Court strikes down portion of California financial privacy law

AP - San Diego Union Tribune ^ | October 5, 2005 | Juliet Williams

[calcowgirl]

SACRAMENTO – A U.S. District Court judge on Tuesday struck down a portion of a California law that restricts banks from selling consumers' private information to their affiliates, ruling that the state law is pre-empted by federal rules.

The American Bankers Association, the Financial Services Roundtable and Consumer Bankers Association had sued California Attorney General Bill Lockyer, arguing that the federal Fair Credit Reporting Act already regulated their ability to sell such information to affiliates in other lines of business.

The federal act lets banks and other financial institutions share information with affiliates about customers' "credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living."

The 2003 California financial privacy law forced companies to offer consumers the right to opt-out of sharing such information.

The attorney general's office said Tuesday that it was weighing whether to appeal the ruling to the 9th Circuit Court of Appeals, which already sided with the banks.

"The Bush administration and the banks have mounted a concerted campaign to strip consumers of strong protections afforded by state law and to leave them at the mercy of weak federal regulators and weaker federal laws," Lockyer spokesman Tom Dresslar said Tuesday. "If this ruling stands it'll be another unfortunate victory in that campaign."

The California law forced banks to give consumers the opportunity to bar the sale of information to an affiliate that isn't in the same line of business. For example, the state law said a bank can't pass on information about a customer to an insurance company owned by the same corporation, if that customer objected.

U.S. District Judge Morrison C. England Jr. ruled last summer that California's regulations – the toughest in the nation – could stand, but the 9th U.S. Circuit Court of Appeals disagreed, and sent the case back to England to determine if any part of the affiliate-sharing rule should remain.

Spokespeople for the associations, which are based near Washington, D.C., did not immediately return calls from The Associated Press late Tuesday. American Bankers Association President and CEO Edward L. Yingling posted a statement on the association's Web site praising the ruling.

"When Congress debated the FACT Act in 2003, it clearly renewed the Fair Credit Reporting Act's pre-emption of state laws like California's privacy statute. Indeed, Congress concluded that federal pre-emption was the key to ensuring the continued success of a seamless nationwide credit reporting system," Yingling said in the statement.

The ruling still leaves in place portions of the state law that force financial institutions to get permission before sharing personal financial information with nonaffiliated companies. That rule also is tougher than federal regulations, Dresslar said.

[gondramB]

"The federal act lets banks and other financial institutions share information with affiliates about customers' "credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.""


I had no idea. Sounds like the court is right. And we do need accurate credit ratings for smooth functioning of capitalism but it also feels like individuals are losing control over who gets that info.

[shooter223]

"The California law forced banks to give consumers the opportunity to bar the sale of information to an affiliate that isn't in the same line of business. For example, the state law said a bank can't pass on information about a customer to an insurance company owned by the same corporation, if that customer objected." .......this is bass ackwards.......customer info should not be sold without written permission .......have you ever tried to get your name taken off of a mailing list(or find the source of the list)? ........good luck

[shooter223]

the libs say abortion is about "the right to privacy" .....no right to privacy in your financial affairs?

[Mrs. Shawnlaw]

I worked for a grocery store chain during a strike a few years ago. One of the employment forms that was 'voluntary' was wanting me to give permission for them to get my credit rating report.
They did NOT get my permission and when I mentioned it to some people later on they thought it would have been Okay. I was astounded.

Some people just don't care or get it.

We dropped participation in 4H because they wanted to do a background check on the parents of participants in leadership roles for child abuse,neglect,predator. No Way! I'm his mother for God's Sake!
Again, many thought, 'Well, if you have nothing to hide why not?'