Overview
Title
To amend the Gramm-Leach-Bliley Act to modernize the protection of the nonpublic personal information of individuals with whom financial institutions have customer or consumer relationship, and for other purposes.
ELI5 AI
H. R. 1165 is trying to make sure banks protect people's private information better by setting new rules for how they can use and share it, while also making one big set of rules for the whole country so it's the same everywhere.
Summary AI
The bill H. R. 1165, titled the "Data Privacy Act of 2023," proposes updates to the Gramm-Leach-Bliley Act to enhance protections for individuals' nonpublic personal information held by financial institutions. It outlines financial institutions' obligations regarding the collection, use, and disclosure of personal information, aiming to increase transparency and give individuals more control over their data. The bill also addresses international data sharing, defines terms like "consumer relationship," and insists on a technology-agnostic implementation to ensure adaptability to different business models. Additionally, the bill would preempt state laws to create a unified federal framework for data privacy within financial institutions.
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AnalysisAI
General Summary of the Bill
The bill, known as the “Data Privacy Act of 2023,” seeks to amend the existing Gramm-Leach-Bliley Act with the goal of modernizing privacy protections concerning nonpublic personal information handled by financial institutions. It aims to enhance safeguards for consumer data by defining clearer protocols for the collection, use, and sharing of personal information. Notably, it expands protections to individuals who have any form of customer or consumer relationship with a financial institution. The bill further addresses how information can be shared both domestically and internationally and introduces new rights for consumers related to accessing and deleting personal information.
Summary of Significant Issues
One major issue is the potential overriding of state laws by these federal provisions. This federal preemption could weaken stronger privacy laws at the state level, reducing protections currently available to consumers. Furthermore, the broad and complex definition of "customer or consumer relationship" might lead to confusion about who is covered under the Act, potentially allowing for practices that are not anticipated by consumers. The lack of clear penalties for non-compliance with the bill’s requirements may limit the effectiveness of enhanced privacy protections, as financial institutions might not face significant repercussions for failing to abide by new rules.
Impact on the Public
The public might see increased transparency and control over their personal data held by financial institutions if the bill is passed. It provides clear guidelines on how financial institutions handle consumer data, which could reduce instances of data misuse and improve overall data security. However, there may be concerns about the time it takes to implement these new procedures, with the bill allowing up to 45 business days for financial institutions to respond to consumer requests regarding their data.
Impact on Specific Stakeholders
Consumers stand to benefit from increased rights regarding their data, including the ability to access and request the deletion of personal information. This could lead to greater trust in financial institutions. However, they may also experience confusion due to the complex legal language and definitions used in the bill.
Financial institutions might face new compliance costs and operational burdens as they adapt to the bill's requirements, particularly smaller institutions that may not have the resources to implement necessary changes quickly. On the other hand, the act’s uniformity across states could simplify regulatory compliance for institutions operating in multiple jurisdictions.
State Governments could see reduced control over privacy regulations as federal law supersedes state laws. This could impact states that have enacted more stringent privacy laws than those proposed federally.
In summary, while the bill seeks to align privacy practices with modern-day needs and enhance consumer protections, it raises considerable concerns regarding potential federal overreach, clarity of language, and enforcement mechanisms. As with any legislative action, careful consideration and potential amendments might be necessary to balance the interests of all stakeholders involved.
Issues
The potential federal overreach by superseding state laws with respect to privacy protections is a significant issue. This action could weaken state-level consumer protections on personal information. This is addressed in Section 6 and Section 507.
The definition and scope of 'customer or consumer relationship' in Section 9 are complex and could lead to confusion among financial institutions and consumers, resulting in inconsistent data protection practices.
The broad and potentially vague language in the obligations of financial institutions regarding the collection and disclosure of nonpublic personal information might allow for practices that consumers do not anticipate or approve. This is discussed in Section 3.
The lack of penalties or specific enforcement mechanisms for non-compliance with the access and deletion rights could render these protections ineffective. This is a concern in Section 7 and Section 502A.
The expansion of the scope from 'customers' to 'individuals with whom a financial institution has a customer or consumer relationship' without clear justification in Section 2 could allow for broader data collection and sharing, raising privacy concerns.
The ambiguity surrounding how compliance costs are assessed for smaller institutions and the inconsistency of regulations across states may create financial and operational burdens, as mentioned in Section 5.
The allowance for nonaffiliated third parties to use collected data for 'functions on behalf of the financial institution' is broad and could include unwanted activities, as outlined in Section 3.
The lengthy 45-business-days response time for data access and deletion requests could lead to dissatisfaction among individuals seeking timely resolution of their privacy rights. This is addressed in Section 7 and Section 502A.
The effectiveness and criteria of the existing safeguard standards and enforcement regime are subject to review, but there is ambiguity about what additional remedies might be necessary or implemented. This is discussed in Section 11.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title; table of contents Read Opens in new tab
Summary AI
The first section of the Data Privacy Act of 2023 introduces the Act with its title and provides a list of the main sections, which cover topics such as the protection of personal information, rules about collecting and sharing this information, privacy policies, interactions with state laws, and guidelines for international data sharing and personal data access.
2. Protection of nonpublic personal information Read Opens in new tab
Summary AI
The section amends the Gramm-Leach-Bliley Act to clarify that financial institutions must protect the nonpublic personal information of any individual they have a customer or consumer relationship with. It also makes it illegal for these institutions to use such information without consent, unless an exception applies.
3. Obligations with respect to the collection and disclosure of nonpublic personal information Read Opens in new tab
Summary AI
The text amends Section 502 of the Gramm-Leach-Bliley Act to expand the rules on how financial institutions collect and share nonpublic personal information. It specifies when and how they can collect information from customers, when they must inform customers, and requires third parties to keep the information confidential, while also allowing individuals to opt out of sharing their information.
4. Disclosure of institution privacy policy Read Opens in new tab
Summary AI
The amendment to Section 503 of the Gramm-Leach-Bliley Act requires financial institutions to provide clear privacy disclosures to their customers or consumers, outlining how nonpublic personal information is collected, used, and shared. It also grants individuals certain rights, such as requesting their data, opting out of data sharing with third parties, and having their data deleted upon request.
5. Rulemaking Read Opens in new tab
Summary AI
Section 5 of the amendment to the Gramm-Leach-Bliley Act instructs state insurance authorities to issue regulations for insurance providers that are not stricter than those created by coordinating federal agencies, and it also requires consideration of the compliance costs on small institutions when making new rules.
6. Relation to State laws Read Opens in new tab
Summary AI
The section changes the existing law by stating that federal rules about how financial institutions collect, handle, and share personal information override any similar state laws, including rules about privacy policies and international sharing of data.
507. Relation to State laws Read Opens in new tab
Summary AI
This section explains that the rules laid out in this subtitle of the bill take precedence over any state laws or regulations concerning how financial institutions handle personal information. It specifically covers areas like the collection, disclosure, and international sharing of personal information, as well as the financial institution's privacy policies and related individual privacy rights.
7. Obligations with respect to access and deletion of nonpublic personal information Read Opens in new tab
Summary AI
The section amends the Gramm-Leach-Bliley Act to require financial institutions to give customers access to and the ability to delete their nonpublic personal information. They must respond to requests within 45 business days, but there are exceptions if the information must be kept for legal reasons, disputes, or specific exceptions already outlined in the law.
502A. Obligations with respect to access and deletion of nonpublic personal information Read Opens in new tab
Summary AI
The section requires financial institutions to allow individuals to access and, upon request, delete their nonpublic personal information unless specific exceptions apply, such as legal retention requirements. Institutions must notify users about the right to request deletion if an account is inactive for a year and respond to these requests within 45 business days, with rulemaking to be completed within one year.
8. Obligations with respect to the international sharing of nonpublic personal information Read Opens in new tab
Summary AI
A section of a bill restricts financial institutions from sharing private customer information with foreign governments. However, exceptions are made for legitimate law enforcement reasons or when legally necessary for financial examinations or compliance by a foreign governmental authority.
502B. Obligations with respect to the international sharing of nonpublic personal information Read Opens in new tab
Summary AI
Financial institutions are generally not allowed to share nonpublic personal information of their customers or consumers with foreign governments. However, there are exceptions if the information is shared for legitimate law enforcement purposes or if it is required by a foreign government authority overseeing the institution for legal compliance.
9. Definitions Read Opens in new tab
Summary AI
In this section, some definitions in the Gramm-Leach-Bliley Act are updated. It includes definitions like "data aggregator," which refers to businesses that handle nonpublic financial information, and "account credentials," which involve personal login details for financial accounts. It also clarifies terms related to customer and consumer relationships with financial institutions.
10. Repeal of expired provisions Read Opens in new tab
Summary AI
The section repeals expired parts of the Gramm-Leach-Bliley Act by removing section 508 from the law and updating the table of contents to reflect this change.
11. GAO report Read Opens in new tab
Summary AI
The section requires the Comptroller General of the United States to submit a report to Congress within one year after the Act's enactment. The report must evaluate the effectiveness of current safeguard standards under the Gramm-Leach-Bliley Act in protecting individuals' data in financial institutions, and assess whether additional enforcement measures are needed. The terms "customer or consumer relationship" and "financial institution" are defined as per the relevant law.
12. Sense of Congress Read Opens in new tab
Summary AI
Congress expresses its opinion that Federal agencies should implement the Gramm-Leach-Bliley Act in a way that is not tied to specific technologies, allowing it to adapt to new business models and technologies.
13. Effective date Read Opens in new tab
Summary AI
The section outlines when the changes introduced by the Act will come into effect. These changes will start either one year after all the necessary rules are made or two years after the Act is enacted, whichever comes first.