Opt-In Rule Would Hurt Californians: DMA

California residents would be socked with additional expenses if the state passes an opt-in bill.

That’s the conclusion drawn by a new study by the Direct Marketing Association.

The DMA released the findings just as the new legislative session was starting in California. And one of the bills expected to be reconsidered this term is a financial marketing opt-in bill defeated last year.

The DMA study predicts that new home buyers could end up paying up to $1,760 apiece in additional interest charges. And consumers with credit cards could be hit with $927 million in increased interest payments.

In addition, direct marketers and e-commerce firms would have to spend up to $594 million in additional advertising costs.

The study, authored mostly by Peter Johnson, Ph.D., also shows that charitable organizations would be hurt. They would have to spend more money on fundraising as “$1.57 billion is diverted from direct aid,” according to the DMA.

“Our data suggests that a third-party sharing opt-in scheme would increase direct mail campaign costs by 12% and simultaneously could potentially decrease person-to-person contributions by 10%,” said Michael Turner, Ph.D., executive director of the DMA’s Information Services Executive Council.

Meanwhile, in California, State Sen. Jackie Speier (D-Hillsborough) plans to ask the Senate to reconsider SB-773, a bill that would require financial institutions to get a consumer’s permission before sharing their data with third parties.

The Senate normally reconsiders any defeated bill as a courtesy to the authors, explained Robert Herrill, a spokesperson for Speier.

Introduced last year, the bill received only 32 votes out of the 41 needed for passage. There were 26 votes against the measure.

At the time, Herrill blamed the defeat on Democratic Gov. Gray Davis, who had proposed revisions that would have softened the legislation.

Herrill declined comment on the specifics of the DMA study. But he argued that companies such as American Express and Pacific Life would not have supported the bill if it was going to cost consumers that kind of money.

Davis reaffirmed his commitment to privacy during his recent state-of-the-state address, according to Herrill.

He added, “Those who profit from our system of sharing confidential personal information will be last to agree to fundamental reforms in that system.”

SB-773 also mandated 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.