In November 12, 1999, then President Bill Clinton, signed the Gramm-Leach-Bliley Act, more commonly known as the Financial Services and Act of Modernization of 1999. The Act primarily legalizes the merging of different financial institutions like banks, credit companies, insurance companies, and investment companies. Because of this, the risk brought about by sharing of consumer records has become a threat for individuals against identity theft.
It was stated however, that the key rules would remain the same even if the companies have merged. Two of the key rules of the act were that of Financial Privacy and Safeguard. The so-called Financial Privacy Rule involves the gathering and disclosure of personal financial information by financial companies and institutions. The Safeguard Rule requires all financial companies to design, implement, and safeguard all consumer information.
The "Gramm-Leach-Bliley Act" (GBLA) has three major components:
1. Financial Privacy - requiring financial companies to provide privacy notice to consumers stating how consumer information will be obtained, where will the information be shared, how till the information be used, and how will the information be protected. It should also specify that the consumer has rights to refuse information sharing to other parties in compliance to the stipulations of the Fair Credit Reporting Act. If there will be privacy policy changes, the consumers should also be notified, and for each time there will be changes, the consumers have the right to opt out. This is a proactive method to counter-attack the growing number of identity theft cases in the country.
2. Safeguards Rule - requiring financial companies to provide a written information security plan that states how the company has prepared for and plans to continue protecting their clients' information. The document must state at least one specific employee who manages the safeguarding of information, the company's risk management strategies, monitoring and testing programs to secure information, and should still state how they collect, store, use, and protect, consumer information.
3. Guard against Pretexting - Pretexting also known as Social Engineering is the process of obtaining access to personal information without proper authority. This is a form of identity theft referred to as account hijacking or phishing. GBLA requires financial organization to provide a plan on how they train their employees in safeguarding consumer information. The training should be followed up by random spot-checks, and "outside the classroom" practical examination.
Since the inauguration of President Barack Obama, however, this act has been revisited and has been subjected to revisions. The President believes that the act has directly caused the 2007 financial crisis in the United States.
About this Author
Tina L. Douglas is a well established author on the topic of identity theft.
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