NCPA - National Center for Policy Analysis

States Take Up Privacy Issues

February 10, 2000

Even as federal regulators are putting the finishing touches on privacy rules to carry out last year's financial-services overhaul legislation, states are considering adopting even stricter privacy laws.

So far, at least 17 states are considering one or more proposals to safeguard individuals' confidential financial information.

  • A proposal in California would require consumer notice and consent before personal information is disclosed by telephone companies, credit-card issuers, bookkeeping services and video-rental enterprises.
  • New Hampshire lawmakers will consider prohibiting any transfer of name, address and telephone number without the consumer's consent.
  • A requirement that financial institutions get permission from consumers before sharing personal information will be debated in Massachusetts.
  • A proposed measure in Utah would limit the sale of personal consumer information to third parties and would allow private lawsuits.

Under the new federal law, firms that share private information with independent third parties must mail copies of their privacy policies to customers. Customers must also be given the option of telling firms not to share private personal data with third parties -- such as telemarketers.

The state initiatives differ from the federal law in one fundamental respect. States want to require businesses to take the initiative if they intend to share information. The federal law puts the burden on consumers to inform companies they don't want their information shared.

Various business coalitions oppose the state laws, which they claim would be a patchwork.

Source: Michael Schroeder, "Groups Form to Stop States on Privacy," Wall Street Journal, February 10, 2000.


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