If California's legislators don't hammer out tougher private information protection legislation, California's voters could step in to make it tougher for financial institutions to share their personal information.

A proposed initiative, supported by a Californians for Privacy Now coalition of powerful citizens' rights groups including AARP, CalPIRG, Consumer Federation of California, Consumers Union, Privacy Rights Clearinghouse, E-LOAN and the American Civil Liberties Union passed the 100,000 signatures mark this month.

That's more than one fourth of the required 373,816 signatures of registered California voters necessary by mid-August to get the measure on the March 2004 ballot in the Golden State.

If passed, the proposed "California Financial Privacy Act of 2004" will be the toughest in the nation and require financial institutions to obtain a consumer's explicit consent before selling or sharing their personal information with affiliates or third party companies for any purpose other than to complete a transaction initiated by the consumer.

That's contrary to current federal law which requires consumers nationwide to go to the trouble to contact each financial service company directly and "opt-out" of individual financial services companies sharing information. Consumer advocates say the federal law isn't strong enough and it makes consumers follow sometimes confusing instructions.

"Weak financial privacy laws leave consumers vulnerable to identity theft, aggressive marketing practices and fraud," said Lupe de la Cruz, advocacy manager for for AARP (formerly known as the American Association of Retired People.

"Californians have made it clear that they want to decide for themselves whether banks and other financial institutions can sell or share their personal financial information. This initiative gives consumers control and puts the burden on financial institutions to get permission first."

(Editor's Note: Along with laws enacted by legislators, California permits voters to use a direct initiative process to create new laws. Voters bypass the Legislature to have an issue of concern put directly on the ballot for voter approval or rejection, provided each initiative first obtains sufficient registered voter signatures.)

Financial institutions -- including mortgage lenders -- retain some of your most sensitive, personal information.

Consumer privacy protection provisions of the federal Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (FSMA), and other laws, govern how financial institutions can use that information.

FSMA says each financial institution, can share your information with affiliates, but in a "clear and conspicuous manner," must:

Published: June 13, 2003

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.