The U.S. District Court in Sacramento, Calif., has ruled that the federal Fair Credit Reporting Act does not preempt California’s “affiliate-sharing” restrictions in Senate Bill 1.[@@]
S.B. 1 requires insurance companies to give California consumers notice and an opportunity to “opt-out” of financial information disclosures between affiliates for marketing purposes.
The decision does not affect affiliate information sharing for other purposes, which are excepted from the opt-out standard by S.B. 1.
The California law also generally provides that financial institutions may not disclose a consumer’s nonpublic personal information to any nonaffiliated third party without the consumer’s consent. The federal court decision is limited to a discussion of the preemptive effect of federal law on state “affiliate exchange” restrictions.
Banks and banking industry trade groups are expected to decide Friday whether they will seek an injunction against the decision and, if necessary, more time for financial institutions to adjust their activities. An expedited appeal to the 9th Circuit Court of Appeals in San Francisco also is expected.