Senate Passes National Credit Reporting Bill

by Becky Evans

WASHINGTON - The Senate voted 95-2 on Wednesday in favor of a national credit reporting bill that legislators say would protect consumers from the growing crime of identity theft.

But consumer advocacy groups said that lawmakers had missed an opportunity to pass tougher legislation that would prevent banks, insurance companies and other financial institutions from sharing consumers' personal information.

The controversial bill, sponsored by Sen. Richard Shelby (R-Ala.), includes provisions to fight identity theft but does nothing to stop affiliate-sharing of consumer information. The bill, along with the House-passed version, now goes to conference.

Ed Mierzwinski, a consumer advocate with the Massachusetts Public Interest Research Group, said he was "extremely disappointed" that the Senate had chosen "to permanently take away state rights to protect consumer privacy."

Dianne Feinstein (D-Calif.) and Barbara Boxer (D-Calif.), the only two senators to vote against the bill, sponsored an amendment that would have allowed consumers to request that financial institutions not share their personal information with affiliates.

The Senate rejected their amendment, which was patterned after a new California law, by a vote of 70-24.

"I think time will show that this was the wrong vote, and I have no doubt that this issue will resurface as consumers learn more about the misuse of their most sensitive personal information," Sen. Feinstein said.

Sen. Shelby said his bill "strikes a careful balance between ensuring the efficient operation of our markets and protecting the rights of consumers."

He said it would cut down on identity theft by requiring merchants to eliminate credit card and bank account numbers on electronic receipts, increasing the maximum penalty for identity theft from three to five years in prison and allowing consumers to place fraud alerts on their credit reports if they suspect they have been victims of identity theft.

The Bush administration announced its support for Shelby's bill, saying it would strengthen "the national credit reporting system that has proven critical to the resilience of consumer spending and the overall economy" and protect consumers by "including new tools to improve the accuracy of credit information and help fight identity theft."

The Foundation for Taxpayer and Consumer Rights (FTCR) said Bush's support of the legislation violated his "strong and explicit campaign promises to allow consumers to have 'absolute' control over their private information."

The organization sent a letter to the President on Wednesday, which said: "While campaigning in 2000 you promised voters in the strongest and most explicit possible terms that you would protect our privacy if elected President. Those commitments do not square with your Administration's support of legislation to give banks free rein to share information with thousands of corporate affiliates."

Consumer groups say they will watch closely as the legislation moves into conference committee, but they are not optimistic that the final bill will do enough to protect consumers.

"Without a clear statement from Congress and President Bush that companies have to get permission before sharing information, the bill will fail to protect consumer privacy," said Jerry Flanagan, spokesman for the FTCR. "If they are not addressing the heart of financial privacy legislation, Americans won't have the privacy that they deserve."