The staff of the Federal Trade Commission's Bureau of Consumer Protection ("BCP") has submitted comments to the Department of Justice, the Department of the Treasury, and the Office of Management and Budget (the "Study Agencies") focusing on the privacy and identity theft issues raised by the collection and use of personal financial and other information in personal bankruptcy proceedings. The Study Agencies are conducting a study of how the filing of a bankruptcy affects the privacy of individual consumer information that becomes part of a bankruptcy case. The comment suggests that, in light of the highly sensitive nature of the collected data, and the technological ease with which it can be used to facilitate identity theft, the Study Agencies may wish to consider to what extent highly sensitive information, such as a consumer's social security number, must be included in public record data.
Additionally, BCP's comment recommends that the commercial use of personal bankruptcy non-public data be prohibited. Noting that many bankruptcy trustees are contemplating compiling such non-public data into centralized databases for commercial sale or use, the comment suggests that use of such data would be outside the scope of the trustee's responsibilities, and may also breach the trustee's fiduciary duty. The staff comment also states that the sale of detailed financial information may have implications under the FCRA.
Finally, the comment notes that the interplay of consumers' privacy rights and the Bankruptcy Code is unsettled and involves competing considerations. Recent FTC and various State actions have asserted that the sale of private customer information in direct violation of a company's privacy statement contravenes applicable law; however, according to the comment, the more valuable the customer information is perceived to be, the greater the pressure may be on a bankruptcy estate to sell that information despite explicit pre-petition company promises to the contrary. The staff's comment suggests that, in the context of evaluating possible additional statutory changes, the interplay of the Bankruptcy Code and law enforcement efforts to protect consumer privacy merit further in-depth analysis.
NOTE: This comment represents the views of the staff of the FTC's Bureau of Consumer Protection, and does not necessarily represent the views of the Commission or any individual Commissioner.
The Commission vote authorizing staff to file the comment was 5-0
Copies of the staff comment are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; toll-free: 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. V000013)
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