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A national group of state attorneys general on Friday stopped short of a formal recommendation to Congress that it not pass any privacy law that pre-empts state-based privacy legislation. Instead, the National Association of Attorneys General quietly approved a resolution urging Congress to craft new laws so that state attorneys general have enforcement powers under it. “There’s been significant debate and philosophical disagreement wherever the [privacy] issue has been raised,” said California Attorney General Bill Lockyer, who led a NAAG privacy subcommittee that previously recommended that the NAAG urge Congress not to pre-empt the states. Lockyer cast the internal NAAG debate as one pitting “populist” attorneys general such as himself against “special interests” attorneys general swayed by the private sector. The subcommittee is proceeding to study the privacy of medical records and financial data. The privacy debate is heating up in Washington, and a raft of new legislation already has been introduced in Congress. The specter of a patched-together quilt of new state laws has driven the private sector to the bargaining table on Capitol Hill in search of federal pre-emption of the states. Friday’s vote is a small but significant win for industry lobbyists battling to thwart — or at least weaken — new privacy laws at both the state and federal levels. Lockyer, who favors no pre-emption of states by Congress, said that privacy legislation has been introduced in 47 states in recent years, only to be defeated after concerted lobbying campaigns. Dozens of states are expected to consider legislation again this year. Ironically, given that state attorneys general tend to be more diligent about consumer protection than Congress, the Senate yesterday passed a major bankruptcy reform bill that included an extensive consumer privacy amendment. Sen. Patrick Leahy, D-Vt., introduced the amendment with an eye toward preventing episodes such as the one last year involving Toysmart.com, a defunct e-retailer. Toysmart attempted to sell its customer lists during bankruptcy proceedings, even though the company’s privacy policy had promised customers that Toysmart wouldn’t share such data with third parties. Leahy’s amendment requires bankruptcy courts to ensure that debtors live up to their own privacy policies. Debtors would be barred from transferring personal data if they had established a privacy policy that said no such transfer would occur. Bankruptcy courts could make exceptions, but only after a hearing involving a specially appointed “consumer privacy ombudsman” to weigh costs, benefits and alternatives. Related Articles from The Industry Standard: Voter.com to Sell Membership List States to Weigh In on Privacy End in Sight for Toysmart Data-Privacy Fight Copyright � 2001 The Industry Standard

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