A survey conducted over the summer recess by the House Banking Committee found that, despite privacy protections passed in last year's financial services modernization bill, a slew of companies advertising on the Internet and in the backs of newspapers and legal publications continue to offer financial information about virtually anyone for a marginal fee.

At a hearing on identity theft and other financial privacy issues today, House Banking Committee Chairman James A. Leach, R-Iowa, said committee staff contacted businesses found on the Internet and in legal trade journals advertising the ability to locate bank accounts, account balances, and other financial information most consumers would consider confidential. All 11 of the companies randomly contacted confirmed their ability and willingness to collect a broad range of financial information on a particular individual for a fee.

Leach said the brief, three-hour survey demonstrated that consumer protections included in the passage of last year's Gramm-Leach-Bliley Act have done little to discourage would-be information brokers. One amendment included in the bill makes it a federal crime to obtain customer information from a financial institution under false pretenses, such as misrepresenting one's identity.

Robert Douglas, CEO of American Privacy Consultants Inc., who also assisted committee staff in its survey, said the number of Web sites advertising such services have doubled in the past two years. For $249, one such company, Docusearch Inc., will return bank names and addresses on an individual, account types, account numbers, and if possible, Douglas said, the approximate balance of all located personal accounts.

Douglas noted that Docusearch continues to offer its services over the Internet even after several national magazines and major newspapers identified the company as the source of personal information used by a stalker to murder a young woman, a case that led to Congressional hearings and several pending bills to outlaw the sale of Social Security numbers.

Leach said he was "astonished" that such activities were wantonly advertised, following the passage of a law which makes the theft of financial information subject to fine and imprisonment, and asked officials from the Federal Trade Commission how these sites could be allowed to exist with impunity.

Betsy Broder, assistant director for the FTC's division of planning and information, said the legislation was still very "young," but that the commission was finally poised to take action. Broder said the FTC has kept an eye on such operations as one of the key sources of information for perpetrators of identity theft, a crime that affects an estimated 500,000 Americans each year.

Broder said an identity theft hotline established by the FTC last fall is now logging more than 1,000 calls per week. While she conceded that the commission had brought only one case against an alleged information broker, Broder said the FTC and law enforcement agencies were beginning to take advantage of the FTC's ID theft database as a resource.

Leach and other lawmakers have suggested that the current privacy protections in the GLB Act don't hold water, and over the past year a number of bills have sprung up to address the issue.

H.R. 4311, offered by Reps. Darlene Hooley, D-Oreg., and Steven LaTourette, R-Ohio, would require credit card companies to issue fraud alerts and to confirm with customers before granting extensions of credit or changing their billing address. The bill would also require credit reporting companies to honor fraud alerts, and would ask credit bureaus to investigate discrepancies in customers' credit reports. A similar bills also is pending in a Senate subcommittee.

But as Congress struggles to finish work on a number of outstanding appropriations bills in the remaining few weeks left in this session, lawmakers at today's hearing gave the bill slim chances of passage this year.

Still, at least one lawmaker, Rep. John J. LaFalce, D-N.Y., was optimistic about H.R. 4311's prospects.

"I know there is little time left in the session and our calendar is very full, but this bill would make such a significant contribution to consumer privacy that I would hope that we might at least follow this hearing with a markup of the legislation and report it to the House floor."

Reported by Newsbytes, http://www.newsbytes.com/

13:05 CST
Reposted 13:17 CST