CALIFORNIA ASSEMBLY KILLS FINANCIAL PRIVACY MEASURE

For the Third Year in a Row, Lawmakers Reject
Public's Call for Greater Privacy Protection

SACRAMENTO, CA - Following an intense opposition lobbying campaign by banks, insurance companies and brokerage firms, the California Assembly defeated a popular legislative proposal that would have given consumers greater ability to protect their financial privacy. By a vote of 35 to 36, SB 773 (Speier/Nation/Jackson) went down to defeat on the final day of the 2001 California legislative session. The measure needed 41 votes to pass the Assembly.

"Despite widespread public support for financial privacy protection, lawmakers voted today to side with big banks, insurance companies and investment firms over the interests of consumers," said Shelley Curran, a Policy Analyst with Consumers Union's West Coast Regional Office. "In the end, consumers lost out to the politically powerful financial industry and have been left with little ability to protect their financial privacy."

Under federal law, consumers have no right to control the use and sharing of their personal information by corporations with their affiliates and only a limited ability to prevent financial institutions from selling or sharing this information with third parties. As a result, financial institutions routinely share and sell information regarding their customer's account balances, buying habits, and payment histories.

This can harm consumers beyond being subjected to unwanted telemarketing calls. 'Some banks have sold personal financial information about their customers to telemarketers who charged consumers for services, even though the consumer never consented. Credit card issuers may use data regarding the spending patterns and buying habits of consumers to charge them higher rates. 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.

SB 773 would have allowed consumers to stop the financial institutions they do business with from sharing this information with affiliates by opting out. Most financial institutions would have been required to get prior approval from consumers (opt-in) to share or sell financial information with unaffiliated third parties. The bill would have required financial institutions to provide consumers with better notice of their privacy rights and established fines for businesses that violated the law.

"California consumers deserve better leadership on this issue from their elected representatives," said Curran. "Now that this bill has been killed in Sacramento, lawmakers shouldn't be surprised if frustrated voters turn to the ballot to enact the strong financial privacy protection they want and deserve."

###

Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization serving only the consumer. We are a comprehensive source of unbiased advice 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.

View Files Sorted By Office: Consumers Union OPI, New York - Washington DC Office
West Coast Regional Office - Southwest Regional Office - Consumer Policy Institute

  
the entire directory only this category
[More search options]

[ Health ] [ Finance ] [ Food ] [ Product ] [ Other ]
[ About CU ] [ News ] [ Tips ] [ Resources ]
[ New Files ] [ Home ]


Please contact us at: http://www.consumersunion.org/contact.htm
All information ©1998-2002 Consumers Union