Message-ID: <5916830.1075843082783.JavaMail.evans@thyme>
Date: Fri, 3 Dec 1999 04:07:00 -0800 (PST)
From: scott.bolton@enron.com
To: sue.nord@enron.com, susan.landwehr@enron.com, jeff.dasovich@enron.com, 
	marchris.robinson@enron.com, lisa.yoho@enron.com, 
	aleck.dadson@enron.com
Subject: TD's state round-up
Mime-Version: 1.0
Content-Type: text/plain; charset=ANSI_X3.4-1968
Content-Transfer-Encoding: quoted-printable
X-From: Scott Bolton
X-To: Sue Nord, Susan M Landwehr, Jeff Dasovich, Marchris Robinson, Lisa Yoho, Aleck Dadson
X-cc: 
X-bcc: 
X-Folder: \Jeff_Dasovich_Dec2000\Notes Folders\Eci
X-Origin: DASOVICH-J
X-FileName: jdasovic.nsf

=09

=09
=09
=09State Roundup: December 2, 1999 ?
=09
=09
=09
=09
=09
=09
=09
=09
=09Thoroughly Modern Privacy Problems=20

?????Even before the federal Financial Services Modernization Act was signe=
d=20
into law, some state regulators could see signs of trouble. Unsure that the=
=20
bill would provide adequate privacy protections for financial records, stat=
es=20
began hashing out the issue, investigating consumer privacy and launching=
=20
committees dedicated to exploring options. Those efforts have proven=20
fruitful. With privacy advocates lamenting the final results in S. 900, the=
=20
pressure is seeping into the states to protect personal information. Howeve=
r,=20
there are precious few that foreshadowed the federal government's game of=
=20
catch to the states on the issue of privacy. Now, privacy advocates are=20
bombarding state capitals, urging them to take action that the federal=20
government didn't.=20
?????What didn't happen at the federal level was an opt-in policy for shari=
ng=20
of consumer information. The legislation, which provided a legal framework=
=20
for financial services megamergers, permits banks to share their customers'=
=20
information with other businesses, such as brokerages, insurance firms and=
=20
telemarketers. To reveal customers' personally-identifiable information wit=
h=20
outside partners, the financial institutions must provide consumers the=20
opportunity to "opt-out" of the sharing arrangement. This means that bank=
=20
customers would need to notify a bank that they are against the disclosure =
of=20
their personal information; if they don't alert the bank, their information=
=20
would automatically be up for grabs. An amendment, introduced by Sen. Paul=
=20
Sarbanes, D-MD, secures the right of states to pass stricter=20
information-sharing regulations. While privacy advocates are satiated by th=
e=20
provision, they would have preferred language that required consumers to=20
opt-in to all information-sharing practices. Now, they hope to see that typ=
e=20
of policy enacted in the states.=20
=09Building A Framework

?????There are a handful of states that already had begun work in the priva=
cy=20
arena. One is Minnesota, which catapulted itself into the national privacy=
=20
spotlight in June when Attorney General Mike Hatch launched an investigatio=
n=20
and lawsuit against U.S. Bank for giving out personal financial information=
=20
to a telemarketing company. The telemarketers, after calling customers and=
=20
inquiring whether they wanted additional information about bank services,=
=20
charged the customers for the services. Hatch alleged that the bank release=
d=20
the information for $4 million plus commissions, some of which he said were=
=20
gained by disclosing deceptive information. Under the settlement, the bank=
=20
donated over $2 million to charities around the state and agreed to make=20
refunds to Minnesota customers who were victims of the scheme. It also=20
enacted an opt-out policy, among other penalties. Minnesota was one of the=
=20
most outspoken opponents of the federal legislation, saying that it "was ev=
en=20
weaker than the settlement we got," according to Hatch's press secretary,=
=20
Leslie Sandburg.=20
?????Consumers Union's David Butler called Minnesota "as proactive as any=
=20
state at this point" for their prosecution of U.S. Bank, but added that "th=
is=20
is still a relatively new debate at the state level."=20
?????Some observers anticipate that with the passage of the federal "bank=
=20
bill," states may become more alert to the issues at hand. "This will force=
=20
states to look directly at the issue," said Brett Hester, the National=20
Governors' Association's economic development policy analyst. John Ryan, of=
=20
the Conference of State Bank Supervisors, agreed. "It's a hot issue, an=20
easily political issue," he said. "You have elected officials who may want =
to=20
make an issue out of this." Minnesota, taking advantage of the Sarbanes=20
amendment, will introduce legislation next session to the tune of protectin=
g=20
consumer privacy.=20
?????Also at the fore is Massachusetts' Lieutenant Gov. Jane Swift, R, and=
=20
Gov. Paul Cellucci. In a recent speech, Swift railed against the federal=20
legislation, saying that both Congress and the administration missed out on=
 a=20
historic opportunity to ensure privacy protections. "Now that the federal=
=20
government has determined that states should decide some privacy issues for=
=20
their citizens," Swift said, "we in Massachusetts are pleased to be at the=
=20
forefront of this crucial national debate." At the crux of the=20
administration's plan is the establishment of an opt-in system that require=
s=20
businesses to seek consumers' consent before they sell or share information=
.=20
"Governor Cellucci and I don=01,t think that this is too much to ask," she=
=20
added.=20
?????The legislation's initiative grew out of a quality-of-life commission=
=20
established by the governor. The group determined that privacy was one of t=
he=20
hottest issues, and from that grew the omnibus legislation that has been se=
nt=20
to five different legislative hearings and two public hearings, explained=
=20
John Ziemba, deputy general counsel and deputy director of the Office of=20
Consumer Affairs. Most committees are still looking at the legislation, and=
=20
will wrap-up their investigations next year, as the Massachusetts legislatu=
re=20
completes its two-year term.=20
?????While Massachusetts remains one of the few states specifically targeti=
ng=20
financial privacy, a host of others are joining the bandwagon in the hopes =
of=20
ensuring consumer protection in other high-tech areas. New York Attorney=20
General Eliot Spitzer joined the group of state attorneys general upset wit=
h=20
the weak protections in the federal bank bill, but it wasn't the first time=
=20
he had entered the arena. He had ushered through a spam bill =01* allowing=
=20
consumers the right to opt-out of receiving unsolicited, bulk e-mail =01* a=
nd a=20
bill that would prohibit Web site owners from tracking consumer information=
=20
unless users consented to the actions, said spokeswoman Christine Pritchard=
.=20
Now the focus has turned to reforming the Fair Credit Reporting Act, which,=
=20
among other things, would provide consumers the right to receive one free=
=20
credit report each year to determine its accuracy. And Spitzer also has=20
promoted a bill on identity theft, declaring that if a consumer's identity=
=20
has been stolen to obtain anything of value, the customer, and not just the=
=20
credit card company, is deemed a victim and can seek reimbursement.=20
=09Honing In On The Hot Topics

?????Identity theft, perhaps because of the personal stories that result fr=
om=20
it, is one of the hotter privacy issues in the states, and Arizona is worki=
ng=20
on a law making it a crime to steal a personal password. Rep. Jeff=20
Hatch-Miller, R, who chairs the state's Internet study commission, said tha=
t=20
legislators are just beginning to understand the new level of concern being=
=20
raised by citizens with respect to their right to privacy. The group has=20
established a subcommittee looking into additional privacy legislation that=
=20
may be needed with the understanding that the rules must seek a balance=20
between protecting consumers and businesses alike.=20
?????"Arizona is a fairly conservative state," Hatch-Miller said. "We're=20
friendly to business here. To the extent possible, I think we'll promote=20
private solutions, as we do prefer them to government solutions."=20
?????Hatch-Miller added that one of the newest areas of concern is=20
information from customer convenience cards, such as those given out by=20
grocery stores to determine sale prices, being sold to outside marketers.=
=20
California already has seen legislation introduced that would bar the sale =
of=20
that information, and its legislature's Joint Task Force on Personal=20
Information and Privacy continues to look at that, as well as all issues=20
surrounding privacy. Sen. Jackie Speier, D-San Francisco/San Mateo, is=20
expected to soon drop a bill complementing the Financial Services=20
Modernization Act that would prohibit the sharing of personal information=
=20
among affiliate companies in different sectors. Although because of the=20
strong banking lobby and the political difficulties surrounding the issue,=
=20
staffers say they still don't know what form the bill will take.=20
?????That seems to be a familiar refrain in such discussions, as many elect=
ed=20
officials grapple with the growing number of privacy concerns that=20
technological advances have ushered in. Many legislators looking to the=20
federal government for guidance on the matter have been thrown an unexpecte=
d=20
duty with the results in the financial services act, but observers say they=
=20
will take the ball and run with it. "I think what will happen is you'll see=
=20
legislation in areas where there may be problems," predicted Neal Osten,=20
director of the commerce and communications committee for the National=20
Conference of State Legislatures. =01*by Stephanie Lash