Consumer-credit bill passes Senate

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Legislation that may override California’s tougher privacy law heads to conference committee, then Bush.

Orange County Register (California)

The U.S. Senate passed legislation Wednesday aimed at giving consumers new, stronger tools against identity theft and establishing federal privacy standards.

But California Sens. Dianne Feinstein and Barbara Boxer, both Democrats, voted against down the measure in protest, saying it nullifies tougher California laws.

”Bottom line, this bill reduces the privacy rights of 36 million Californians,” Feinstein said in a statement.

The bill, a reauthorization of the Fair Credit Reporting Act, was approved by a 95-2 vote. Lawmakers said it would ensure the smooth operation of the nation’s credit-reporting system, which helps the economy by offering consumers quick credit.

Feinstein and Boxer said the measure contains important consumer protections but is lenient on affiliate-sharing, a practice in which financial institutions share consumers’ information with their affiliated businesses. Amendments they proposed Tuesday to establish California’s affiliate-sharing law as the federal standard failed.

The recently enacted state law requires most affiliated companies to give consumers notice of the intent to share their data for any purpose, as well as the chance to opt out of that sharing.

The federal bill pre-empts state laws on how businesses use, share and report data on consumers. The measure only requires financial institutions to tell customers when they share their data for marketing and to give them the option to block or limit such sharing.

”Each of us, if we could write the bill by ourselves, would probably have somewhat different aspects to the bill,” said Sen. Paul Sarbanes, D-Md., one of the measure’s key sponsors. ”But I think we sought to craft a balanced package here.”

The House of Representatives passed similar legislation in September. A conference of lawmakers will work out differences in the two measures so the president can sign a bill into law.

Catherine Pulley, a spokeswoman for the American Bankers Association, defended information sharing as vital to ”a system that allows an unbelievable democratization of credit.”

But some say the bill shortchanges consumers.

”This is about the widespread sharing of consumers’ information that results in 4 billion credit-card offers and all this unnecessary marketing,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights. ”Consumers know what’s best, and if a consumer says they don’t want their information traded like a stock or a bond, it shouldn’t be.”
Register staff writer Dena Bunis contributed to this report.
Contact the author at: (714) 796-6749 or [email protected]

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