||Home | Volunteer | Donate | Subscribe | FTCR Websites | Books | Site Map|
home / corporate / press releases
Jun 13, 2003
CONTACT: Jerry Flanagan - 415-633-1320
Consumer Group Calls on Speier & Davis to Clearly Require Informed Written Consent in Privacy Bill
New Amendments Also Give Banks A 45-Day Window To Share Information Even If A Consumer Says "No"The latest version of the financial privacy bill released yesterday does not clearly require that a bank must obtain informed written consent before selling private financial information to telemarketers and others outside the company. Other new amendments allow financial institutions a 45-day window to share information with affiliated companies when a consumer opens a new account even if the consumer says "no" ("opts-out"). The bill, SB 1, is scheduled to be considered in a special hearing of the Assembly Banking and Finance Committee on Tuesday.
"The key to protecting privacy is to require a consumer's informed written consent," said Jerry Flanagan, consumer advocate for the Foundation for Taxpayer and Consumer Rights. "The lure of huge financial gain is so great that banks will stop at nothing to hoodwink consumers into giving up their privacy. This bill would be helped immensely by five words 'banks must get written consent.' If this is Senator Speier's intent then it must be in writing."
On June 4, Governor Davis and Senator Speier announced that they had reached a compromise agreement on the long awaited financial privacy legislation. When that compromise language was released to the public two days later, it contained a major loophole that allowed banks to obtain consent over the telephone or to hide consent agreements in financial contracts. Following concerns raised by FTCR and others, Senator Speier announced her intention to correct the problem. However, nothing in the new version of SB 1 released yesterday requires that a bank obtain written consent -- it merely provides a mandatory format if a bank chooses to seek written consent. As a result of these changes, a financial institution could be considered in compliance with the bill while inducing a consumer's consent through discounts offered over the phone or in any other oral agreement:
In addition, new changes to the bill on page 19 lines 27-40 allow banks to share private financial information with affiliated businesses for up to 45 days even if a consumer has exercised his or her right to "opt out." This amendment severely undermines the consumer's ability to control the dissemination of his or her information as well results in a false sense of security that the consumer's right to "opt out" provides a real protection. For example, a consumer opening a new bank account could choose to "opt out" of information sharing on the day the account is opened, but the bank would be provided a 45 day window to share or sell the newly attained private information before it had to comply with the consumer's wishes. The financial institution is not required to make the consumer aware of the 45-day exemption
"This loophole gives banks a 45-day license to steal," said Flanagan.
Additionally, FTCR continues to have concerns with the compromise bill released last week with Governor Davis. Specifically, that compromise would:
- 30 -
The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit and non-partisan consumer advocacy organization. For more information, visit us on the web at www.consumerwatchdog.org
back to top
©2000-2004 FTCR. All Rights Reserved. Read our