Parts of Laws Upheld That Limit Banks’ Sharing of Personal Data

A federal judge on Tuesday upheld parts of municipal ordinances in California that prohibit banks from sharing financial information about their customers’ finances without prior approval.

The decision by U.S. District Judge Claudia Wilken, if it survives, means banks must get approval from customers before their information is shared with or sold to third parties, such as insurance companies and other financial institutions not affiliated with the bank.

Wilken ruled in response to a challenge to local ordinances, set to take effect Sept. 1, that were approved last year in Contra Costa County, San Mateo County and Daly City.

Bank of America and Wells Fargo tried to block enforcement of the laws.

The case is expected to affect similar laws recently passed in San Francisco, Alameda County and Santa Cruz County and may encourage other local governments to act. The Legislature repeatedly has defeated such laws.

Still, the judge overturned parts of the ordinances that prohibited the banks from sharing information without a customer’s consent with a bank’s own affiliates.

Those parts of the laws, Wilken ruled, were preempted by Congress, which has authorized such practices.

Wilken’s ruling means customers must ask a bank not to share their financial information with its affiliates to keep that material private. Bank of America spokesman Harvey Radin said the firm was “gratified by the decision.”