Hopefully the start of a trend
A clear victory for privacy rights
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Friday, July 2, 2004
FEDERAL Judge Morrison England was unequivocal: States have a right to stop banks from selling or sharing personal financial information without customer permission.
His ruling, in U.S. District Court in Sacramento, thus allowed California's landmark financial privacy law to take effect Thursday.
"Finally, in a court of law, the interests of everyday consumers prevailed over the big banks," said Shelley Curran, a lobbyist for Consumers Union. "This is the first time in a long while."
California's financial privacy law was signed last August after a more than three-year struggle in the Legislature. England's ruling pierced one of the financial-services industry's main arguments against the measure -- that regulation of privacy, as with most aspects of interstate banking, is a matter for Congress.
The federal judge noted that the Financial Modernization Act, passed by Congress in 1999, explicitly gave states the right to "enact more stringent privacy regulations" than the weak federal rules on the sharing of confidential information.
After a determined battle that tested the fortitude of legislators and Gov. Gray Davis to stand up to a powerful industry -- with timidity often reigning, unfortunately -- the California measure finally got traction last fall when a citizens' initiative on financial privacy gained enough signatures for the March ballot. The initiative threat caused the banking and insurance industry lobbyists to withdraw their opposition, and the legislation by Sen. Jackie Speier, D-Hillsborough, breezed through both houses of the Legislature in near-record time.
Under the new law, financial companies will be required to obtain customers' permission before selling or sharing phone numbers, account balances, spending patterns or other personal information with telemarketers and other third parties. The new state law also requires companies to give customers an opportunity to restrict information sharing within a family of companies, a process known as "opt out."
