Protect Consumer Privacy
Information technology offers many benefits, from higher productivity to better medical care, but it comes at a price: the gradual loss of privacy. Some of it people surrender more or less willingly in order to vote, drive a car, work or even to get a discount at a supermarket. By paying with a credit card, we also unwittingly leave a trail of information that, when pieced together, adds up to a surprisingly detailed portrait of ourselves. Banks, which have in their files the most sensitive and useful information about their clients’ finances, have earned millions collating the data and peddling them to the highest bidder.
Consumers who are careful in disclosing their personal details can slow down the electronic assault on their privacy. But even they cannot stop it entirely. What consumers need is help from legislation that would give them some control over the use of the information already collected. California is taking the lead in the right direction.
President Clinton’s weekend proposal to strengthen the protection of consumers’ financial privacy is the right measure, but similar legislation failed in Congress last year and is unlikely to fare better this year.
More promising for California consumers is a state measure, SB 1372, proposed by Sen. Tim Leslie (R-Tahoe City) that would require banks and other financial institutions to notify clients about sharing of personal data and give them the right to say no, or opt out, of disclosure of private information. Two stronger bills that would have banned banks from sharing information with others unless specifically authorized--the “opt in” requirement--were defeated in both houses last month under pressure from the banking lobby.
But even the second-best “opt out” legislation would help control the banks’ practice of selling the financial information of their customers, and deserves strong support. It requires a clear and conspicuous notice by the banks and a simple act of checking a box by the consumers. The measure also authorizes state banking regulators to enforce the privacy provision by meting out penalties or even shutting down noncomplying banks.
Leslie’s bill has already cleared one of the highest hurdles in the Senate, approval by the Finance Committee, and is due for consideration by the Judiciary Committee May 9 and later by the Appropriations Committee. It will then go to the Assembly, where it faces hostility, especially in the banking committee.
California is one of 22 states that seeks to enact strict financial privacy laws to override puny federal privacy protection. Considering the determined opposition from a well-organized banking lobby, consumers need to let Sacramento know that using a bank account, a credit card or even a discount card is not a license to sell or give away personal finance information. It’s not a trade-off consumers should have to make.
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To take action: Sen. Adam Shiff, chairman of the state Senate Judiciary Committee, (916) 445-5976, or e-mail at senator.schiff@sen.ca.gov.
