Automated Clearinghouse Association, as very importantly, state banking associations.

Related Link Star Systems Inc. privacy document
(Printed with permission from Star Systems Inc.)

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