• Federal Credit Legislation May Preempt State Privacy Laws
  • December 10, 2003
  • Law Firm: Graydon Head & Ritchey LLP - Cincinnati Office
  • The U.S. Senate will soon be considering legislation permanently extending Fair Credit Reporting Act preemptions, unless California senators are able to block it.

    Senators Dianne Feinstein (D-Calif.) and Barbara Boxer (D-Calif.) oppose the proposed bill because it would preempt recently passed financial privacy protections in California that create the nation's strictest financial privacy law.

    The proposed legislation would permanently preempt state credit reporting laws while increasing requirements designed to help prevent identity theft.

    According to "Dear Colleague" letter distributed by Boxer and Feinstein, the bill, in its current form, would deny consumers privacy protections by allowing conglomerates to freely share large amounts of personal information on their customers with affiliated partners even if a consumer requests that the information not be shared. Even worse, they said, the bill permanently removes the ability of the states to enact stronger laws.

    Among amendments Boxer and Feinstein would offer to the bill are:

    • an opt-out for consumers on the sharing of personal information among "unrelated affiliated companies;"

    • protections for "sensitive consumer medical information;"

    • prohibitions for the sale of Social Security numbers to the general public, removal of the numbers from identification cards, and provisions that any free credit reports provided to consumers do not contain their Social Security numbers;

    • a requirement that financial institutions notify consumers when an adverse action decision is made based on information received from affiliates; provisions for consumers to view the information, and the ability to correct errors;

    • closing of "loopholes" in the bill to allow consumers to opt out more effectively from marketing solicitations, and to define the scope of a "pre-existing business relationship." In the bill, consumers can opt out unless an institution has a "pre-existing business relationship," with the term currently undefined, and;

    • a sixth amendment that would enhance sentences for perpetrators of identity theft by two years when the crime is committed to facilitate other serious crimes, and by five years if the perpetrator also engages in a terrorist act.