Bipartisan Legislation Protects Personal Financial Information

Bills provide consumer options for sharing
Thursday, January 21, 2016

LANSING — Legislation introduced today protects consumers’ personal financial information from being automatically shared by banks and credit unions to unaffiliated third parties.

This bipartisan three-bill package requires banks, savings banks and credit unions to request permission to share personal information when customers apply for loans. The bills in the package include House Bill 5227, introduced by State Rep. Jeremy Moss (D-Southfield); House Bill 5228, introduced by State Rep. Peter Lucido (R-Shelby Township); and House Bill 5229 introduced by state Rep. Jim Runestad (R-White Lake).

It is common practice for a bank or credit union customer to specifically request to opt out from the personal information sharing policy. However, customers do not always understand their rights.

“Many people are not aware that this information is shared in the first place,” stated Rep. Moss. “The sharing of this information makes people vulnerable to identity theft and could result in unwanted marketing offers and consumer profiling.”

Rep. Runestad said the legislation will strengthen the relationship between banks and customers.

“Under this proposed legislation financial institutions will develop the relationship with their customers by having the conversation about opting-in to sharing and the services the institution offers through sharing agreements,” Rep. Runestad said.

The bills require financial institutions to receive written consent before personal information can be shared with other businesses and services. It also requires banks, savings banks and credit unions to establish and publicize a privacy policy reflecting the information-sharing request.

“Currently seven other states restrict the sharing of customer information with unaffiliated third parties,” Rep. Lucido added. “Customers should be in control of these decisions and well-informed about how information is shared about them.”

The bills were referred to the House Committee on Financial Services.