Measure to limit sale or sharing of personal data wins only three votes on 12-member panel.

Los Angeles Times

SACRAMENTO — A landmark privacy protection bill that would require Californians to give written approval before their personal financial information could be sold or shared with telemarketers and other third-party businesses was defeated by an Assembly committee Tuesday.

Recently endorsed by Gov. Gray Davis, the bill, SB 1, by Sen. Jackie Speier (D-Burlingame) attracted yes votes from only three of the 12 members of the Assembly Banking Committee. Swing votes on the committee are held by Democrats friendly to business.

Immediately, consumer activists announced that they will concentrate on efforts to qualify for the March ballot a privacy protection initiative they say would be even tougher than the bill defeated by the committee.

“This issue polls [favorably] at 90%. People want control of the privacy of their information,” Shelley Curran of Consumers Union said after the bill was scuttled. Curran said initiative supporters have collected about 200,000 of the 340,000 voter signatures needed to qualify for an election.

Fred Main, a vice president of the California Chamber of Commerce who led the opposition to Speier’s legislation, indicated that opponents of the bill had not decided how much money they would spend to defeat the proposed initiative but said the sum would be adequate.

He suggested that backers of Speier’s bill had used the threat of an initiative as leverage to get the legislation enacted. He asserted that they were probably “surprised” at the committee’s action.

Defeat of the Senate-approved bill came after weeks of intensive lobbying in the Assembly by banks, insurance companies, Wall Street financial houses and other business interests that warned that the legislation would add unnecessary costs to businesses that already were tightly regulated.

On the other side, a coalition of consumer advocates, civil rights activists, organized labor and senior citizens appealed to the committee for protection against loss of control of the intimate details of their financial lives.

In a futile appeal during Tuesday’s hearing, Betty Perry, veteran lobbyist for the Older Women’s League, told the committee that the bill represented a final hope for consumer protection.

“It’s up to you to help us. We can’t go anywhere else. Any bank we go to will expose our information, without your help,” Perry said.

It was the fourth time in as many years that Speier had lost such a bill. Last year, moderate Democrats in the Assembly watered it down so much at the urging of business interests that she voluntarily killed it rather than send a weak bill to Davis, who had not endorsed it.

Her latest bill, labeled by Senate leader John L. Burton (D-San Francisco) and others as the toughest of its kind in the country, would have required businesses to first obtain written permission from a customer before his or her financial information could be shared with telemarketers and other third parties.

In other cases, the consumer’s information, such as bank account and credit card balances, mortgage payments and annual income, could be shared with affiliate businesses unless the customer ordered the practice stopped.

Earlier in the month, Davis, who is threatened with a recall election, endorsed the bill, saying the private information of Californians should not be traded “like baseball cards.” At the committee hearing, his director of privacy, Joanne McNabb, testified that the governor was in full support of the bill and wanted it sent to him for signature.

But Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights who had challenged Davis’ commitment to passage of the bill, charged later that Davis had failed to personally lobby for it.

“There is no way a governor whose party controls both houses of the Legislature couldn’t get this bill on his desk, if he really wanted it,” Court said.

But Speier said Court was wrong. She said Davis “worked pretty hard” and was “very helpful.” She added, “This battle isn’t over.”

In response to defeat of the bill, Court posted on the foundation’s Web site the first four digits of the Social Security numbers of each committee member who didn’t vote for the bill. He also posted the first three numbers of the governor’s Social Security card.

He said he obtained the Social Security numbers from an Internet source for $26.

“We wanted to show the politicians that this is personal and serious and politicians who don’t respect the need for privacy protection must realize they don’t have privacy,” Court said.

About a dozen witnesses testified in favor of the bill, saying the central issue was whether the consumer had the right to control use of his or her private information, which has become a lucrative commodity as electronic technology plays a greater role in global commerce.

But Main and other opponents charged, among other things, that the bill’s “one size fits all” format would impose higher costs, create conflicting restrictions on competitors, prevent some insurance agents from even communicating with their superiors and give unfair advantage to some businesses at the expense of their competitors.

“It’s neither workable nor reasonable,” Main testified.

Gene Livingston, representing the American Electronics Assn., said the bill would wrongly classify software manufacturers, who make tax preparation programs, as tax preparers. Typically, software makers would not be affected by the bill but tax preparers would be, he said.

Voting for the bill were committee chairwoman Patricia Wiggins (D-Santa Rosa), Wilma Chan (D-Alameda) and Ellen Corbett (D-San Leandro).

Voting against it were Russ Bogh (R-Cherry Valley), Ron Calderon (D-Montebello), Guy Houston (R-Livermore) and Tony Strickland (R-Moorpark).

Five committee members did not vote: Cindy Montanez (D-San Fernando), Ed Chavez (D-La Puente), Lou Correa (D-Anaheim), Tim Leslie (R-Tahoe City) and Juan Vargas (D-San Diego).