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VER HOJA DE INFORMACIÓN

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The DOL’s proposed rule would close the current regulatory loopholes to ensure that all investment professionals provide advice that is in retirement savers’ best interest and that any conflicts of interest do not taint their advice. This “best interest” standard would apply across the board: to any investment professional advising on retirement accounts for any recommended investment product.

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Aside from the unfairness of charging two good drivers different premiums solely due to their gender, insurers’ inconsistent use of gender indicates that it is not a reliable factor in risk-based pricing, as insurers do not agree on gender-based risk of loss.

The data, purchased by CFA from Quadrant Information Services, used insurers’ rate plans filed with the state to calculate the premium for a 35-year-old unmarried driver with no accidents, moving violations, license suspensions, or lapses in coverage, and who has a high school diploma and rents their home. They drive a 2011 Honda Civic LX and have a 12-mile commute, five days a week, for 12,000 miles driven annually. The premium quote is for insurance at the state minimum liability coverage requirement.

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• Make it much easier for financial firms to avoid any fiduciary responsibility when advising retirement savers about their retirement plan and IRA investments.
• Deprive retirement savers of critical protections when the risks and conflicts are greatest.
• Substantially weaken protections against conflicts of interest when the fiduciary standard does apply.
• Render the standard unenforceable for IRA investors, leaving millions of retirement savers without recourse when they are victims of harmful advice.

With their retirement security on the line, workers and retirees need and deserve retirement investment advice they can trust. The DOL proposal would instead expose them to conflicted sales recommendations dressed up as advice. It should be withdrawn in its entirety and a new rule proposed that protects workers and retirees, not the excess profits of well-heeled financial firms.

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The CFA-PIABA Fact Sheet on Regulation Best Interest

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Instead of strengthening protections for investors, is a craven giveaway to Wall Street. Instead of strengthening protections for investors, it will preserve and protect broker-dealers’ ability to rip off their clients, water down the standard that applies to investment advisers, and abandon investors to sort out the differences between brokers and advisers based on confusing and misleading disclosures.

That’s why the chief supporters of this rulemaking are not the investors who want and need to be protected against conflicted investment advice, or state securities regulators who are the front line on retail investor protections, or fiduciary advisers who have long embraced a higher standard, but the broker-dealers that make tens of billions of dollars annually steering investors into high-cost, risky investments that are highly profitable for the firm, rather than those that are best for the investor.

CFA Best Interest Bait and Switch

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Investor advocates, state securities regulators, legal experts, and fiduciary advisers all agree that the regulations the agency is set to approve are a betrayal of the “Mr. and Ms. 401(k)” investors SEC Chairman Jay Clayton pledged to protect when he undertook this rulemaking. Ordinary investors lose tens of billions of dollars each year as a result of self-interested advice from investment advisers and brokers. With this rule, the SEC is effectively sanctioning the conflicts of interest that create incentives for brokers to give self-interested advice to their clients. The drain on people’s hard-earned savings will continue.

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As explained further below, any truly consumer friendly standard must: (1) require brokers and advisers alike to act in their customers’ best interests; (2) stop companies from encouraging brokers to act against their clients’ interests; and (3) stop financial professionals from marketing themselves as trusted advisers unless they actually have to meet the best interest standard appropriate to that role. In evaluating the SEC proposal, we’ll be asking the following questions.

Does it impose a true best interest standard on brokers’ investment recommendations?

When people turn to financial professionals for help with their investments, they expect those professionals to recommend the investments that are best for them. But that is not currently the case for brokers who operate under what is known as the “suitability” standard that leaves them free to recommend the products that are most profitable for them, rather than those that are best for the customer, as long as they are generally appropriate. Knowing they can’t fight the simple principle that professionals should put their customers first, financial firms have publicly claimed to support a best interest standard, while working feverishly behind the scenes to avoid any real obligation to do what’s best for their customers. Toward that end, they’ve sought to rebrand brokers’ existing suitability standard as a “best interest” standard that is “appropriately tailored for the broker-dealer business model” and redefine terms associated with a fiduciary standard, such as “duty of care,” as compliance with existing – and inadequate – rules of FINRA, the industry’s private self-regulatory authority.

In evaluating the SEC’s proposed new rule, we’ll be looking to see whether it provides the best interest standard investors expect and deserve or simply tweaks the existing suitability standard, as industry has sought. The critical question: what will brokers be prohibited from doing under the new standard that they are permitted to do under the existing suitability standard? Specifically, does the new standard require the broker to recommend the best available investment option, taking into account the needs of the investor and the characteristics of the investment? Anything short of that is not a true best interest standard and should not be labeled as such.

Does the clarified standard for investment advisers also include a clear requirement to act in clients’ best interests?

Investment advisers have long been held to a heightened standard under the Investment Advisers Act of 1940. But that standard is the result of judicial and staff interpretations of the Act’s anti-fraud provisions, rather than a statutory requirement. Over the years, the SEC has been reluctant to bring enforcement actions under the Act that impose obligations beyond disclosure, and disclosure has been shown time and again to be ineffective in protecting investors. A best interest standard does not mean much unless investment advisers have to change their behavior, not simply change the fine print of their paperwork. In evaluating the SEC proposal, we’ll be looking to see whether the clarified standard for investment advisers includes an explicit obligation to act in the customer’s best interests that cannot be satisfied through disclosure alone.

Does the new standard for brokers and advisers include limits on conflicts of interest?

Raising the standard of conduct without reining in the practices that encourage violations of that standard is likely to produce only minimal improvements in broker conduct and the treatment of investors. As long as financial professionals continue to be paid and rewarded for making recommendations that profit the firm, instead of those that are best for the investor, they are likely to act on those incentives. While the SEC Chairman has made clear that he does not intend to impose the strict limits on conflicts of interest included in the Department of Labor’s pro-investor fiduciary rule for retirement accounts, there’s still room for improvement over the disclosure-only approach to addressing conflicts advocated by industry.

In evaluating the SEC’s proposed new standard, we’ll be looking to see whether it takes any steps to rein in industry practices that encourage and reward harmful advice. In particular, we’ll be looking to see whether the SEC is willing to take even the most basic step of prohibiting firms from intentionally creating incentives – such as sales quotas, sales contests, and paying bonuses to reward the sale of particular products – that encourage financial professionals to base their recommendations on their own financial interests, rather than the customer’s best interests.

Will the proposal enhance investors’ ability to make an informed choice among different types of financial professionals?

Years of research has shown that investors cannot distinguish between brokers and investment advisers, which is a crucial fact to bear in mind. The Commission is proposing to require brokers and advisers alike to provide customers with a brief written “relationship summary,” which is presumably designed to help alleviate that confusion. But disclosure alone cannot solve this problem if it is not backed by restrictions on the ability of brokers to market themselves to the public as trusted advisers and to label their sales representatives as “financial advisors,” “wealth managers,” and other similar terms. In evaluating the SEC proposal, we will be looking to see whether the agency places appropriate restrictions on the misleading use of such titles and whether it proposes to test the new disclosure document for effectiveness in conveying key information to investors.

* * *

The SEC has the potential to save investors tens of billions of dollars by requiring brokers and advisers alike to act in customers’ best interests. The weak, disclosure-based standard industry has been lobbying for would do more harm than good, by creating the false impression that investors are protected when that is not the case. Investors will be watching Wednesday’s vote closely to see whose side the SEC is on.

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Myth: The CFPB’s rule bans consumers from resolving their claims through arbitration.

Fact:  The rule provides groups of consumers with a choice on how to resolve their dispute. The rule permits groups of consumers to pursue their claims in arbitration proceedings, through the Court system, or any other option.

However, the rule stops companies from forcing consumers into arbitration proceedings. The current system allows financial companies to limit consumer choice. The rule restores this freedom.

Currently, consumers have recovered billions by pursuing group claims through the Court system, compared to arbitration. When the rule takes effect, companies seeking to encourage resolutions through arbitration will likely make a greater effort to ensure that these proceedings are fair and transparent. If arbitration is more attractive than pursuing claims through the Court system, consumers will voluntarily choose this option.

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This is partly because victims of foodborne illness often cannot determine the source of their infection. Consider:

• Up to 28 days may pass between the time a consumer eats a contaminated food and develops listeriosis, an infection that killed 33 people who ate Jensen Farms cantaloupes in 2011.
• Up to six weeks may pass before feeling the effects of poisoning from Salmonella typhimurium, the pathogen that killed nine people and sickened 714 others who ate peanut butter paste manufactured at a Georgia plant under then-Georgia governor Sonny Perdue’s watch.

Most people have a tough time recalling everything they ate a day ago, much less a month ago. And most food safety lapses, thankfully, do not result in high-profile outbreaks that are ultimately traced back to their source. But that does not mean we can ignore them.

Regulations to prevent food safety threats cost less than reacting after people get sick. That is why large bipartisan majorities have supported laws like the Food Safety Modernization Act and appropriations for food inspectors, epidemiologists, microbiologists, and the rest of the people and infrastructure that make our food safe.

Unfortunately, the Trump Administration has already begun undermining the American food supply’s protections in the name of “deregulation,” with actions such as:

• Nixing rules to standardize how manufacturers and retailers alert consumers to recalls of contaminated products—rules that are required under the Food Safety Modernization Act.
• Proposing to cut billions of dollars of funding, including nearly the entire budget of USDA’s Food Safety and Inspection Service, and replace it with user fees.
• Moving to authorize chicken imports from China, where overuse of antibiotics has bred “superbugs” resistant to drugs once thought of as a last resort, and scandal after scandal has exposed a deeply flawed food safety system. The move is widely viewed as a quid pro quo to allow more U.S. beef sales in China.
• Proposing double-digit cuts to funding for surveillance of foodborne illness outbreaks by the Centers for Disease Control and Prevention and its partners.
• Pushing to expand the disastrous “Hog HIMP” pilot inspection program at slaughterhouses despite evidence of disturbing animal welfare and worker and food safety problems.

Trying to save money for American families by scrimping on food safety regulation is a penny-wise, pound-foolish strategy. American consumers spend roughly $1.46 trillion on food and beverages each year. We should not have to wonder whether we are paying to get sick.

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The legislation includes a number of provisions related to the Consumer Financial Protection Bureau (CFPB) and its dedicated military protection office. Senior military leaders and organizations representing servicemembers, veterans, survivors, and their families have voiced support for the CFPB. Experts at the Consumer Federation of America conducted analysis on the proposed legislation’s impact on the CFPB’s authorities with respect to military families.

The analysis suggests that military families would lose out on valuable protections, if the proposal were to become law, potentially impacting morale, financial readiness, and overall force readiness.

Illegal Conduct by the Financial Services Industry Against Military Families

The American military community, including servicemembers, veterans, survivors, and their families face unique financial challenges, compared to their civilian counterparts. For example, active-duty servicemembers are subject to Permanent Change of Station orders – legal instructions that require them to move to a new post. For military families who are “underwater” on their mortgage, this can create serious financial stress. Given these frequent moves, many military spouses face challenges when looking to secure steady and stable employment.

While surveys show high levels of support for military families from the civilian population, some in the financial services industry have taken advantage of the challenges these families face.

• Many of the largest mortgage servicers in the country were caught engaging in illegal foreclosures on the homes of more than 2,400 military families. This stunning violation of the law by Bank of America, Citi, JPMorgan Chase, Wells Fargo, and Ally Financial likely resulted in deep emotional and financial pain for these families. As part of a settlement, the institutions would collectively pay over $300 million.
• After a report by the CFPB uncovering illegal overcharging schemes in the student loan industry, regulators found that Sallie Mae and Navient cheated military families on their student loans. The companies were ordered to pay $60 million. The Department of Justice described the student loan giant’s conduct as “intentional, willful, and taken in disregard for the rights of service members.”

• Despite an effort to hide its misconduct by shredding documents and deleting phone call recordings, Cash America, a payday lender, was found to be overcharging servicemembers in violation of the Military Lending Act. The CFPB fined Cash America and ordered the company to clean up its bad practices.

Financial Readiness is Connected to Force Readiness

The Department of Defense (DOD) has long been concerned about the financial fitness of the force, stating in a report that “predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force.”

Addressing financial misconduct by bad actors that target military families can both contribute to overall military readiness and reduce the costs to taxpayers of involuntary separations. According to Department of Defense analysis of involuntary separations that were due to legal or standard-of-conduct issues—an average of 19,893 per year—the Department estimates that approximately half are attributable to a loss of security clearance, and, of these, 80 percent are due to financial distress. The Department estimates that each of these separations costs taxpayers over $57,000.

Praise for the Consumer Financial Protection Bureau from the Military Community

In testimony submitted to the Senate Armed Services Committee, the Consumer Federation of America was joined by other consumer and veterans’ advocacy groups. The testimony expressed strong support of the CFPB’s robust defense of servicemembers, veterans, survivors, and their families.

The military’s senior enlisted leaders also spoke about the critical role of the CFPB to ensure military families are kept safe from financial harm. Sergeant Major of the Army Daniel A. Dailey noted about the CFPB, “I know they have done great things for our servicemembers.”

In letters to Congress and through other public statements, organizations such as the Veterans of Foreign Wars, National Military Family Association, Student Veterans of America, the Retired Enlisted Association, Veterans for Education Success, the Reserve Officers Association, Iraq and Afghanistan Veterans of America, Vietnam Veterans of America, the Tragedy Assistance Program for Survivors, and others have praised the CFPB and its dedicated military protection unit.

Military Protections Removed by the Financial CHOICE Act

According to analysis by the Consumer Federation of America, the current version of the Financial CHOICE Act includes several provisions that negatively impact servicemembers, veterans, survivors, and their families.

• Inclusion of Payday Lender Loophole. According to a study that examined the density of payday lenders in 20 states, researchers found that even when considering other variables such as income and ethnicity, the counties and zip codes that had the greatest overrepresentation of payday lenders tended to a common characteristic: a close proximity to military installations. The authors noted that “payday lenders crowd around the gates of military bases like bears on a trout stream.”

Section 733 of the bill would completely eliminate the CFPB’s authority to create competition and sensible safeguards for payday and auto title loans, where lenders have targeted the military community. The CFPB would also be banned from taking any enforcement action when payday lenders break the law.

• Elimination of Military Protection Office Requirement. Under current law, the CFPB is required to establish a dedicated Office of Servicemember Affairs to coordinate consumer financial protection efforts across Federal and State agencies. The office, established by Holly Petraeus, is also required to monitor consumer complaints from military families and provide financial education resources.

Section 725 of the bill would eliminate this requirement, jeopardizing the future of the unit.

• Military Lending Act Oversight Shut Down. The CFPB supervises nonbank financial companies, including auto lenders and payday lenders, to ensure they are complying with the Military Lending Act (MLA). The MLA limits excessive interest and fees for active-duty servicemembers, including those on active Guard or active Reserve duty, to a 36% annual percentage rate. The law also forbids financial companies from forcing military borrowers to waive their rights under other consumer protection laws or to submit to arbitration proceedings against their will. The consumer agency is the only government regulator with authority to supervise these companies.

Section 727 eliminates CFPB’s authority to supervise entities for compliance with the Military Lending Act.

• Other Authorities to Enforce Key Protections Stripped. According to CFA’s analysis of CFPB enforcement actions impacting servicemembers and veterans, the agency heavily relies on its authority to protect consumers from unfair, deceptive, and abusive acts and practices. For example, CFPB shut down USA  Discounters’ servicemember fee scam, which relied on this critical authority. This law protects members of the military from misrepresentations, bait-and-switches, and other misconduct.

Section 736 of the bill would eliminate this authority, reducing the CFPB’s ability to protect military families from these abuses.

• Forced Arbitration Reform Halted. Banks and financial companies currently include provisions in the contract fine print that forbid consumers, including veterans and survivors, from taking companies to court if they’ve been cheated. Current law gives the CFPB the ability to place sensible limits on how financial companies can engage in this practice. After publishing an extensive study, the CFPB proposed a set of safeguards to ensure greater transparency and fairness in arbitration.

The Military Coalition, a consortium of uniformed services and veterans organizations representing more than 5.5 million current and former servicemembers and their families and survivors, strongly endorsed the CFPB’s proposal in a letter, noting that “our nation’s veterans should not be deprived of the Constitutional rights and freedoms that they put their lives on the line to protect, including the right to have their claims heard in a trial by a jury when their rights are violated. The catastrophic consequences these clauses pose for our all-voluntary military fighting force’s morale and our national security are vital reasons for the CFPB to act quickly to finalize the regulations.”

Section 738 would repeal the CFPB’s authority to pursue these reforms.

For more information about the Consumer Federation of America’s research and analysis on consumer financial services issues, including the Consumer Financial Protection Bureau and its work to protect servicemembers, veterans, survivors, and their families, click here.

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With tens of billions of dollars in profits at stake, however, the powerful financial interests opposed to the rule are not going down without a fight. Energized by last November’s election results, financial industry lobbyists have renewed their attacks on the rule. In addition to pursuing lawsuits seeking to overturn the rule in court, they have both urged the Trump Administration and backed legislation to first delay and then kill the rule. Members of Congress who believe working Americans and retirees deserve retirement investment advice that serves their best need to stand firm in opposition to these efforts.

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This checklist from Consumer Federation of America (CFA) and its Identity Theft Service Best Practices Working Group provides suggestions for questions to ask if you are considering identity theft services to help breach victims. This is not intended as legal advice, however; consult with an attorney before deciding whether to purchase such services, what features are needed, and which provider to select.

The term “data breach” is used here to encompass a broad range of incidents in which personal information may have been compromised, including hacking, accidental disclosure, skimming, insider theft, lost equipment, and careless disposal of documents. Identity theft services may not be necessary in every breach situation, but if you are going to offer them, you’ll want to make sure that they provide the breach victims with the information and assistance that best fits their needs.

1. What are identity theft service providers?

As described in more detail in this checklist and in CFA’s Best Practices for Identity Theft Services,[2] these are companies that provide a range of services which typically include alerting individuals about potentially fraudulent use of their personal information, mitigating the damage, and/or helping victims recover from identity theft. The features of their programs vary widely and can often be customized to fit particular breach situations.

2. Is it a good idea to retain an identity theft service provider before a data breach occurs?

Responding to a data breach can be hectic and stressful. Consider having identity theft services lined up in advance in case of a data breach rather than shopping for those services in the midst of one. You may also be able to save money by pre-negotiating for future identity theft services.

3. How do you know whether identity theft services are necessary if a breach occurs?

Whether identity theft services are necessary in the event of a data breach depends in large part on the types of personal information involved and the circumstances in which the breach occurred. Most states have data breach notification laws, some of which require offering identity theft services in certain breaches, and there are also federal laws that may apply.[3] These laws vary in terms of the types of entities that they cover and what triggers a requirement to provide notice, and to whom. Be aware of the data breach laws that apply to you. A good rule of thumb is: if you are legally required to notify the victims of a data breach, you should consider providing them with identity theft services.

4. What features of identity theft services should you look for to help breach victims?

The particular features of identity theft services that are most helpful to breach victims will vary according to the types of personal information that were compromised. In interviewing identity theft service providers, describe the types of information that have been or could be compromised and ask them what features would best meet the needs of those affected. They will need to have a thorough understanding of the situation to determine the specific features that you may want to offer.

Information for breach victims

You should always ask whether the identity theft service provides victims with information about how they may be able to reduce the potential damage that may result from the breach. For example, this could include tips about:

• Changing compromised account numbers.
• Re-setting and maintaining strong passwords.
• Monitoring their accounts online and reviewing statements promptly to detect unauthorized charges or debits.
• Accessing and checking their credit reports at annualcreditreport.com.
• Recognizing and avoiding “phishing,” particularly attempts to exploit the fact of the breach.[4]
• Using fraud alerts, security freezes and other tools that may be appropriate in the situation.

The Federal Trade Commission provides guidance on what to do if one’s personal information is lost or stolen.[5] Identity theft victims can use www.identitytheft.gov to report identity theft and get a customized recovery plan.

Other general questions to ask about the service

• Are the services available to breach victims 24/7?
• Is there a toll-free number, with live operators to answer frequently asked questions?
• What response times and other service levels can the service commit to?
• Can the service handle multiple languages?
• If monitoring is provided, how quickly are alerts about possible fraud sent, and are there multiple options to receive them?
• Are there specially trained personnel to assist victims in the event that fraud occurs as a result of the breach?
• Will the service continue to help victims with fraud that resulted from the breach but has not been resolved by the time your contract ends?

Monitoring

Monitoring, a common feature in many identity theft services, can help detect if someone’s personal information is being used or at risk of being used for fraudulent purposes. There are many different types of monitoring.  It is important to note that there is no guarantee that monitoring can catch every instance of fraud that it is designed to try to detect.

• Credit monitoring is useful to detect certain kinds of new accounts that are opened using the breach victims’ personal information, such as new credit cards, charge cards, auto loans and mortgages. If Social Security numbers have been compromised, credit monitoring is one of the features that you should consider because they are often used to open new credit accounts.
• Credit monitoring may also alert victims to possible fraud when accounts that have been sent to collection are reported, including accounts that don’t typically appear in credit reports, such as utilities, telecommunications or health care services. In addition, there may be options for breach victims to be notified when there are anomalies in their account balances, credit limits or credit use. Ask what the credit monitoring will cover.
• To improve detection of existing account takeovers, fraudulent applications for government benefits, impersonating breach victims in legal proceedings and other possible uses of compromised data, you may also want to look for services that monitor public records, proprietary commercial databases, change of address records and other databases. You may want to consider this type of monitoring when Social Security numbers have been exposed in a breach since they can be used for many different fraudulent purposes.
• If only credit card or debit card numbers were compromised, the breach victims should be advised to set up alerts on those accounts. Most card issuers will provide these alerts to customers at no charge. In addition, services that monitor “the dark web” to detect if that information is being offered for sale and alert the accountholders can be helpful.
• This type of monitoring can also be useful to detect if Social Security numbers, passwords and other credentials are being traded on the Internet. Breach victims should always be advised to re-set  passwords if they have been compromised, however, and to consult with their financial institutions or other companies with whom they have accounts to determine the best course of action if it appears that the account numbers may have been exposed.

Fraud resolution

Fraud resolution is another feature to consider offering. Before you contract with an identity theft service provider, you’ll want to be certain that victims will be able to access resolution services promptly and easily. It’s also important to know what types of assistance will be provided to ensure that the victims can get the help they need.

Ask the service provider exactly what the assistance that it can offer to the breach victims would entail. Advice for victims from trained personnel is an important feature of any good identity theft service. For example, with the correct advice about the steps to take, victims can usually resolve problems with fraudulent charges to their credit cards themselves relatively easily.

In some cases, more hands-on assistance may needed, such as contacting creditors, law enforcement authorities, or others on behalf of victims. If the compromised data could lead to problems that are complex and difficult to remedy, such as debit card or other types of bank account fraud, stolen tax refunds, medical identity theft, or employment fraud, seek assurances that the identity theft service provider has expertise in the relevant areas and can provide the help that the victims will need.

5. What other kinds of assistance might identity theft services provide in breach situations?

Some identity theft service providers will help you respond to a breach, including writing and/or sending the notifications to those affected by the breach. If you are interested in this kind of assistance, ask what kind of experience they have in this regard. A well-written notice can reduce call volume and the potential for negative reactions, and encourage victims to take advantage of the services that will be provided. The breach notice should be in plain language, clearly describe the services that are being offered, and explain how victims can access the services. Details of the services and how they can help the victims should be made easily available.

Identity theft service providers may also be able to help you handle calls and emails asking for general information about the breach. If desired, you can work with them on scripts to use. In addition, they may provide you with advice about FAQs and other helpful information for your website. Keep in mind that you should never rely solely on advice from an identity theft service provider; always consult with legal counsel on the wording of breach notifications and other steps that you should take in response to the breach. Consider retaining an attorney that specializes in helping organizations respond to breaches.

6. How can you find reputable identity theft service providers?

An insurer, lawyer or consultant that works with your enterprise to deal with breach situations may have suggestions for identity theft service providers to use. You can also do research online. Be aware that there are many organizations that offer “ratings” for identity theft services. Some of them are independent and impartial, others are “pay-to-play.” Ask the identity theft service providers that you are considering for references from clients they have served in similar breach situations. Checking their complaint records and ratings with the Better Business Bureau is another good idea. If service providers have customer satisfaction ratings based on independent assessments of their services, that information can also be helpful. Keep in mind that if you have insurance for cybersecurity risks or other liabilities, it might cover identity theft services in the event of a breach, and the policy may name a specific identity theft service provider or offer a list of providers from which to choose.

CFA’s Best Practices for Identity Theft Services encourage identity theft service providers that are seeking to sell breach services to clearly explain the benefits and limitations of their programs and how the features may help the breach victims. The best practices also caution them against overstating or misrepresenting, directly or by implication, how the features of their programs may help the victims.

If the claims being made seem exaggerated or it is unclear whether the features of the service will adequately meet the needs of the breach victims, look for another identity theft service provider.

7. What else should you think about when considering contracting for identity theft services?

As with any business contracts, you’ll want to make sure that the services are clearly described in your provider agreement and the terms accurately reflect your expectations. You may also want to consider including provisions that address whether and in what manner the identity theft service provider may solicit the breach victims to buy services during the contract period and/or purchase services once it ends.

The Data Breach Services section of CFA’s Best Practices for Identity Theft Services provides guidance for identity theft service providers in this regard. Furthermore, under that section, identity theft service providers should only ask the breach victims for the personal information that is needed to provide the services and only use the information for that purpose. While it may be necessary to share breach victims’ personal information with affiliates or third parties in order to provide the services, the identity theft service providers should share the information only for that purpose and never sell it to others.

Whether you are contracting for identity theft services in the event of a breach or to give your customers or employees as a benefit, CFA encourages you to look for identity theft service providers whose practices are aligned with its Best Practices for Identity Theft Services. Ultimately, the quality of the identity theft services you offer and the behavior of the service provider will reflect on you. Choose the service, and the features of the service, that will best fit the needs of those who may use it.

The Consumer Federation of America (CFA) is an association of non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization’s Board of Directors.

[1] See information about data security from the Federal Trade Commission at www.ftc.gov/tips-advice/business-center/privacy-and-security/data-security. The nonprofit organization National Cyber Security Alliance also provides information about security at www.staysafeonline.org/business-safe-online/. Another good resource is the Online Trust Alliance Data Protection and Breach Readiness Guide, available at   https://otalliance.org/system/files/files/resource/documents/2016-ota-breachguidehr.pdf.

[2] On page 4 of CFA’s Best Practices for Identity Theft Services, identity theft service providers are described as follows: Some monitor credit reports and alert consumers to activities such as new accounts opened in their names. Some monitor customers’ personal information more broadly, in addition to or instead of monitoring credit reports – for instance, information in commercial and public databases, and in online chat rooms. Some also search “underground” Web sites that identity thieves use to trade in stolen information. Most services offer some type of assistance for customers who become identity theft victims, from providing advice to taking direct action to resolve their problems. For some identity theft service providers, fraud resolution is the main benefit they provide. Many services include insurance or guarantees. See www.consumerfed.org/pdfs/CFA-Best-Practices-Id-Theft-Services.pdf.

[3] Sources  for information about state data breach notification laws include: www.ncsl.org/research/telecommunications-and-information-technology/security-breach-notification-laws.aspx, www.bakerlaw.com/files/Uploads/Documents/Data%20Breach%20documents/Data_Breach_Charts.pdf and www.mintz.com/newsletter/2007/PrivSec-DataBreachLaws-02-07/state_data_breach_matrix.pdf. The chart at www.steptoe.com/assets/htmldocuments/SteptoeDataBreachNotificationChart.pdf has state and federal laws.

[4] See information from the Federal Trade Commission about phishing at www.consumer.ftc.gov/articles/0003-phishing.

[5] See https://identitytheft.gov/Info-Lost-or-Stolen.

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The rule aims at eliminating harmful practices that have become deeply embedded in the business models of sales-based financial firms. It does this by closing loopholes in the current regulations that have allowed brokers and insurance agents to masquerade as objective advisors while acting as self-interested salespeople, by requiring all financial professionals to make a legally binding commitment to set aside their own interests and seek to do what is best for the customer, and by requiring firms to eliminate practices, including compensation and personnel practices, that conflict with that goal.

This fact sheet describes the key benefits retirement savers will receive from this ground-breaking rule.

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These firms are more likely to hire, and less likely to fire, “financial advisers” who engage in unscrupulous conduct. Since advisers who’ve engaged in misconduct once are five times as likely to do so again, this practice poses a direct threat to the firm’s customers. The study identified the ten firms among those with at least 1,000 advisers that employ the highest percentage of advisers with a record of misconduct. View the fact sheet to see how their rhetoric stacks up against their actions.

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Both the Securities and Exchange Commission (SEC) and the Department of Labor (DOL) have a role to play in fixing that problem. The SEC is responsible for eliminating the double-standard that has enabled broker-dealers to offer investment advice about securities without having to meet the fiduciary standard appropriate to a relationship of trust. The DOL is responsible for eliminating loopholes in ERISA regulations that have enabled brokers, insurance agents, and others to offer self-interested advice to retirement plans, plan participants and Individual Retirement Account (IRA) investors.

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