American Bankers Association v. Brown: Whether California's Financial Information Privacy Law Has Been Preempted by the Fair and Accurate Credit Transactions (FACT) Act (CRS Report for Congress)
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| Release Date |
Revised Jan. 27, 2010 |
| Report Number |
RL32626 |
| Report Type |
Report |
| Authors |
M. Maureen Murphy, Legislative Attorney |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
The California Financial Information Privacy Act1 was enacted on August 28, 2003, as Congresswas considering the legislation that was to become the Fair and Accurate Credit Transactions(FACT) Act. The California law became effective on July 1, 2004. It governs the rights ofCalifornia residents with respect to the dissemination of nonpublic personal information byfinancial institutions. In some respects, it diverges from two federal laws that impose restrictionson the dissemination of customer information by financial institutions: (1) the privacy title of theGramm-Leach Bliley Act of 1999 (GLBA) and (2) 1996 amendments to the Fair CreditReporting Act of 1970 (FCRA). It includes a requirement that, before sharing nonpublic personalinformation with nonaffiliated third parties, financial institutions obtain an opt-in, i.e., affirmativeconsent, from their customers. Before such information may be shared with affiliates not in thesame line of business and regulated by the same functional regulator, an opt-out notice isrequired, i.e., a notice providing an opportunity to preclude disclosure of information. Whollyownedsubsidiaries and affiliates in the same line of business (securities, banking, or insurance)may share information, except medical information, without an opt-out or opt-in requirement.California's law was enacted as a temporary federal statute purporting to preempt state regulationof information sharing among corporate affiliates was set to expire on December 31, 2003. TheFACT Act, among other things, makes that preemption permanent and limits the ability ofaffiliated companies to share consumer information for marketing solicitations.
