The flood of proposed state-level financial privacy regulations appears to be drying up quickly — a relief to financial services firms and their direct marketing partners who had feared the bills would create a disparate patchwork of laws superseding the Gramm-Leach-Bliley Act.
In California, the second of three bills that would have required financial services firms to adopt opt-in methods for sharing customer information was defeated yesterday. The third bill, SB 1732, was changed to require an opt-out format, and it passed the California Senate Finance, Investment and Trade Committee by a 5-2 vote.
Earlier in the week, an assembly bill seeking to establish an opt-in privacy requirement for financial firms also died.
Several bills in other states seeking to impose strict privacy restrictions on financial services firms also were defeated this year under heavy lobbying pressure from banks, insurance companies and other groups. The legislative initiatives primarily were seeking to create opt-in requirements for information sharing, forcing financial services firms to gain the affirmative consent of their customers before sharing customer data with third parties.
The federal legislation imposes an opt-out system for financial services firms. They would be free to share customer information with marketing partners and others as long as the customers do not specifically request that their information not be shared.
Massachusetts is one of the few states remaining that has an active financial services privacy protection bill. Legislation also failed in New York and Washington; although, some consumer groups in Washington are reportedly seeking a ballot initiative.
In Massachusetts, the House Committee on Banks and Banking postponed until June 1 a hearing on its privacy measure, which is seeking to require opt-in protections for consumers, to allow time for the federal agencies that oversee the financial services industries to formulate their final interpretations of the privacy provisions in the Gramm-Leach-Bliley Act. Those interpretations are scheduled to be finalized by May 12, and the law is to become effective Nov. 12.
The Massachusetts bill was introduced jointly by Rep. William Strauss and Sen. Steve Tolman, both Democrats, in January. When the bill was introduced, Tolman was quoted as saying that he was seeking to reduce the number of telemarketing calls people received.