North Dakota Voters Repeal Data Law

Voters in North Dakota overwhelmingly rejected a law last month that allowed banks to sell customer information without written permission.

“It’s surprising that the issue got as far as a ballot initiative,” said Marty Abrams, executive director of the Center for Information Policy Leadership at Hunton & Williams, Atlanta.

Abrams was skeptical the North Dakota vote signaled a trend, but also feels the direct marketing industry must do a better job of educating the public about the benefits of sharing information. The decision, he added, may influence the fate of the Fair Credit Reporting Act, which allows financial services organizations to share customer data with third-party marketers. The FCRA expires at the end of 2003.

Banks often share data to determine the credit risk of a given customer, said Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association.

“It’s unfortunate because banks and credit card companies in North Dakota won’t be able to share information with each other and that might increase the prices and interest rates on loans,” he said.

Because the measure was a ballot initiative and not a bill in the legislature, the DMA did not lobby in the state about it or try to influence voters.

Some privacy advocates welcomed the North Dakota vote. Jason Catlett, president of Junkbusters Corp., a Green Brook, NJ privacy advocacy organization, said the referendum sent a clear message to state and federal legislators about the growing public demand for privacy legislation.

“In North Dakota, three out of four voters said they wanted their privacy guarded,” said Catlett.

In North Dakota, unofficial totals showed 80,706 voters — 73% — decided to repeal the state law allowing banks, credit unions and other financial institutions to sell private information without first obtaining customers’ permission. Some 27%, or 29,176 voters, favored keeping the law.

Gov. John Hoeven, a former banker who opposed the repeal, reportedly said state officials will have to measure the vote’s impact, noting it will complicate efforts to expand financial services jobs in the state.

North Dakota’s law was patterned after a federal financial privacy measure approved by Congress three years ago. This was the first time voters of any state rendered a judgment on financial privacy.