X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
California Senate Bill No. 1, which would seek to provide strong consumer protection of private financial information by enacting the California Financial Information Privacy Act, was introduced in the California Assembly by State Senator Jackie Speier on Dec. 2. While a somewhat similar bill died on the Assembly floor last year, the chances of passage may be increased now because of newly elected liberal legislators and the support of State Senate President Pro Tem John Burton. Undoubtedly, there will be a fight. Indeed, last year, banks, insurance companies and other corporations reportedly spent millions of dollars in campaign contributions and lobbying expenses to defeat a measure to protect the financial privacy of consumers. EXISTING LAW As stated by way of background in SB 1, existing law regulates banks, savings associations, credit unions and industrial loan companies by the Department of Financial Institutions and by certain federal agencies. Furthermore, the Gramm-Leach-Bliley Act requires financial institutions to provide notice to consumers about their use of nonpublic personal information and allows consumers to decide that such information not be shared with nonaffiliated third parties. THE CALIFORNIA FINANCIAL INFORMATION PRIVACY ACT SB 1 would enact the Financial Information Privacy Act. The act would require financial institutions to provide specified written forms to consumers about the sharing of nonpublic consumer personal information. Also, the bill would allow consumers to direct financial institutions not to share nonpublic personal information with affiliated companies or with nonaffiliated financial companies with which the financial institutions have contracted to provide financial products and services. The bill would further require the permission of consumers before financial institutions could share nonpublic personal information with other nonaffiliated companies. Moreover, the bill would provide that financial institutions would not be required to provide this written form to their consumers if the institutions do not disclose any nonpublic personal information to any nonaffiliated third-parties or affiliates. In addition, the bill would require financial institutions not to deny consumers financial products or services because they have not provided the necessary consent that would authorize the institutions to disclose or share nonpublic personal information. The bill would also require financial institutions to comply with consumer requests regarding nonpublic personal information within 45 days of receipt of the requests. Notwithstanding the foregoing provisions, the bill would allow the disclosure of nonpublic personal information to help identify or locate missing children, witnesses, criminals and fugitives, parties to lawsuits, and missing heirs, and under other specified circumstances. The bill would not change existing laws pertaining to access by law enforcement agencies to information held by financial institutions. Finally, the bill would provide civil penalties for negligent, or knowing and willful violations of the provisions of the act. These penalties would not become operative until July 1, 2004. READING TEA LEAVES It is difficult to forecast precisely whether SB No. 1 will be passed and the California Financial Information Privacy Act will be signed into law. On the one hand, there has been some momentum favoring privacy protection over the past several years. On the other hand, privacy protection costs money, and big business likely is willing to spend some money now in an effort to defeat a bill that, if passed, could cost them much more money later. Eric Sinrod is a partner in the San Francisco office of Duane Morris ( www.duanemorris.com), where he focuses on litigation matters of various types, including information technology disputes. Sinrod’s Web site is www.sinrodlaw.com, and he can be reached at [email protected]. To receive a weekly e-mail link to Sinrod’s columns, please type Subscribe in the subject line of an e-mail to be sent to [email protected].

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.