Industry Worried California Privacy Law Will Derail National Uniformity

That problem does not exist right now with privacy, he says. The concerns over privacy are relatively new and the country has the chance to develop a uniform system that works for everyone.

But now, Caskie says, California is trying to go the other way.

FCRA addresses the issue of information sharing among affiliates. By contrast, the Gramm-Leach-Bliley Act addresses the issue of information sharing among nonaffiliates.

Another major difference between FCRA and GLB is that FCRA preempts inconsistent state laws, while GLB allows states to enact privacy laws that are more restrictive than those in GLB.

The California law would require insurance companies and other financial institutions to allow customers to opt out of information sharing among affiliates, a standard which is far more restrictive than that in FCRA.

If FCRA is reauthorized as is, that provision in the California law would be preempted.

But since the parliamentary rules in the Senate allow any one member to slow down or even stop any legislation, the fear is that one or both of Californias senators, Dianne Feinstein and Barbara Boxer, both Democrats, will delay FCRA reauthorization unless the new California law is saved from preemption.

Caskie says the primary concern is that the resulting system would be nonuniform when consumers are much better served by uniformity.

FCRA is scheduled to expire at the end of this year. Financial services groups say that unless FCRA is reauthorized with all its current preemptions intact, it will be much more difficult to provide credit to consumers.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 15, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.