For Immediate Release:
Wednesday, August 27, 2003
Shelley Curran – 415-431-6747
New Law Offers Strongest Protections in the Nation, Debate Over Financial Privacy Moves to Congress
SAN FRANCISCO, CA – Governor Gray Davis signed a new law today that provides Californians the strongest financial privacy rights in the country. The bill signing by Davis caps a four-year campaign by privacy advocates to give consumers greater control over whether their personal information is shared and sold by banks, insurance companies and other financial institutions. The debate over privacy now shifts to Congress where financial industry lobbyists are working to block states like California from enacting consumer protections that go further than existing weak federal law.
“California’s new law represents a milestone in the fight for financial privacy that will pave the way for similar reforms in other states,” said Shelley Curran, Policy Analyst for Consumers Union’s West Coast Regional Office. “Consumers throughout the country want and deserve these same kind of protections.”
Under the new law, Californians will have the right to stop the sharing of information by financial institutions with affiliates unless they meet very stringent criteria. The law requires financial institutions to obtain a consumer’s affirmative consent before sharing information with most third parties. It also establishes standards that financial institutions will be required to follow to inform consumers of their privacy rights.
Current federal law gives consumers very little control over how their personal information is used by financial institutions and leaves consumers vulnerable to identity theft, aggressive marketing practices and fraud.
“Most people don’t want information about their bank balance, spending habits and other intimate details of their financial lives shared widely and sold for profit,” said Curran. “This new law offers Californians important new rights to protect their privacy and exercise better control over who has access to their personal financial information.”
The new California financial privacy law comes at a time when Congress is debating amendments to the Fair Credit Reporting Act (FCRA) that could effect state reform efforts. Financial industry lobbyists have argued that a section of FCRA prevents states from enacting restrictions on information sharing by financial institutions with affiliated companies. This section of FCRA is due to expire at the end of the year. Privacy advocates point out that when Congress passed the Gramm Leach Bliley Act in 1999, it specifically invited states to enact stronger financial privacy protections than those contained in the federal law.
“While most major financial industry interests have conceded that the new California law offers a workable framework for reform, we expect them to use the debate over FCRA to try to block the tougher privacy reforms we’ve won in California,” said Curran. “But we intend to make sure that this new California law is not undermined in Congress and to push for similar protections for all consumers. We need to send a message to lawmakers in Washington D.C. – consumers deserve financial privacy protection.”
Consumers can send their lawmakers in Congress an email urging them to support the ability of states to pass stronger financial privacy laws through a new web site created by Consumers Union. To send an email at no charge, go to: www.Financial PrivacyNow.org.
Consumers Union, nonprofit publisher of Consumer Reports magazine, is an independent testing, educational, and information organization serving only the consumer. We are a comprehensive source of unbiased information about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.