SACRAMENTO — Proponents of a bill aimed at prohibiting financial institutions from selling customers’ private information without their permission fear the legislation may be killed Tuesday by a state Assembly committee.
The hotly debated bill, which supporters say would provide California’s consumers with the strongest privacy protections in the nation, faces a crucial vote in the Assembly Banking and Finance Committee.
The 12-member committee – eight Democrats and four Republicans – needs seven votes to pass the legislation, which has been opposed by some Democrats even though Gov. Gray Davis is in favor of it.
“It is getting increasing likely that those business Democrats will vote against it,” said Jerry Flanagan, consumer advocate for the Foundation for Taxpayer and Consumer Rights. “This vote is really a referendum to Gov. Davis’s leadership.”
With only two committee Democrats openly supporting the bill, chances are it may die just as it did the past two years. If it is killed this time, supporters plan to put an even tougher measure on a statewide ballot initiative in March.
Davis announced his support for the bill earlier this month, saying that “Californians don’t want their private, personal information bought and traded like baseball cards.”
The proposed bill requires financial institutions and insurance companies to get written permission from customers before sharing their personal financial information with a nonaffiliated company.
Companies that violated the information-sharing law could be fined $2,500 per violation, up to $500,000. Fines could be higher if the violations are intentional. If the information sharing led to identity theft, penalties could be doubled.
Proposed by Sen. Jackie Speier, D-Daly City, the bill is her fourth attempt to pass a measure that would let consumers opt out of having their financial records shared between companies. A similar bill was killed at the end of the last legislative session in August after fierce industry opposition.
“Now it’s all up to the committee to do the right thing,” said Flanagan. He described the bill, which does not prohibit information sharing of such personal data as Social Security numbers and medical records, as merely a first step.
Banks and insurance companies have resisted the legislation, saying that not allowing companies to share information would increase costs and leave consumers more susceptible to identity theft.
Those industries spent more than $20 million in campaign contributions and lobbying expenses during its successful two-year fight against Speier’s earlier attempts.
“We think it’s not a workable, reasonable bill,” said Fred Main, senior vice president of the California Chamber of Commerce.
He said the bill will only allow large banks to benefit more from their affiliates and make small banks suffer. Main also objects to a requirement for written permission to share information.
“If somebody calls you up on the phone, will you have to ask that person to send the permission by fax? It seems to be a bit out of date,” Main said.
On the Net: Read the bill, SB1, at http://www.senate.ca.gov