A Correction was made in the article
"Collection Lawyers Could Go to Jail for Hiring Investigators,"
99 LWUSA 164, attorney Mitchell
Dinkin of Palm Beach Gardens, Fla., was misidentified as a debtors' attorney.
He is actually a collection lawyer who represents creditors. The article
was as follows: Collection attorneys could be sued or go to jail for hiring
an investigator to find out information about a debtor's bank accounts, under
a bill that has been introduced in the House.
Currently, a variety of laws make it
difficult to get information about debtors from banks by prohibiting lawyers
and their employees from
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(1) telling the bank that the debtor
owes a debt or
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(2) obtaining the information under
false pretenses. As a result, some lawyers hire outside investigators to
track down a debtor's assets, and then make sure the investigators don't
reveal to the lawyer how they found the information, says Mitchell Dinkin
of Palm Beach Gardens, Fla., who primarily represents debtors.
It's a "don't ask, don't tell" policy,
he says. Under the bill, an attorney could be liable if an agent, such as
an investigator, used some pretext to track down financial information about
a debtor. The bill prohibits asking anyone to obtain information from a financial
institution "knowing or consciously avoiding knowing that the person will
obtain...the information" under false pretenses. Proponents of the bill argue
that it won't hurt collections because the same information can be obtained
by sending information subpoenas to banks or contacting debtors themselves.
But collection lawyers say that can be very difficult to do.
To get the information from a bank,
"you need to know the exact name of the bank, which is usually hard to find,"
says Todd Houslanger, a collection attorney in Huntington, N.Y. "And debtors
often don't respond and don't tell the truth." "There would be a tremendous
delay in most cases if this bill passed," says H. Lee Wind, CEO of Instasearch,
a New York organization that represents investigators and collection attorneys.
Last year, a similar bill was attached
to a larger financial services measure that died in the Senate. Civil and
Criminal PenaltiesUnder the bill, a lawyer could be liable for:
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(1) actual damages sustained by the
bank or the debtor as a result of the lawyer's actions or
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(2) any compensation the lawyer received
as a result of the violation, whichever is greater, plus reasonable attorney
fees. A lawyer could also face criminal fines and/or up to five years in
jail. These penalties could be doubled if the attorney was also engaged in
other illegal conduct involving more than $100,000.
States would be permitted to sue for
statutory damages of up to $1,000 per violation and attorney fees.
Here is the Bill
The bill is
H.R. 30, the "Financial
Information Privacy Act of 1999," sponsored by Rep. James Leach, R-Iowa.
Financial Information Privacy Act of 1999HR 30 IH106th CONGRESS1st Session
H. R. 30 To protect consumers and financial institutions by preventing
personalfinancial information from being obtained from financial institutions
underfalse pretenses.
IN THE HOUSE OF REPRESENTATIVES January
6, 1999 Mr. LEACH (for himself, Mrs. ROUKEMA, Mr. LAZIO, Mr. CASTLE, Mr.
LAFALCE,Mr. HINCHEY, and Mr. VENTO) introduced the following bill; which
was referred to the Committee on Banking and Financial Services
A BILL To protect consumers
and financial institutions by preventing personal financial information from
being obtained from financial institutions underfalse pretenses.
Be it enacted by the Senate and House
of Representatives of the UnitedStates of America in Congress assembled,
SECTION 1. SHORT TITLE.This Act may
be cited as the `Financial Information Privacy Act of1999'.
SEC. 2. FINANCIAL INFORMATION PRIVACY.The
Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) is amendedby adding
at the end the following:`TITLE X--FINANCIAL INFORMATION PRIVACY PROTECTION`
SEC. 1001. SHORT TITLE; TABLE OF
CONTENTS.`(a) SHORT TITLE- This title may be cited as the `FinancialInformation
Privacy Act of 1999'.`(b) TABLE OF CONTENTS- The table of contents for this
title is asfollows:`TITLE X--FINANCIAL INFORMATION PRIVACY PROTECTION`
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Sec. 1001. Short title; table of contents.`
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Sec. 1002. Definitions.`
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Sec. 1003. Privacy protection for customer
information offinancial institutions.`Sec. 1004. Administrative enforcement.`
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Sec. 1005. Civil liability.`
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Sec. 1006. Criminal penalty.`
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Sec. 1007. Relation to State laws.`
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Sec. 1008. Agency guidance.`
SEC. 1002. DEFINITIONS.`For purposes
of this title, the following definitions shall apply:`
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(1) CUSTOMER- The term `customer' means,
with respect to afinancial institution, any person (or authorized
representativeof a person) to whom the financial institution provides a productor
service, including that of acting as a fiduciary.`
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(2) CUSTOMER INFORMATION OF A FINANCIAL
INSTITUTION- The term`customer information of a financial institution' means
anyinformation maintained by a financial institution which isderived from
the relationship between the financial institutionand a customer of the financial
institution and is identifiedwith the customer.`
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(3) DOCUMENT- The term `document' means
any information in anyform.`
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(4) FINANCIAL INSTITUTION-`(A) IN GENERAL-
The term `financial institution' means anyinstitution engaged in the business
of providing financialservices tocustomers who maintain a credit, deposit,
trust, or other financial accountor relationship with the institution.`
(B) CERTAIN FINANCIAL INSTITUTIONS
SPECIFICALLY INCLUDED-The term `financial institution' includes any
depositoryinstitution (as defined in section 19(b)(1)(A) of theFederal Reserve
Act), any loan or finance company, anycredit card issuer or operator of a
credit card system, andany consumer reporting agency that compiles and
maintainsfiles on consumers on a nationwide basis (as defined insection 603(p)).`
(C) FURTHER DEFINITION BY REGULATION-
The Board ofGovernors of the Federal Reserve System may prescriberegulations
further defining the term `financialinstitution', in accordance with subparagraph
(A), forpurposes of this title.`
SEC. 1003. PRIVACY PROTECTION FOR CUSTOMER
INFORMATION OF FINANCIALINSTITUTIONS.`
(a) PROHIBITION ON OBTAINING CUSTOMER
INFORMATION BY FALSE PRETENSES-It shall be a violation of this title for
any person to obtain orattempt to obtain, or cause to be disclosed or attempt
to cause to bedisclosed to any person, customer information of a
financialinstitution relating to another person--`
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(1) by knowingly making a false,
fictitious, or fraudulentstatement or representation to an officer, employee,
or agent ofa financial institution with the intent to deceive the
officer,employee, or agent into relying on that statement orrepresentation
for purposes of releasing the customerinformation;`
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(2) by knowingly making a false,
fictitious, or fraudulentstatement or representation to a customer of a
financialinstitution with the intent to deceive the customer into relyingon
that statement or representation for purposes of releasing thecustomer
information or authorizing the release of suchinformation; or`
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(3) by knowingly providing any document
to an officer, employee,or agent of a financial institution, knowing that
the document isforged, counterfeit, lost, or stolen, was fraudulently obtained,or
contains a false, fictitious, or fraudulent statement orrepresentation, if
the document is provided with the intent todeceive the officer, employee,
or agent into relying on thatdocument for purposes of releasing the customer
information.`
(b) PROHIBITION ON SOLICITATION OF
A PERSON TO OBTAIN CUSTOMERINFORMATION FROM A FINANCIAL INSTITUTION UNDER
FALSE PRETENSES- Itshall be a violation of this title to request a person
to obtaincustomer information of a financial institution, knowing orconsciously
avoiding knowing that the person will obtain, or attemptto obtain, the
information from the institution in any mannerdescribed in subsection (a).`
(c) NONAPPLICABILITY TO LAW ENFORCEMENT
AGENCIES- No provision ofthis section shall be construed so as to prevent
any action by a lawenforcement agency, or any officer, employee, or agent
of such agency,to obtain customer information of a financial institution
in connectionwith the performance of the official duties of the agency.`
(d) NONAPPLICABILITY TO FINANCIAL
INSTITUTIONS IN CERTAIN CASES- Noprovision of this section shall be construed
to prevent any financialinstitution, or any officer, employee, or agent of
a financialinstitution, from obtaining customer information of such
financialinstitution in the course of--`
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(1) testing the security procedures
or systems of suchinstitution for maintaining the confidentiality of
customerinformation;`
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(2) investigating allegations of misconduct
or negligence on thepart of any officer, employee, or agent of the
financialinstitution; or`
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(3) recovering customer information
of the financial institutionwhich was obtained or received by another person
in any mannerdescribed in subsection (a) or (b).`
(e) NONAPPLICABILITY TO CERTAIN TYPES
OF CUSTOMER INFORMATION OFFINANCIAL INSTITUTIONS- No provision of this section
shall beconstrued to prevent any person from obtaining customer information
ofa financial institution that otherwise is available as a public recordfiled
pursuant to the securities laws (as defined in section 3(a)(47)of the Securities
Exchange Act of 1934).`
SEC. 1004. ADMINISTRATIVE ENFORCEMENT.`(a)
ENFORCEMENT BY FEDERAL TRADE COMMISSION- Except as provided insubsection
(b), compliance with this title shall be enforced by theFederal Trade Commission
in the same manner and with the same powerand authority as the Commission
has under the Fair Debt CollectionPractices Act to enforce compliance with
that title.`
(b) ENFORCEMENT BY OTHER AGENCIES IN
CERTAIN CASES-`(1) IN GENERAL- Compliance with this title shall be
enforcedunder--`(A) section 8 of the Federal Deposit Insurance Act, in thecase
of--`(i) national banks, and Federal branches and Federalagencies of foreign
banks, by the Office of theComptroller of the Currency;`(ii) member banks
of the Federal Reserve System (otherthan national banks), branches and agencies
of foreignbanks (other than Federal branches, Federal agencies,and insured
State branches of foreign banks),commercial lending companies owned or controlled
byforeign banks, and organizations operating undersection 25 or 25A of the
Federal Reserve Act, by theBoard;`(iii) banks insured by the Federal Deposit
InsuranceCorporation (other than members of the Federal ReserveSystem and
national nonmember banks) and insured Statebranches of foreign banks, by
the Board of Directors ofthe Federal Deposit Insurance Corporation; and`(iv)
savings associations the deposits of which areinsured by the Federal Deposit
Insurance Corporation,by the Director of the Office of Thrift Supervision;and`(B)
the Federal Credit Union Act, by the Administrator ofthe National Credit
Union Administration with respect to anyFederal credit union.`(2) VIOLATIONS
OF THIS TITLE TREATED AS VIOLATIONS OF OTHERLAWS- For the purpose of the
exercise by any agency referred toin paragraph (1) of its powers under any
Act referred to in thatparagraph, a violation of this title shall be deemed
to be aviolation of a requirement imposed under that Act. In addition toits
powers under any provision of law specifically referred to inparagraph (1),
each of the agencies referred to in that paragraphmay exercise, for the purpose
of enforcing compliance with thistitle, any other authority conferred on
such agency by law.`
(c) STATE ACTION FOR VIOLATIONS-`(1)
AUTHORITY OF STATES- In addition to such other remedies asare provided under
State law, if the chief law enforcementofficer of a State, or an official
or agency designated by aState, has reason to believe that any person has
violated or isviolating this title, the State--`
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(A) may bring an action to enjoin such
violation in anyappropriate United States district court or in any othercourt
of competent jurisdiction;`
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(B) may bring an action on behalf of
the residents of theState to recover damages of not more than $1,000 for
eachviolation; and`
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(C) in the case of any successful action
under subparagraph(A) or (B), shall be awarded the costs of the action
andreasonable attorney fees as determined by the court.`
(2) RIGHTS OF FEDERAL REGULATORS-`(A)
PRIOR NOTICE- The State shall serve prior writtennotice of any action under
paragraph (1) upon the FederalTrade Commission and, in the case of an action
whichinvolves a financial institution described in section1004(b)(1), the
agency referred to in such section withrespect to such institution and provide
the Federal TradeCommission and any such agency with a copy of its
complaint,except in any case in which such prior notice is notfeasible, in
which case the State shall serve such noticeimmediately upon instituting
such action.`
(B) RIGHT TO INTERVENE- The Federal
Trade Commission or anagency described in subsection (b) shall have the
right--`(i) to intervene in an action under paragraph (1);`(ii) upon so
intervening, to be heard on all mattersarising therein;`(iii) to remove the
action to the appropriate UnitedStates district court; and`(iv) to file petitions
for appeal.`
(3) INVESTIGATORY POWERS- For purposes
of bringing any actionunder this subsection, no provision of this subsection
shall beconstrued as preventing the chief law enforcement officer, or anofficial
or agency designated by a State, from exercising thepowers conferred on the
chief law enforcement officer or suchofficial by the laws of such State to
conduct investigations orto administer oaths or affirmations or to compel
the attendanceof witnesses or the production of documentary and other evidence.`
(4) LIMITATION ON STATE ACTION WHILE
FEDERAL ACTION PENDING- Ifthe Federal Trade Commission or any agency described
insubsection (b) has instituted a civil action for a violation ofthis title,
no State may, during the pendency of such action,bring an action under this
section against any defendant named inthe complaint of the Federal Trade
Commission or such agency forany violation of this title that is alleged
in that complaint.`
SEC. 1005. CIVIL LIABILITY.`Any person,
other than a financial institution, who fails to complywith any provision
of this title with respect to any financialinstitution or any customer
information of a financial institutionshall be liable to such financial
institution or the customer to whomsuch information relates in an amount
equal to the sum of the amountsdetermined under each of the following
paragraphs:`
(1) ACTUAL DAMAGES- The greater of--`
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(A) the amount of any actual damage
sustained by thefinancial institution or customer as a result of suchfailure;
or`
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(B) any amount received by the person
who failed to complywith this title, including an amount equal to the value
ofany nonmonetary consideration, as a result of the actionwhich constitutes
such failure.`
(2) ADDITIONAL DAMAGES- Such additional
amount as the court mayallow.`
(3) ATTORNEYS' FEES- In the case of
any successful action toenforce any liability under paragraph (1) or (2),
the costs ofthe action, together with reasonable attorneys' fees.`
SEC. 1006. CRIMINAL PENALTY.`
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(a) IN GENERAL- Whoever violates, or
attempts to violate, section1003 shall be fined in accordance with title
18, United States Code,or imprisoned for not more than 5 years, or both.`
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(b) ENHANCED PENALTY FOR AGGRAVATED
CASES- Whoever violates, orattempts to violate, section 1003 while violating
another law of theUnited States or as part of a pattern of any illegal
activityinvolving more than $100,000 in a 12-month period shall be fined
twicethe amount provided in subsection (b)(3) or
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(c)(3) (as the case maybe) of section
3571 of title 18, United States Code, imprisoned fornot more than 10 years,
or both.`
SEC. 1007. RELATION TO STATE LAWS.`
(a) IN GENERAL- This title shall not
be construed as superseding,altering, or affecting the statutes, regulations,
orders, orinterpretations in effect in any State, except to the extent that
suchstatutes, regulations, orders, or interpretations are inconsistentwith
the provisions of this title, and then only to the extent of theinconsistency.`
(b) GREATER PROTECTION UNDER STATE
LAW- For purposes of this section,a State statute, regulation, order, or
interpretation is notinconsistent with the provisions of this title if the
protection suchstatute, regulation, order, or interpretation affords any
person isgreater than the protection provided under this title.`
SEC. 1008. AGENCY GUIDANCE.`In furtherance
of the objectives of this title, each Federal bankingagency (as defined in
section 3(z) of the Federal Deposit InsuranceAct) shall issue advisories
to depository institutions under thejurisdiction of the agency, in order
to assist such depositoryinstitutions in deterring and detecting activities
proscribed undersection 1003.'.
SEC. 3. REPORT TO CONGRESS ON FINANCIAL
PRIVACY.Not later than 18 months after the date of enactment of this Act,
theComptroller General of the United States, in consultation with theFederal
Trade Commission, the Federal banking agencies, and otherappropriate Federal
law enforcement agencies, shall submit to theCongress a report on--(1) the
efficacy and adequacy of the remedies provided in theamendments made by section
501 in addressing attempts to obtainfinancial information by fraudulent means
or by false pretenses;and(2) any recommendations for additional legislative
or regulatoryaction to address threats to the privacy of financial
informationcreated by attempts to obtain informmation by fraudulent means
or false pretenses.
Find Out Anything
About Anyone?
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