SD33 - Privacy Laws Relating to Personal Rights and Credit

  • Published: 1990
  • Author: Office of the Attorney General and Department of Law and State Corporation Commission
  • Enabling Authority: Senate Joint Resolution 192 (Regular Session, 1989)

Executive Summary:
Pursuant to SJR 192, adopted by the General Assembly at its 1989 Session, the Office of the Attorney General and the State Corporation Commission were requested to undertake jointly a study to determine whether existing privacy laws related to personal rights and the opportunity to secure credit adequately protect the individual. In undertaking and completing this study, staff of the Office of the Attorney General and State Corporation Commission prepared an overview of existing privacy laws; submitted questionnaires to credit reporting companies, financial institutions and check-guarantee service businesses; and held a public hearing. Staff also monitored ongoing activity at the federal level related to the subject of privacy and credit.

The study resulted in the following conclusions and recommendations:

(1) Education - Many consumers are not aware of the protections provided by state and federal privacy laws already in place. To help educate consumers, the Office of Consumer Affairs, the Office of the Attorney General, the Bureau of Financial Institutions and their counterparts at the federal level should continue to respond to consumer privacy inquiries and to alert consumers to the protections currently available to them. Private organizations and consumer groups also are encouraged to continue their efforts to educate consumers about their rights and currently available protections.

(2) Recordation by Merchants of Credit Card Numbers on Checks - The practice by some merchants of recording credit card numbers on checks when those checks are accepted for payment constitutes an invasion of privacy and promotes opportunities for credit card fraud. Legislation prohibiting that practice is recommended as one step to prevent fraud, particularly in connection with telephonic credit card purchases.

Potential problem areas that were studied but for which legislation is not being recommended at this time for the reasons indicated in the body of this report, include: extending the privacy protections of the Fair Credit Reporting Act; placing limitations on the use of credit information for marketing purposes; prohibiting merchants and others from recording personal information on credit card sales slips; and regulating the disclosure of individual financial records by financial institutions.