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April 4, 2000 Electronic Financial Services Council Questions Effect on Internet-Based Businesses of Proposed Privacy Regulations Implementing the Gramm-Leach-Bliley Act
Washington, D.C. – Noting the impact on Internet-based businesses of sweeping privacy rules, the scope of which is unclear, the Electronic Financial Services Council (EFSC) called for the relevant Federal agencies to create a "clear, definitive list" of activities that are covered by the proposed privacy regulations implementing the Gramm-Leach-Bliley Act. Drawing upon its unique membership of major technology and financial services companies, the EFSC focused its comment letter to the agencies on the potential effect of the proposed rules on Internet-based businesses. The EFSC identified a number of crucial ambiguities in the proposed rules, including the core definitions of what is a "financial institution" and what is a "financial product or service," the meaning of which will determine how broadly the privacy regulations will apply. "Companies that may be subject to the proposed regulations, including many Internet-based businesses, are severely handicapped in understanding or commenting on the agencies’ proposals so long as it is not clear to whom the proposed regulations will apply," according to Jeremiah S. Buckley, Executive Director of the EFSC. "Many businesses that would want to comment on privacy issues affecting them do not realize that these proposed regulations are in fact intended to apply to them." "Privacy considerations are of ever-increasing importance to consumers, especially in the context of the Internet. As pioneers of a new way of delivering financial services, our members keenly understand the need to set standards to respond to that consumer demand," noted the EFSC in its comment letter. "Strong privacy protections and clear Federal rules are not inconsistent," according to Buckley. The Gramm-Leach-Bliley Act, passed in November of 1999, created new obligations for "financial institutions" to protect consumers’ personal financial information. Seven Federal agencies published proposed privacy regulations in late February and early March. The EFSC comment letter lists 25 areas where the proposed regulations require clarification or revision, which are set forth in an Executive Summary at the beginning of the letter. The EFSC was founded by Intuit, GE Capital Mortgage, Microsoft and Countrywide. Current members also include Cendant, Chase Manhattan Mortgage, Citigroup, Creditland, E-Loan, Esurance, First American Financial Corporation, Freddie Mac, GHR Systems, GMAC Mortgage, Lender’s Services, Lending Tree, The Principal Financial Group, United Guaranty/AIG, Ultraprise Corporation, Wells Fargo/Norwest and Xpede. The full text of the EFSC’s comment letter is attached and can be found, along with additional information regarding the EFSC, by visiting http://www.efscouncil.org. |