Issue

How should personal privacy be protected in a way that does not harm the competitiveness of Minnesota employers?

Policy

The Minnesota Chamber believes that Minnesota law should be consistent with federal law.  Therefore, we oppose legislation that would restrict the use, sharing or disposal of information beyond federal law.  Businesses would be at a competitive disadvantage if held to different standards than federal law, and it could be especially harmful to Greater Minnesota where electronic commerce and information-based businesses create a special opportunity. 

During the last few years, Minnesota adopted several laws designed to protect personal information, including legislation on identity theft, the use of Social Security numbers and security breaches.  These laws were generally supported by a broad coalition, including businesses, and passed on a bipartisan basis.  The Minnesota Chamber believes this legislation is sufficient to address privacy concerns, and further changes in these areas are not needed.

• Identity theft: Minnesota law gives consumers the ability to place a freeze on their credit reports.  This prevents identity thieves from accessing someone else’s credit for illegal purposes.

• Social Security numbers: Minnesota law prohibits businesses from requiring an individual to transmit a Social Security number over the Internet unless the connection is secure or the number is encrypted (except as required by federal law), printing a Social Security number on any materials that are mailed to the individual (unless state or federal law requires the number on the document), using a Social Security number as the primary account identifier (except in connection with a retirement or benefit plan or human resource or payroll administration), and selling Social Security numbers, among other things.

• Security breach: Minnesota law requires anyone doing business in the state that maintains data that includes personal information to notify affected individuals of any breach of security where the unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. 

In addition, federal law allows for 14 uses of driver’s license data – for example, to notify individuals of recalls, for use by law enforcement or for research.  Minnesota should not limit the ability of businesses to use driver’s license information as long as they comply with these 14 federally approved uses. 

The Minnesota Chamber supports reasonable requirements regarding the disposal of paper and electronic records that contain personal information.  We do so because Minnesota businesses take seriously the protection of personal information that they maintain.  Proper disposal makes the information impossible to read or use.  Information that is encrypted or that cannot be associated with an individual should not be considered personal information for the purposes of any disposal requirement. 

The Minnesota Chamber also opposes legislation that would implement an opt-in requirement.  We oppose opt-in requirements because they increase costs, eliminate consumer benefits from information sharing and hinder small business growth.

Business Impact

Minnesota continues to rank in the top tier of states in terms of protecting financial privacy. For many years, it was ranked first or second by the Privacy Journal, a national publication that compares state laws, regulations and court decisions affecting privacy.  Businesses understand the importance of privacy and are taking all reasonable measures to protect consumers under current federal and state laws.  Minnesota businesses need to be able to compete with their counterparts in other states and countries.  Increased Minnesota-specific regulation would hinder that growth and development.

Opt-in requirements increase costs in at least three ways.  First, companies that use personal information to target their marketing or to enter new markets must contact customers one at a time to gain their permission to use information.  It is less costly to have consumers reveal their own preferences about information sharing (i.e., opt-out).  Second, the flow of information combats fraud by providing for check verification services, allows individuals access to their bank accounts by providing ATM networks, assists in collecting child support by locating delinquent parents, and gives individuals critical health care information by tracking the success rates of doctors and clinics.  These benefits would likely be lessened under an opt-in system.  Third, small companies often have to enter into relationships and share information with third parties in order to offer the same level of services as their larger counterparts.  If opportunities to share information are lost, so are small companies’ growth opportunities. 

The federal Fair Credit Reporting Act pre-empts states from enacting more stringent financial information-sharing laws.  Congress recognized that multiple state laws with respect to information sharing would affect interstate commerce and therefore set national standards.  Federal pre-emption should be extended to other areas of privacy or information sharing due to the potential impact on business.