U.S. Rep. Patrick McHenry (R-NC) introduced legislation this week in the House that seeks to modernize financial data privacy laws.
The bill, the Data Privacy Act of 2023, looks to give consumers more control over how their personal information is collected and used.
“Republicans are putting American consumers back in control of their financial data,” McHenry, chairman of the House Financial Services Committee, said. “As advances in technology bring greater access to our financial system, the amount of personal financial information collected on Americans also increases. The financial services sector is already highly regulated when it comes to consumer data. However, it’s critical that we bring our privacy guardrails into the 21st century to match the widespread adoption of financial technology. I’m proud to introduce this legislation to secure Americans’ private financial data without strangling innovation.”
Specifically, the bill would modernize the Gramm-Leach-Bliley Act (GLBA) using a technology-agnostic approach. The consumer protections in the bill would apply to future innovation and new technologies. It also seeks to empower consumers to understand how their data is being collected and used by a service provider when they agree to the provider’s privacy policy. Further, it ensures that consumers have the right to terminate collection of their data.
In addition, it would require entities to disclose to consumers why they are collecting certain pieces of data and only use data for its stated purpose. Also, covered entities must provide consumers with an opportunity to opt out of the data collection if it is not necessary to provide the product or service offered by the entity. Also, it would require privacy terms and conditions to be transparent and easily understandable. Finally, it would create a national standard to reduce the compliance burden and provide certainty to both consumers and entities that handle their financial data.