Measure would bar firms from selling consumers’ financial data without consent.
The Los Angeles Times
SACRAMENTO — Opposing sides have reached a compromise over a beleaguered bill that would
prohibit banks, stockbrokers, insurance companies and other businesses from selling a customer’s most confidential financial information without the consumer’s consent, sources said Wednesday.
If it holds together, the deal worked out by business interests and consumer advocates would impose what backers said would be the nation’s most stringent controls on the release and sale of personal financial information.
Gov. Gray Davis, who embraced the proposal in June after having opposed similar bills by Sen. Jackie Speier (D-Hillsborough) at previous sessions, said in San Francisco on Wednesday that a compromise was “in the works” to enact such a bill this year.
Davis said the compromise, intended to revive a major bill that was defeated two months ago, would “allow us to pass a major piece of [privacy] legislation.”
“Right now,” the governor said, “financial institutions can take your spending habits from your Master Card or other credit cards and sell those to other companies. People do not want that information out there.”
He and supporters of the compromise are expected to announce details of it at a news conference today. Speier refused to divulge specifics of the compromise, but said she felt “more hopeful now than I’ve ever been in the history of this issue.”
As a result of the compromise, Chris Larsen, a Silicon Valley businessman who spent almost $1 million to qualify a tougher privacy initiative for the March 7 ballot, said he would abandon his plan. He said he was satisfied that the compromise bill would adequately protect consumer information from commercial exploitation.
“We think this clearly is a bellwether for the rest of the country to strengthen their very weak privacy laws,” he said.
At least one amendment to the bill would leave it to the federal government to approve the forms that banks would use to get a consumer’s consent. A second change would remove county district attorneys as the primary enforcers of the law and transfer that responsibility to the state attorney general and various state regulators.
Those changes did not sit well with one consumer advocacy organization that was not part of the compromise negotiations, the Foundation for Taxpayer and Consumer Rights.
In a letter to Davis, the group charged that the compromise severely weakened the bill and suggested that he had endorsed the measure as an attempt at “saving yourself from being recalled.” Further, it charged that the settlement provided “new giveaways to banks and insurers.”
“Any new law should be at least as protective as the ballot initiative” by requiring a clearly written and easily understood consumer consent form for the consumer to sign when he or she agrees to the sharing of private information, said Jamie Court, the organization’s personal-privacy specialist.
The Senate passed the Speier bill earlier this spring over relatively light opposition from business interests. But business lobbies turned up the heat in the Assembly and defeated it in the lower house’s Banking Committee in June. The bill got only three favorable votes from the Democrat-dominated, 11-member panel. Several members refused to vote, in effect casting a vote against the bill.
This is the fourth time in as many years that Speier, the Legislature’s champion of privacy protection, has carried such a bill. Two years ago, her legislation was killed outright in the Assembly. Last year, it was beaten up so badly by business interests in the lower chamber that Speier chose to kill it herself rather than seek final passage by the Senate.