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Sens. Moran and Heitkamp Introduce Bipartisan Legislation to Streamline Financial Protections for Consumers

Legislation would make certain privacy policies are available on the financial institution’s website, allow banks to opt out of annual written notices

WASHINGTON, D.C. – U.S. Senators Jerry Moran (R-Kan.) and Heidi Heitkamp (D-N.D.) today introduced the Privacy Notice Modernization Act, S. 423, bipartisan legislation that would streamline financial privacy notifications that banks provide consumers. The legislation would require banks to alert customers when their privacy policies and information-sharing practices change, while eliminating duplicative, annual, legalese-ridden notifications that are often neglected by consumers. 

“Finding the right regulatory balance is vital as we seek to untangle American homes and businesses from a complicated and duplicative regulatory structure,” Sen. Moran said. “In Kansas and across the country, community banks are important to the families they serve, small businesses and economic growth. Unfortunately, Community banks are being disproportionately hurt by rules and notification requirements because they are less able to absorb compliance costs. Resources that would otherwise be directly applied to serving clients and the community are now being spent to comply with annual privacy notices requirements and other regulations. Smarter regulation of financial privacy notifications will better protect and inform consumers while removing the excessive burdens placed on financial institutions. The House of Representatives has passed similar measures multiple times over the past several years, and I look forward to swift Senate passage of this commonsense legislation.” 

“In North Dakota, we understand the importance of being cost-conscious, and so do our local banks,” said Sen. Heitkamp. “But for years, local banks – which many North Dakotans use – have been forced to send out privacy notices each year that can be hundreds of pages long – putting an undue financial burden on them and providing redundant updates filled with legalese that often only confuse consumers. My bipartisan bill would make commonsense changes by making sure consumers are only informed when policies and practices are really changing. As a result, these changes would better support consumers and eliminate costly and redundant annual updates filled with legalese, but not a lot of news. I’ll keep fighting for commonsense solutions to see to it that our financial institutions aren’t wasting money and are instead investing in ways to responsibly inform hardworking Americans on how to best plan for their futures – and to make sure our federal priorities mirror our local values.”

Under the Gramm-Leach-Bliley Act (GLBA), banks are annually required to alert consumers about their information-collection and information-sharing practices in writing. Unfortunately, these annual privacy notices have become so long, cluttered, and routine that most consumers are either confused by them, or they simply do not read them at all. The requirement is also costly for small institutions like community banks and credit unions.

The Privacy Notice Modernization Act would allow banks that do not share customer information the option to forego delivery of the annual written notice unless there has been a change in the bank’s privacy policy. An institution’s privacy policy will still be available to customers on the institution’s website. The bill is cosponsored by Sens. Tom Cotton (R-Ark.), Bob Corker (R-Tenn.), Mike Crapo (R-Idaho), Dean Heller (R-Nev.), Mark Kirk (R-Ill.), Jeff Merkley (D-Ore.), Tim Scott (R-S.C.), Jon Tester (D-Mont.), Pat Toomey (R-Penn.), Mark Warner (D-Va.) and Elizabeth Warren (D-Mass.).

Sens. Moran and Heitkamp’s bill is supported by the American Bankers Association (ABA), the Independent Community Bankers of America (ICBA), the Credit Union National Association (CUNA), and the National Association of Federal Credit Unions (NAFCU).

Click below to read the full bill text.

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