California Consumers Win Major Financial Privacy Victory

Published on Sep 6, 2008 - 10:25:40 AM

By: Consumer Federation of California

Sep. 5, 2008 - "California consumers just won a huge privacy victory. The federal court ruled that California's Financial Privacy Law give consumers the right to stop banks and other financial institutions from sharing our personal information with affiliates," Richard Holober, Executive Director of the Consumer Federation of California stated.

Big banks fought this legislation from 2000 until 2003. After consumer and privacy advocates collected 600,000 signatures to place a privacy initiative on the ballot, banks acquiesced to avoid a disaster at the polls. Senate Bill 1 of 2003 (Speier) became law and California established the nation's strongest financial privacy protections.

Financial institutions then ran to court to overturn the law. In 2005 the Court of Appeals for the 9th Circuit ruled that federal law pee-empted portions of SB 1 and remanded the matter to the Federal District Court to determine the extent of the preemption. Yesterday the 9th Circuit ruled that the District Court erred in ruling that federal law preempted California from all regulation of personal information sharing within a family of affiliated financial institutions, finding instead that California consumers have the right to restrict the sharing of information that is not related to credit reports.

"This ruling is significant because some large financial institutions have hundreds or even thousands of affiliates. Californians can now tell their banks not to hand out private information regarding what they earn, buy or borrow to hundreds of strangers who have no right to that information," Holober stated.

The Consumer Federation of California was a founder of Californians for Privacy Now, which sponsored the 2003 ballot initiative drive that pushed the legislature and governor to adopt California's Financial Information Privacy Act (SB 1).

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