Opt-in Bill Defeated in California Assembly

There was at least one small piece of good news for direct marketers last week. On Friday, the California Assembly voted down SB 773, a privacy bill that went even further than federal law.

The measure, which could have required financial institutions to get a consumer’s permission before sharing their data with third parties, received only 32 votes out of the 41 needed for passage. There were 26 votes against the measure.

This was a relief to lobbyists from both the direct marketing and banking industries.

The bill’s co-sponsor, Sen. Jackie Speier (D-Hillsborough), blamed Gov. Gray Davis, who had proposed revisions that would have softened the legislation. An estimated 18 Democrats, reportedly reacting to opposition from Davis and the banking industry, refrained from voting on the measure. There were no Republican supporters.

Introduced in February by Speier and Assemblymember Hannah-Beth Jackson (D-Santa Barbara), the bill also required that consumers be given a chance to opt out of data sharing with affiliates.

The Gramm-Leach-Bliley financial modernization act, a federal law passed in 1999, puts no such limit on sharing with affiliates. And it allows an opt-out for sharing with non-affiliates.

To the disappointment of Speier and privacy advocates, Davis proposed changes in SB773, allowing an opt-out for non-affiliated companies with a joint marketing agreement. He also favored an opt-out for non-affiliated firms in the same line of business.

Robert Herrill, a spokesperson for Speier, called Davis’ proposals “unacceptable.” But industry groups were desperate to avoid an opt-in.

“The problem is that, whether it’s opt in or opt out, consumers just don’t opt,” said Oscar Marquis, an attorney with the law firm of Hunton & Williams.

SB773 was passed by the California Senate by a 25-13 vote in June. It also passed three Assembly committees.