Consent Need Not Be In Writing, Stronger Local Bay Area Laws Preempted
The compromise privacy protection legislation announced by Governor Davis and Senator Jackie Speier Tuesday was made public Thursday and contains major loopholes and exceptions favoring the state’s largest financial institutions.
“Informed consent is the heart of the individual’s right to privacy, and the loopholes in this bill will allow corporations to take their private information through sleight of hand,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). “If these loopholes are not closed, a fraud will be perpetrated against the people of California. Californians should not once again be betrayed by the fine print of legislation as well as financial service products.”
The loopholes include:
- “Explicit prior consent” of the consumer before information is shared is not defined so that financial institutions are left to define the standards — which need not be in writing, can be induced through discounts over the phone, or can be buried in fine print of credit card applications.
- Stronger city and county ordinances protecting residents’ financial privacy would be invalidated, as banks asked a federal judge to do last Friday — including those in Daly City, San Francisco City and County, and San Mateo County (all the heart of Speier’s district).
- Local Bay Area laws which would be overturned by the bill allow for less sharing among affiliates, explicit definition of protected information (including social security numbers), and more control over who information is shared with.
- The “consent” form currently removes the provision for an “opt in” box presented to consumers– leaving banks to decide the standard.
- Allow organizations and businesses to access a consumer’s purchasing history.
- Allow marketers to retain a consumer’s private information.
- There are exemptions for retailers and real estate companies.
- Corporations can offer discounts to induce sharing of information.
“Senator Speier should not sacrifice the stronger privacy protections enacted by her own constituents for a weaker state law. Governor Davis cannot proclaim that he’s for protecting personal privacy and then give banks and insurers the means to toy with it,” said Jamie Court, Executive Director of the Foundation for Taxpayer and consumer Rights.
The Foundation for Taxpayer and Consumer Rights urged the loopholes to be closed by Governor Davis, Senator Speier, and the Assembly Banking Committee, which will consider the bill Monday.
The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit and non-partisan consumer advocacy organization. For more information, visit us on the web at: http://www.consumerwatchdog.org.
Analysis of City and County Privacy Ordinances
Daly City, San Mateo County and Contra Costa County have enacted privacy laws that are to take effect on September 1, 2003. Alameda, Solano, Marin, Santa Cruz and San Francisco counties have all passed privacy ordinances. The provisions listed below constitute stronger standards than those present in the current version of SB 1.
San Francisco City and County: “San Francisco Financial Information and Privacy Ordinance” — Ordinance 237-02
- Includes consumer’s Social Security Number in list of protected information.
- Requires written or electronic “consent acknowledgment” from the consumer before information can be disclosed.
- Requires progressively higher penalties for banks that violate privacy standards multiple times.
- Provides consumers greater control choice in determining which banks and business have access to their private financial institutions.
San Mateo County: “An Ordinance Regulating the Disclosure of Confidential Consumer Information By Financial Institutions” — Chapter 5.14
- Includes consumer’s Social Security Number in list of protected information.
- Requires a written “consent acknowledgment signed by the consumer” before information can be disclosed.
- Requires the financial institution to provide written notice that includes: i) The specific types of information that would be disclosed or shared; ii) the general circumstances under which the information would be disclosed or shared; iii) The specific types of persons or business that would receive the information; iv) The specific proposed types of uses for the information.
- Requires progressively higher penalties for banks that violate privacy standards multiple times.
http://www.co.sanmateo.ca.us/smc/department/home/0,,1864_4318241_4513009,00.html
Daly City Ordinance Number 1295 — Chapter 5.92 of Municipal Code
- Provides consumers greater control choice in determining which banks and business have access to their private financial institutions.
- Requires banks to get a consumers “affirmative consent” before private information can be disclosed.
- Requires mandatory minimum fines for banks that violate consumer privacy.
http://www.abag.ca.gov/privacy/Daly_City_Ordinance.pdf
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