California coalition launches ballot measure campaign to protect consumers' financial privacy (March 2003).

March 2004 vote sought by privacy advocates

SACRAMENTO, CA - Californians will have the right to decide for themselves whether financial institutions can sell or share their personal information with affiliates and other companies if a proposed ballot measure wins voter approval. Advocates working to strengthen the financial privacy rights of consumers submitted a proposed ballot measure to Attorney General Bill Lockyer today that they hope to bring before California voters in March 2004.

Additional information about the financial privacy ballot measure is available online at www.californiaprivacy.org.

If passed, the initiative will give Californians the strongest financial privacy protection in the nation by requiring financial institutions to obtain a consumer's explicit consent before selling or sharing their personal information with affiliates or third party companies for any purpose other than to complete a transaction initiated by the consumer.

"Californians have made it clear that they don't want their banks and other financial institutions to share their families' personal information without first getting permission," said Shelley Curran, Policy Analyst with Consumers Union's West Coast Regional Office. "State and Federal lawmakers have failed to safeguard consumers' financial privacy. This initiative will provide Californians the protection they want and deserve."

"The market has failed consumers in the privacy arena, and the only way to solve the problem is to give consumers the right to control the selling and sharing of their personal information," said Chris Larsen, Chairman and CEO of E-LOAN. "Both consumers and the financial industry will win if we pass this initiative. By allaying consumer fears about privacy, confidence and trust will emerge - encouraging consumers to take advantage of new services and technologies that they're too afraid to use now."

Current federal law offers consumers very little protection when it comes to controlling whether their personal information is shared or sold by the financial institutions with which they do business. As a result, information such as a customer's account balance, payment history and employment status are routinely shared and sold by financial institutions.

"These business practices represent a fundamental invasion of our privacy," said Bob Warnagieris, Manager of AARP Legislative Advisory Committee. "Most people are very selective when it comes to disclosing personal financial information to others. When banks and other financial institutions share or sell information about our account balances or spending habits without first getting permission, they are violating our desire to keep this information private."

These information sharing practices can harm consumers in significant ways. Some banks have shared personal financial information about their customers, including credit card account numbers, with telemarketers who charged customers for services, even though the consumer never provided their consent. Credit card issuers may use data regarding the spending patterns of consumers to charge them higher rates. Or a senior citizen who has significant equity in a home and whose only source of income is his or her monthly Social Security check might be targeted for a predatory home mortgage loan. The widespread sharing of personal financial information among companies also makes consumers more vulnerable to identity theft.

"Many financial institutions have hundreds of affiliates and countless other third parties like telemarketers and direct mail firms with which they share their customers' private financial information," said Lenny Goldberg, spokesperson for the Privacy Rights Clearinghouse. "The more this information is disbursed, the greater the likelihood it will fall into the wrong hands and be used for identity theft."

A poll of likely California voters commissioned by the Consumer Federation of California Education Foundation in January found that an overwhelming 91 percent of those surveyed supported a measure that would require banks, insurance companies, securities firms and other financial institutions to get their customers' permission first before selling their personal information to third parties.

"Despite overwhelming public support for tougher rules governing financial privacy, the legislature has repeatedly failed to protect consumers," said Richard Holober, Executive Director of the Consumer Federation of California. "This initiative will ensure that consumers -- not banks and insurance companies -- will decide who has access to their personal financial information."

The proposed ballot measure is supported by a coalition of organizations, including AARP, Consumers Union, Consumer Federation of California, CalPIRG (California Public Interest Research Group), Privacy Rights Clearinghouse, E-LOAN, and American Civil Liberties Union.