Calif. Privacy Ballot Initiative will be Long and Costly Campaign, Alliance Says

News that privacy advocates claim to have gathered enough valid signatures to have their Consumer Information Privacy Initiative appear on the March 2004 California primary election ballot could signal the beginning of a long and costly campaign for the financial services industry, according to the Alliance of American Insurers.

The self-named Californians for Privacy Now announced yesterday that it has gathered 550,000 valid signatures – more that the 373,816 signatures required by state law to qualify for the statewide ballot. The coalition includes AARP, CalPIRG, the Consumer Federation of California, Consumers Union, Privacy Rights Clearinghouse, and the American Civil Liberties Union, and is bankrolled by E-Loan. The deadline for filing the signatures with the Secretary of State is Sept. 29, but the sponsors are threatening to file them as early as Aug. 20 if state legislators fail to pass what they consider to be “strong” privacy protection legislation by noon Aug. 19.

“The tremendous time, effort and money that will be expended by both sides in a statewide initiative campaign is totally unnecessary since the insurance industry already has been complying with California’s insurance privacy law for more than 20 years,” said Rey Becker, Alliance vice president of property/casualty. “The proposed initiative attempts to reinvent the wheel with regard to privacy law, which is absurd.”

Becker even questioned the legality of the initiative, noting that only two days ago a federal judge in Oakland, CA, struck down attempts to regulate financial information disclosures between affiliated companies, saying they were preempted by federal law. “Therefore, the part of the ballot initiative that deals with such relationships already has been ruled unenforceable even before it is filed,” he said.

“However, in true California fashion, the insurance industry will be forced to waste valuable resources fighting this ill-advised initiative that, even if it passes muster with voters, will only succeed in creating burdensome, California-only rules that discourage entry to the market. This will result in fewer choices and higher premiums for insurance consumers, and will probably create a groundswell of support for another initiative, and so on and so on.

“Meanwhile, since the California State Legislature remains in session, the initiative’s proponents seek to use the measure as a ‘sword of Damocles’ hanging over the heads of the financial services industry and legislators alike,” Becker said.

Topics California