Financial Data Protection Act: More harm than good for many consumers

California has been a long time leader in providing consumers with identity theft protection laws. All residents of the Golden State have the ability to freeze their credit files and California law requires businesses who lose sensitive information to notify affected customers. Now, it appears that Congress is close to taking away these protections.

A bill recently passed the House Committee on Financial Services that would replace the strong identity theft protections in California and other states with weaker rules. The Financial Data Protection Act (HR 3997) only requires companies to report data breaches when they are "likely to result in substantial harm."  The bill also would only allow credit report file freezes for Americans who have already been victims of identity theft. PIRG's Ed Mierzwinski likens it to "You've already been shot, so they give you but no one else a bulletproof vest."

It is wonderful that Congress is interested in enacting national identity theft protection laws, but this bill does not go far enough. Instead of weakening protections available to consumers in certain states, this bill should be improved to require mandatory data breach reporting and universal file freeze accessibility.

Read more about this bill here or can help campaign against the bill's passage here. The bill is currently supported by Congresswoman Deborah Price (Ohio), Congresswoman Darlene Hooley (Oregon), Congressman Steven LaTourette (Ohio), Congressman Dennis Moore (Kansas) and Congressman Mike Castle (Delaware).

What do you think about the Financial Data Protection Act ? Share your feedback in the comments section below.