A bill giving Californians some of the toughest financial privacy protections in the nation passed its first legislative test Tuesday when it was approved 10-5 by the State Assembly’s Judiciary Committee. It now goes to the Assembly Banking Committee for action.
The bill, The Consumer Financial Privacy Act (AB-1707), was sponsored by Judiciary Committee Chairwoman Sheila Kuehl. It requires that banks and other financial institutions in California obtain a customer’s written authorization each time they propose to share personal information with affiliated or unaffiliated third parties regardless of the purpose.
In order to get that permission, the financial institutions would be required to tell their customers what information they have about them, how they obtained it, the identity of the person or organization seeking their personal information and what they intend to do with it.
The law would allow disclosure of private, personal information for the servicing of a customer’s account, as well as credit reporting agencies and, when required, to law enforcement authorities in connection with child support enforcement and criminal investigative purpose.
Additionally, it gives individuals and the state permission to sue any institution making unauthorized disclosures, subjecting them to civil penalties ranging from $2,500 to $250,000 for each violation.
The Consumer Financial Privacy Act is one of three financial privacy bills California lawmakers are considering. Kuehl’s bill and those sponsored by State Senators Jackie Speier and Tim Leslie propose would exceed the minimum privacy provisions in the Financial Services Modernization Act (FSMA).
The FSMA permits banks, other financial institutions and insurance companies to merge and offer consumers an array of competing products, but limits their use and dissemination of personal financial data without authorization.
The Federal Trade Commission and the Federal Reserve Board and several other federal agencies are slated to publish their final rules and regulations implementing the act by mid-May.
Mary Abrams, vice president, information policy and privacy for credit reporting agency Experian, said action by lawmakers in California and other states to adopt their own financial privacy rules was “premature” until they’ve seen if and where there are any gaps in the federal rules that need to be plugged.
He also criticized the opt-in provision in Kuehl’s bill, saying that it could “have an affect on the quality of products consumers see in the marketplace and their ability to get products that are customized for their needs.
Network
