California Legislative Committees Approve Two Privacy Measures

The California Assembly Judiciary Committee approved a controversial financial privacy bill on a partisan vote of 7 to 3. The measure, SB 773 sponsored by Senator Jackie Speier (D-Hillsborough), would create an “opt-in” system for information sharing with third parties, and an “opt-out” system for affiliates.

Bill Gausewitz, AIA assistant vice president, western region, stated that despite hearing extensive testimony about the weaknesses in this bill, the Committee voted to keep the bill moving forward. He maintained that while 43 states have enacted regulations consistent with the Financial Services Modernization Act, California’s proposed legislation will, unfortunately, separate the state from the rest of the country. In addition, Gausewitz said California consumers will face more confusing notices, less convenient services, and decreased access to loans and products.

AIA continues to oppose SB 773 based on four primary concerns:

1. The bill will give customers a right to sue their financial institutions regardless of whether or not the disclosure of information causes harm.

2. The bill discriminates against businesses that use contracts to provide services that other entities provide internally or through affiliates.

3. The bill broadly defines affiliates and will make it practically impossible for insurers writing different lines through different affiliates to maintain a single customer database.

4. Finally, the bill requires that two separate and confusing notices be sent to consumers in order to comply with both the Gramm-Leach-Bliley Act and the new disclosure requirements in SB 773.

The Assembly Business and Professions Committee also narrowly voted to approve a measure to create a “do-not-call” list in California. Approved on a vote of seven to four, SB 771 sponsored by Senator Liz Figueroa, would add California to the list of 24 other states that allow consumers to add their name to a list of phone numbers that solicitors would be banned from calling.

Gausewitz stated that unwanted telephone solicitations during the dinner hour is a main consumer concern in the debate over privacy. He noted that while SB 771 attempts to limit unwanted telephone calls, some of its provisions must be fixed or this bill could create more problems than it will solve.

Both SB 773 and SB 771 will now move on to be heard in the Assembly Appropriations Committee. The California Legislature has until Sept. 14 to approve bills and send them to be considered by Governor Gray Davis.

Topics California