How Portable Is “Your” Data?

July 9, 2021 at 9:46 am Leave a comment

That is the question yours truly is pondering after reading through Colorado senate bill 21-190. When the bill takes effect Colorado will become the third state in the nation, following California and Virginia, to pass legislation mandating that consumers be given greater control over their electronically stored personal data.

Like Virginia’s, Colorado’s law exempts financial institutions from its requirements, but its passage underscores why your vendor management in general and your contract language in particular is more crucial than ever in the absence of federal guidelines. Here is one reason why:

Colorado has followed the lead of other states and Europe in mandating that businesses that process and control personal consumer data have the ability, among other things, to ensure that consumers have: the right to opt out of their personal data being used by third parties for targeted advertising; the right to know who has their information; the right to correct inaccurate information; the right to delete personal information; and the right to “data portability.”

I’ve been told by IT people that conforming to these requirements is not easy to put it mildly. But the tasks are made even more challenging in the absence of universal agreement as to who owns what data and what personal data is. As a result, even though financial institutions have been exempted from many of these laws, you should draft your contracts, particularly those dealing with your core processing functions, mindful of the need to easily access data on behalf of your credit union and members.

For instance, in reviewing contracts with your attorney, you should seek language stipulating that data will be stored in a universally available format. You also want to clearly delineate what data belongs to your credit union and what data belongs to your vendor. Your contract should also stipulate that vendors will only have access to data for the purpose of carrying out their obligations under the agreement.

Why is this or similar language so important? Because it will ensure that you have the ability to track who has access to the personal information of your members. Irrespective of what the law requires, members are going to increasingly expect to have greater control over their personal information. In addition, as I talked about in a recent blog, transferring from one core processor to another can be as acrimonious as a bad divorce. The clearer your contract specifies what information is to be transferred, the easier this process will be.

On that note, enjoy your weekend. For those of you who find soccer only slightly more exciting than watching paint dry, take a look at Sunday’s European Championship game between Italy and the UK. England is the Chicago Cubs of European Soccer minus a World Series win.

Entry filed under: Legal Watch, technology. Tags: , , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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