As auto lenders increasingly turn to technology to improve customer experience, the Senate Banking Committee is pushing for “close scrutiny” over the way financial institutions collect, use, and protect personally identifiable consumer information, the committee announced this week.
Committee Chairman Sen. Mike Crapo (R-Idaho) and Ranking Member Sen. Sherrod Brown (D-Ohio) asked for feedback from stakeholders to inform potential legislation in the 116th Congress, the committee noted in a press release. Responses will be collected until March 15.
Data security issues are top of mind for the leaders of the Senate Banking Committee, who admitted that the collection and use of consumer information will be “a major focus” of the committee moving forward, according to the press release.
“Given the exponential growth and use of data, and corresponding data breaches, it is worth examining how the Fair Credit Reporting Act should work in a digital economy and whether certain data brokers and other firms serve a function similar to the original consumer reporting agencies,” Crapo said in a statement. “I am particularly interested in what data is contained in modern consumer reports, how the information is gathered, who compiles it, how it is protected, how consumers can access it and correct it, and how privacy is respected.”
The Senate Banking Committee’s most recent interest in stricter data security oversight follows California’s Consumer Privacy Act, which gives consumers authority over their personal information and how institutions use it. The law, which goes into effect in January 2020, gives the state’s attorney general authority to fine financial institutions that violate the new regulation.
The increased interest in data security laws is expected considering California’s influence over Capitol Hill, John Redding, a partner at Buckley Sandler LLP, told Auto Finance News. “I hear some talk in Washington, [D.C.,] of looking to California to see whether [data security] should be considered on a federal basis,” Redding said.
However, federal regulation would likely have less of an impact than state regulations on auto lenders, Chris Willis, a partner at Atlanta-based Ballard Spahr LLP and practice leader of the firm’s consumer financial services litigation group, previously told AFN.
To that end, lenders’ concerns should continue to lie with state attorneys general, since they have more power to enforce financial regulation, Willis said. “The impact on auto finance is much more significant on the state level than on the federal level,” he said.
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