11/19/2008
Testimony of NFIB/Massachusetts State Director Bill Vernon in Opposition to 201 CMR 17.00 et seq.
Before the Joint Committee on Consumer Protection and Professional Licensure
Chairman Morrissey and Chairman Rodriques and members of the Consumer Protection and Professional Licensure Committee:
My name is Bill Vernon. I am the Massachusetts director of the National Federation of Independent Business. A non-profit, non-partisan organization, NFIB is the nation's and our state's largest small business advocacy group. In Massachusetts, NFIB represents thousands of small and independent business owners involved in all types of industry, including manufacturing, retail, wholesale, service, and agriculture. The average NFIB member has five employees and annual gross revenues of about $450,000. In short, NFIB represents the small Main Street business owners from across our state. On behalf of those small and independent business employers in the Commonwealth, I urge you to review carefully the financial impact of these regulations on small businesses in the Commonwealth, particularly in light of the current economic climate.
NFIB members are concerned about the compromise of private personal information. NFIB members are Massachusetts consumers who want their personal information protected. That is why NFIB did not vigorously oppose enactment of the enabling legislation, M.G.L. c. 93H. But the proposed regulations promulgated pursuant to that legislation threaten a substantial negative economic impact on small businesses.
The small business impact statement issued with the proposed regulations -- one of the best I have ever seen in Massachusetts -- admits to expenses for each small business that could be several thousand dollars up front with annual maintenance fees of hundreds of dollars depending on the current state of the particular business's computer system. Although cost estimates are preliminary, with the number of small businesses in the Commonwealth, it is likely that total expenses for the small business community in Massachusetts will exceed $1 billion in the first two years of implementation. The cost of doing business in Massachusetts is well documented. Adding this type of cost at this time is not a wise public policy.
In addition, the regulations potentially create a new cause of action in civil liability law for trial lawyers to sue small business owners. The Legislature should act to restrict actions under M.G.L. c. 93A to protect small business owners acting in good faith from lawsuits based on these regulations. The expansion of legal causes of action would adversely impact the state's business climate at a time when most believe we should be doing all we can to encourage businesses to grow and create jobs.
Finally, I am concerned that the proposed regulations pose a unique problem and probably almost impossible task for small business owners seeking to procure certifications of compliance from out-of-state third party vendors. The reluctance of third party vendors to spend any resources to comply, the concern of third party vendors of possible legal action for any compromise of personal private information, and the relatively small business relationship between out-of-state vendors and domestic small businesses will probably force our small businesses to discontinue relationships and to seek new suppliers and customers.
NFIB supports the suggestions outlined in the coalition letter dated Oct. 22, 2008, i.e. encryption required only at the time of computer upgrade, third party vendor certification requirement delayed until Jan. 1, 2011, and inventory process requirement delayed until Jan. 1, 2010.
There is no debate that these regulations will be costly to small business owners. NFIB requests that you act to limit these costs however and wherever possible, and legislatively if necessary, to ensure compliance and accomplishment of our goals without further damaging Massachusetts' business climate.
NFIB is ready to work with you to accomplish our mutual goal of safeguarding personal privacy in a cost effective and reasonable way. Thank you.
