North Dakota Votes for Opt-In Financial Info

Share this content:
Voters in North Dakota repealed a law setting an opt-out standard for the sale and distribution of consumer information by financial institutions, according to vote tallies counted yesterday.

The result from Tuesday's referendum shoots down a North Dakota law mirroring the federal Gramm-Leach-Bliley Act, which requires financial institutions to inform their customers of their right to opt out of the dissemination of their personal information. With that law gone, an earlier law prohibiting financial organizations from distributing consumer data without written permission goes into effect.

Under Gramm-Leach-Bliley, states have the right to set a stricter standard for the sale of financial information than the one set by the federal government. Four other states have done so: Alaska, Connecticut, Illinois and Vermont, said Andrew Lustigman, a New York attorney and DM News columnist.

North Dakota is the first state to institute stricter regulations via a public vote or referendum. The vote was held after consumers in the state mounted a grass-roots petition campaign.

The popularity of the North Dakota referendum should be a warning for direct marketers that other states may create stricter standards than Gramm-Leach-Bliley, Lustigman said. According to news reports, 73 percent of voters favored the opt-in standard.

If more states follow suit, the myriad local regulations could make compliance difficult much in the way state do-not-call lists have created compliance problems for telemarketers.

"The standard that was established by Gramm-Leach may be severely undercut," Lustigman said.

Jerry Cerasale, senior vice president for legislative affairs with the Direct Marketing Association, said that consumer financial data available to direct marketers is already limited by the federal Fair Credit Reporting Act. Most marketers don't use data from banks in promoting their merchandise.

However, financial institutions do use the data to market services and programs to consumers, Lustigman said. The definition of a financial institution in North Dakota is so broad that direct marketers could be affected.

"There's a huge amount of cross-marketing that goes on," Lustigman said.

Consumers in North Dakota also stand to lose because banks will likely increase interest rates and make fewer and more expensive offers due to the restrictions, Cerasale said.

"Financial institutions will have a little bit less information on which to make a risk determination," Cerasale said. "When that happens, rates are higher."


You have until Wednesday, December 7 to get your entries in. Learn more here.

Loading links....

Next Article in Marketing Strategy

Follow us on Twitter @dmnews

Latest Jobs: