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Privacy law experts said Tuesday that an agreement among state legislators and financial institutions on a bill to tighten consumer privacy in California could prevent a hodgepodge of local regulations and may keep the state in line with privacy standards being enacted around the world. SB 773 by state Sen. Jackie Speier, D-Burlingame, seeks to give consumers the power to prevent financial institutions from selling personal information to marketing companies. The legislation had been in limbo until Speier reached an agreement with her fellow legislators and credit union lobbyists to relax provisions they felt were anti-business. The agreement is seen as critical to the bill’s passage — though it’s still not clear if the legislation will make it past Gov. Gray Davis. Francoise Gilbert, a privacy expert with Gray Cary Ware & Freidenrich, said, “We need [the legislation] because we see a global trend towards increasing privacy. If the U.S. wants to interact with the rest of the world it has to use privacy standards that are equivalent to [standards] the rest of the world is using.” Michael Arruda, co-chair of the privacy group at Bingham McCutchen, said this is the only major bill in play to protect consumers’ privacy. Arruda said the legislation is vital because of a trend among local governments to pass privacy rules. “No one wants to see 472 — or however many there are — municipalities and counties passing different privacy laws,” Arruda said. “If you can have one state privacy rule it would be much more digestible than counties adopting their own ordinances. San Mateo County passed their own privacy ordinance and the city of Daly City is close to doing the same.” Gov. Davis has vetoed previous legislation, and credit unions and banks initially opposed Speier’s effort because they felt it got in the way of their business. Credit union lobbyists also argued that the bill gave unfair advantage to corporate conglomerates, whose vast networks of related companies allow them to share information legally. At the same time, smaller, more independent businesses would be prohibited from sharing with each other. The changes made this week “have made [the bill] more palatable to some businesses,” said Allen Hammond, a law professor at Santa Clara University School of Law. “This is very important legislation. As a consumer, I don’t want information traded between companies without my knowledge and permission. What [Speier's] bill does is increase that protection. It doesn’t hamper businesses from getting information; it just protects consumers,” Hammond said. In fact, the way the system works now violates the basic rules of contracts, he contends. When someone submits personal information for a credit check, they don’t intend for that information to be passed along to marketers. “The underlying intent for the acquisition of the information is different — if they intend to use my information in that way, they should let me know,” Hammond said. “As a contractual matter, it’s not what either party intended when they entered the agreement.”

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