RDA Comments to House Financial Services Committee Request for Feedback on Current Federal Consumer Financial Data Privacy Law and Potential Legislative Proposals
The Responsible Data Alliance (RDA), a coalition of leading risk-data providers, is pleased to submit the following comments in response to your request for information related to privacy legislation. Our members are dedicated to protecting consumers, businesses, and government entities from fraud, identity theft, and other illicit activities while streamlining consumer-initiated transactions. We appreciate the opportunity to provide feedback on current consumer financial data privacy law and on potential legislative proposals designed to address the evolving financial services landscape.
Third-party providers play a vital role in the modern financial ecosystem, serving as essential partners for financial institutions. Financial institutions, particularly small and medium-sized institutions; rely on providers to support fraud prevention, regulatory compliance, know-your-customer and due diligence services. Gramm-Leach-Bliley Title V’s framework ensures that even when nonpublic personal information (NPI) is shared with third parties, it is for limited purposes that protect consumers and ensure a safe and sound financial services market. This structure enables institutions to leverage specialized expertise, and technology, ultimately leading to enhanced fraud protection and identity management for consumers and their financial institutions, all while maintaining a high standard of data security. It also ensures that fraud, waste and abuse in government programs are effectively addressed.
The Gramm-Leach-Bliley Act (GLBA) has served for over 25 years as an effective and proven mechanism for balancing consumer privacy, the operational needs of a sound financial system including fraud prevention, trust, and regulatory compliance. RDA supports the application of a strong, preemptive GLBA to ensure consistent and balanced rules that support consumer protection, privacy and innovation in the financial services offered to US consumers. This preemptive standard will also ensure smaller financial institutions can effectively protect their customers at costs they can afford. Essential to the success of GLBA is how it balances consumer’s privacy and choices with a framework of exceptions found in Section 502(e). These exceptions permit critical data flows and use cases which protect consumers from fraud and identity theft, while allowing businesses to ensure they are transacting with the real consumer.
A fully preemptive GLBA would not only streamline operations for financial institutions but would also provide significant benefits to consumers through enhanced innovation and a consistent national standard. Preemption would ensure companies which are designing next-generation tools to combat increasingly complex fraud strategies, often enhanced by AI, can do so for the benefit of all consumers. It would also ensure even greater competition, which benefits consumers and their financial institutions alike. Ultimately, a nationwide standard would ensure that all consumers, regardless of their location, are afforded the same level of data privacy and security protections.
Any new preemptive, omnibus federal privacy legislation must recognize and exempt sectoral privacy statutes such as the GLBA and should continue to include entity, affiliate, data and use-case based exemptions. This is particularly important for the detection and prevention of fraud, as third-party providers of these services may not be financial institutions under GLBA.
We are committed to working with you to ensure that privacy laws are modernized effectively. Our shared objective is to create an updated statute that protects consumers and promotes innovation avoiding a fragmented system of state laws.
Please feel free to contact us at alliance@responsibledata.net with any questions.
The Responsible Data Alliance
