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Golden State of Privacy

June 08, 2003

It's fitting that California, which has perhaps the nation's most severe identity theft problem, could soon have a groundbreaking financial privacy law. Credit state Sen. Jackie Speier (D-Hillsborough), who is trying for a third straight year to force banks and insurance companies to get consumers' explicit permission before they sell private financial data to unrelated companies.

One thing that's changed is that Gov. Gray Davis now supports Speier's bill, SB 1. Why now? The bill is not quite as strong as it once was, thanks to industry-friendly amendments, and the consumer clamor for protection is louder than ever. The measure faces a critical vote in an Assembly committee Monday. But banks and insurance companies clearly prefer the Speier bill to a proposed March 2004 ballot initiative that would force even stiffer privacy protections.

The bill isn't perfect -- consumer activist Jamie Court maintains he'll still be able to pluck the governor's address and Social Security and phone numbers from commercial databases. SB 1 also fails to stop marketers from mining the wealth of personal data contained in birth certificates, Social Security documents and physician records detailing medical treatment.

Consumer activists fear that business lobbyists will persuade Assembly members to further weaken key sections of the bill that guarantee consumers control over how banks and insurance companies use their personal financial information, such as requiring that consumers sign a permission form before companies could sell financial information to unrelated businesses. If the bill is further watered down before Monday's vote, consumer advocates say they will withdraw support and go full-bore on plans for the 2004 voter initiative.

Either way, it would be a clear message to Washington that states will fill the regulatory void if the federal government continues to sit on its hands. California will carry on its long history of prodding Washington to act on behalf of consumers. The state already has the nation's toughest consumer privacy laws, according to Privacy Journal. The privacy advocacy group also reports that weak federal privacy regulations are akin to those in the bottom quartile of states.

If SB 1 arrives on Davis' desk intact, the governor should sign it and immediately send copies to Congress members. California again will have done the nation a favor, as it did in the 1960s and 1970s by forcing automakers to clean up tailpipe emissions.

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