Clinton-Gore Plan Aims to Protect Consumer Privacy

SAN FRANCISCO (05/01/2000) - U.S. President Bill Clinton has announced a new proposal that would expand consumer privacy protections with regard to their financial information, medical records and personal spending habits.

The plan, conspicuously touted as the "Clinton-Gore" plan in a sign that U.S.

Vice President Al Gore might make consumer privacy a campaign issue, would allow consumers to choose whether they want financial institutions to share their financial data, and would require consent before financial institutions could access medical information or reveal detailed information about spending habits.

"In this Information Age, we can't let new opportunities erode old fundamental rights. We can't let breakthroughs in technology break down walls of privacy," Clinton said during a commencement address at Eastern Michigan University in Ypsilanti, Michigan. "In other words, the life insurance company could share information about your medical history with the bank without giving you any choice in the matter. The bank could share information from your student loans and your credit cards with its telemarketer or its broker, again, without giving you any choice. I believe that is wrong."

Rules laid out by Clinton would impose an "opt-out" policy, meaning that financial institutions would be free to share financial information unless a consumer explicitly objected. Medical information and detailed spending information, however, would be subjected to a stronger "opt-in" policy, whereby information could not be shared unless the consumer gave express permission.

"For the most sensitive type of information, I think there should be an extra level of protection," Clinton said. "As more banks and insurance companies merge, lenders could gain access to private medical information and many insurance records. But no one should have to worry that the results of their latest physical exam will be used to deny them a home mortgage or a credit card. Under my plan, you'd get to say no.

"We would add that same safeguard to the information that makes up your personal-spending identity, such as the list of every purchase you've ever made by check or debt or credit card, everything you buy," he added. "Again, that information could be shared only if you say yes."

Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group in Washington, says Clinton's proposal is a step in the right direction, but he argues that all information sharing for commercial purposes, rather than certain kinds, should be subject to an "opt-in" policy.

"It's a major step forward from their earlier positions. The question is how much information about your credit cards is going to be subject to an 'opt-in' under the president's plan," Mierzwinski says, adding that the privacy protection plan should apply to all transactions, not just financial transactions.

"The president, making a strong statement on the need for strong financial privacy, should send a message to all businesses in the new economy, as well as banks, that privacy is not going to be left behind by this administration and that they'll be helping consumers and privacy groups push stronger bills through Congress or state legislatures," he says.

The proposal, which is to be sent to U.S. Congress this week, would also give consumers the right to review their information and to correct errors and would require firms to release their privacy policies to consumers. In addition, Clinton is asking for a study on how electronic bankruptcy records -- which often include social security numbers, account balances, income sources and payment histories -- impact consumer privacy.

"It is clearly implicit in the introduction of this legislation that the industry itself will not voluntarily do the right thing," says David Sobel, general counsel for the Electronic Privacy Information Center (EPIC) in Washington. "There is the recognition on the part of the administration that the incentives are just not there for the industry to protect privacy on its own."

Last November, Clinton signed into law legislation to restructure the country's financial system. The legislation allowed financial institutions to offer banking, securities and insurance. The financial institutions were barred from sharing consumer financial data with telemarketers, but this latest proposal would bar them from sharing consumer financial information with affiliates or any other third-parties, as well.

The government has encouraged self-regulation of the Internet and other industries to address privacy issues, but Clinton says certain types of information are so sensitive that they require legal protections. As he stated in announcing the new rules: "A bank is no longer just a bank, it's often linked with an insurance firm, a broker, a travel agency."

Beyond the plan on financial data, the administration has backed the Children's Online Privacy Protection Act of 1998, which took effect just last month. It ensures that Web sites geared toward children do not gather personal information, except with parental consent. The administration also plans to announce final rules later this year regarding privacy protections for medical records.

Says Mierzwinski, the latest announcement means "the administration is recognizing that industry self-regulation programs have largely failed."

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