FOR IMMEDIATE RELEASE
SACRAMENTO -- With bipartisan support in both the Assembly and Senate, the California state legislature has passed the strongest financial privacy protections in the nation, a move the American Civil Liberties Union hailed as a milestone in the reform of financial privacy laws.
""Most people are very particular about disclosing personal financial information to others, and yet current federal law allows banks, insurance companies and other financial institutions to trade and sell their customer's information with very little restriction,"" said Valerie Small Navarro, an attorney with the American Civil Liberties Union of Northern California. ""This bill gives consumers significant new control so they can limit who has access to their private financial information.""
Tuesday's approval of SB 1 by the California Senate on a 31-6 vote sends the measure to Governor Gray Davis for his signature. Governor Davis is expected to quickly sign the landmark consumer protection bill into law.
Under the financial privacy bill, California consumers will have the right to stop the sharing of information by financial institutions with affiliates unless they meet very stringent criteria. The bill requires financial institutions to obtain a consumer's affirmative consent before sharing information with third parties. It also establishes standards that financial institutions would be required to follow to inform consumers of their privacy rights. The current weak federal law gives consumers very little control over how their personal information is used by financial institutions and leaves consumers vulnerable to identity theft, aggressive marketing practices and fraud.
The new law requires financial institutions to explain in plain language how consumers can exercise their expanded rights and imposes stiff penalties for businesses that fail to comply.
""Consumers will no longer receive confusing and incomprehensible privacy statements they receive from their banks and insurance companies that give them virtually no ability to stop the flow of their private financial information to others," said Beth Givens, Director of the Privacy Rights Clearinghouse.
Californians for Privacy Now had pledged to take the issue directly to the voters with a March 2004 ballot measure if lawmakers failed to act by the end of the day on August 19. Now that the legislature has enacted strong privacy reform legislation and the governor has agreed to sign it into law, the coalition announced that it will not proceed with its initiative campaign. Californians for Privacy Now had collected over 600,000 signatures from registered California voters in support of the measure.
The new financial privacy law adopted by California comes at a time when Congress is debating amendments to the Fair Credit Reporting Act (FCRA). Financial industry lobbyists have argued that a section of the FCRA prevents states from enacting restrictions on information sharing by financial institutions with affiliates. This section of the FCRA is due to expire at the end of the year.
In addition, privacy advocates point out that when Congress passed the Gramm Leach Bliley Act in 1999, it specifically invited the states to enact stronger financial privacy protections than those contained in the federal law. Nonetheless, the debate over the FCRA is expected to be intense.
""Californians have sent a loud and powerful message that they want their privacy protected, said Barry Steinhardt, director of the ACLU's Technology and Liberty Program. ""Lawmakers in Washington should hear that message and enact legislation that gives the same rights to the rest of America.""
For more information on the ACLU's fight to protect information privacy, go to /Privacy/PrivacyMain.cfm