A California Senate committee yesterday postponed voting on two bills that
were seeking to give consumers more control over the information that
financial services have about them. The bills were seen as strengthening the
privacy protections in the federal financial modernization law, the
Gramm-Leach-Bliley Act, which is scheduled to take effect later this year.
One of the bills, introduced by state Sen. Tim Leslie, was amended so that
it no longer requires banks to use an opt-in method for obtaining customer
permission to share information. Instead, it would allow an opt-out method,
in which banks could share customer information with affiliates and third
parties unless specifically asked not to do so by customers.
Jedd Medefind, a spokesman for Sen. Leslie, said the amendment imposes
strict requirements on the formats banks and other financial companies can
use to present the opt-out opportunity to their customers. The
bills were hotly debated for several hours by members of the Finance,
Investment and Trade Committee, he said, before the decision was made to
table the measures for an April 26 vote.
“The basic voice from the banks was what they've been saying all along, that
this is going to hamper commerce and make it difficult to provide good
service,” he said.
Sen. Jackie Speier originally introduced the other Senate bill, which was
less inclusive in terms of what companies were considered financial services
firms and included larger penalties for violations.
Another opt-in financial privacy bill in the California Assembly is scheduled
for an April 24 vote in the Assembly Banking Committee.
Direct marketers generally favor the opt-out method of securing customer
permission, because it tends to make more customer information available for
marketing offers. The legislation is being closely monitored around the
country because several other states also have introduced similar financial
privacy bills and are watching to see the outcome in California.
