McHenry Introduces Data Privacy Legislation
Last week, Rep. Patrick McHenry (R-N.C.), Chairman of the House Financial Services Committee (HFSC), introduced the Data Privacy Act of 2023, which is meant to modernize financial data privacy laws by requiring financial companies to offer their consumers more disclosures about their data and allowing consumers to request their records to be deleted.
“As advances in technology bring greater access to our financial system, the amount of personal financial information collected on Americans also increases,” McHenry said. “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.”
The bill ensures that consumers control how their information is used beyond financial institutions, empowering them to understand how their data is collected and used by providers when they agree to the provider’s privacy policy. Entities must disclose why they are collecting consumer data, and covered entities are required to provide consumers with a way to opt out of unnecessary data collection.
The Data Privacy Act promotes informed choice and transparency by requiring privacy terms and conditions to be easily understandable so that consumers know how their data is collected, who has access to their data, and how their data will be used. It also modernizes the Gramm-Leach-Bliley Act (GLBA) to line up better with the evolving technological landscape.
American Banker noted that the bill would preempt state laws, which HFSC ranking member Rep. Maxine Waters (D-Calif.) criticized during a February hearing, because California has stricter data protection laws than McHenry’s draft.
“I’ve heard some concerns with the approach taken in the discussion draft we’re considering today,” Waters said during the hearing. “The draft would prevent states from adopting new protections in response to changes in technology, something the current law allows.”
