BILL ANALYSIS SENATE JUDICIARY COMMITTEE Senator Ellen M. Corbett, Chair 2009-2010 Regular Session AB 953 (Eng) As Amended June 7, 2010 Hearing Date: June 15, 2010 Fiscal: Yes Urgency: No SK:jd SUBJECT Department of Motor Vehicles: Records: Confidentiality DESCRIPTION Existing law protects residence address information contained in records of the Department of Motor Vehicles (DMV). In certain instances, that information may be disclosed. For example, an insurance company may obtain from DMV address information about motorists and vehicle owners involved in accidents with individuals insured with the company. This bill, sponsored by the California Association of Collectors, would extend this provision to also include authorized contractors of the insurance company, such as debt collectors, thus permitting the disclosure of the address information from DMV directly to the authorized contractor in these instances. BACKGROUND Under existing law, residence address information in DMV records is confidential and may not be disclosed to any person except to a court, law enforcement or other government agency, or if the disclosure is subject to certain exemptions. Disclosures to insurance companies are currently exempted from this prohibition when the company, under penalty of perjury, requests the information for any of the following purposes: (1) to obtain the address of another motorist or vehicle owner involved in an accident with the company's insured; (2) to obtain address information about an individual who has signed a written waiver of the disclosure prohibition; or (3) to obtain address information about other individuals insured under that policy where the named insured has signed the written waiver. (more) AB 953 (Eng) Page 2 of ? This bill would permit the disclosure of residence address information to an authorized contractor of the insurance company. Information could only be disclosed for the purpose of obtaining the address of another motorist or vehicle owner involved in an accident with the company's insured. CHANGES TO EXISTING LAW Existing law provides that any residence address in DMV records is confidential and shall not be disclosed to any person except a court, law enforcement or other government agency, or as specified in Vehicle Code Sections 1808.22 and 1808.23. (Veh. Code Sec. 1808.21.) Existing law provides that residence address information may be released to an insurance company when the company, under penalty of perjury, requests the information for the purpose of obtaining the address of another motorist or vehicle owner involved in an accident with the company's insured. Residence information may also be released to an insurance company when the company requests the information about an individual who has signed a written waiver of Section 1808.21 or when the requested information relates to individuals insured under the policy if a named insured has signed the written waiver. (Veh. Code Sec. 1808.22(b).) Existing law provides that any residential addresses released by DMV may not be used for direct marketing or solicitation for the purchase of any consumer product or service. (Veh. Code Sec. 1808.23(d).) Existing law also requires any person who has access to confidential or restricted DMV information to establish procedures to protect the confidentiality of those records. Existing law specifies that if any confidential or restricted information is released to any agent of a person authorized to obtain information, the person shall require the agent to take all steps necessary to ensure confidentiality and prevent the release of any information to a third party. No agent shall obtain or use any confidential or restricted records for any purpose other than the reason the information was requested. (Veh. Code Sec. 1808.47.) This bill would revise the above exemption to provide that the prohibition on the release of residence information does not AB 953 (Eng) Page 3 of ? apply to an authorized contractor of the insurance company when the contractor requests the information for the purpose of obtaining the address of another motorist or vehicle owner involved in an accident with the company's insured. This bill would provide that the information shall not be used or disclosed for any other purpose or to any other person. This bill would provide that all information obtained by insurance companies, or their authorized contractors, from the department shall be subject to existing state and federal limitations on the use or disclosure of the information and data security requirements that are applicable to the principal (i.e., the insurer). This bill would specify that the DMV shall enforce use or disclosure limitations and data security requirements that are imposed on authorized contractors in compliance with the department's regulations. COMMENT 1. Stated need for the bill The author writes: AB 953 allows insurance company agents to obtain home address records from the Department of Motor Vehicles (DMV) with the same high level of protection that those records already receive under current law. . . . Under current law, there is an uncertainty as to whether insurance companies can authorize collection agencies to use the insurers' access to DMV records in order to determine the home addresses of, and thereby make contact with, drivers and vehicle owners who have been involved in accidents with parties that they insure. The author further explains, "[the bill] adds authorized agents and employees under one circumstance only, where another motorist or vehicle owner is involved in an accident with the company's insured. The intent is to allow insurance companies who use a collection agency for account management to authorize the release directly to the agency rather than asking for it and then sending it to the agency. This reduces business costs and risks to privacy from multiple disclosures and transmissions. The bill also makes it clear that all applicable privacy and data security requirements must be followed." AB 953 (Eng) Page 4 of ? The California Association of Collectors (CAC), sponsor, writes that "[a]ddress information is critical to protect consumers by validating proper identity or preventing fraud and mis-identification. The bill makes it clear that all existing privacy and data security laws apply and that DMV enforcement processes also apply." CAC indicates that "[c]ollectors get DMV address information now in this situation to locate the owner, the financially responsible party in a vehicle accident, when the vehicle may have been operated by a non owner driver. The collector is seeking the legally liable party who is financially responsible for the damages in the accident. They are also seeking to verify the correct identity to avoid going after the wrong party and verifying the correct owner because title [to] the vehicle may have changed several times since the accident." 2. Bill would permit disclosure of address information directly to authorized contractor of insurance company; additional protections needed to guard against misuse a. Disclosure of address information directly to authorized contractor Current law's prohibition on the disclosure of residence address information does not apply to insurance companies when they are seeking that information to obtain the address of another motorist or vehicle owner involved in an accident with the company's insured. This bill would permit a disclosure to be made by DMV directly to an authorized contractor of the insurance company, for the purpose of obtaining the address of another motorist or vehicle owner involved in an accident with the company's insured. The intent of this bill is to reduce costs for the insurance company and contractor when an insurer engages a contractor's services. For example, an insurer involved in a subrogation action may need to find the owner of the vehicle involved in an accident. Under existing law, the insurer must make the request to DMV for address information and then give that information to the authorized contractor to locate the vehicle owner. Under this bill, that contractor could make a request directly to DMV for information about the motorist or vehicle owner involved in the accident. This bill would provide that all information obtained under AB 953 (Eng) Page 5 of ? the bill's exemptions regarding residence information shall be subject to existing state and federal limitations on the use or disclosure of the information and data security requirements which are applicable to the principal. As a result, existing provisions of law protecting such information would apply. For example, current law provides that any residential addresses released by DMV may not be used for direct marketing or solicitation for the purchase of any consumer product or service. Other provisions of law relating more generally to data security such as Civil Code Section 1798.81.5, which requires businesses to maintain reasonable security procedures and practices, and Civil Code Section 1798.82, which requires notification in the event of a data breach, would apply to any disclosure. The bill would also provide that residence information shall not be used or disclosed for any other purpose or to any other person. As a result, residence information obtained by an authorized contractor for the purpose of obtaining the address of another motorist or vehicle owner involved in an accident with the company's insured could only be used or disclosed for that specific purpose. b. Additional protections needed Despite the above-described provisions, this bill still raises the concern that address information obtained for one purpose could be used for another, despite the clear prohibition not to do so. California law strictly protects residential address information contained in DMV records and permits access only to a court, law enforcement agency, or other government agency or as permitted in Vehicle Code Sections 1808.22 or 1808.23. Those two sections contain very limited exceptions allowing certain entities, under penalty of perjury, access to residence information for certain purposes. For example, insurers when requesting the information for the purpose of obtaining the address of another motorist or vehicle owner involved in an accident with the company's insured or an attorney who needs the information to represent a client in a criminal or civil action. This bill would instead, for the first time, allow "authorized contractors" including debt collectors to directly obtain from DMV some of the most confidential information about California drivers-their home address information. As a result, the Committee may wish to amend the bill to contain the following additional protections to protect against potential misuse of AB 953 (Eng) Page 6 of ? this new authority: Suggested amendments: 1. Require that the authorized contractor is acting on behalf of the insurer pursuant to a contractual agreement; 2. Provide that the insurer is responsible for any misuse of the information by the authorized contractor; 3. Strengthen current language in the bill by requiring that the information may not be used or disclosed for any other purpose other than the reason the information was requested; 4. Require that all information received from DMV, and any copies made of that information, be destroyed pursuant to Civil Code Section 1798.81 once the authorized contractor has used the information for the purpose of obtaining the address of a motorist or vehicle owner involved in an accident with individuals insured with the insurer; 5. Prohibit the authorized contractor from selling any information obtained or storing, combining, or linking DMV information with any database for resale or for any purpose other than obtaining the address of a motorist or vehicle owner involved in an accident with individuals insured with the insurer; 6. Require the authorized contractor to maintain a log to track the receipt, use, and dissemination of the information. The log must be immediately available to DMV upon request and must be maintained for four years from the date of the request; 7. Require the authorized contractor to maintain a surety bond in the amount of $50,000, consistent with Vehicle Code Section 1810.2(c) and California Code of Regulations Section 350.24; and 8. Provide that an authorized contractor that violates the bill shall be liable to the DMV for civil penalties up to $100,000 and, if the contractor is a Commercial Requester, shall have its requester code suspended for a period of five years, or revoked. AB 953 (Eng) Page 7 of ? Many of the provisions described above are required already of entities that have applied for "Commercial Requester" status from the DMV, which permits some requesters to become pre-approved to receive address information from the DMV to accomplish a legitimate business purpose pursuant to specified statutes. Those Commercial Requester Accounts (CRAs) are established for applicants who have a legitimate business need for obtaining DMV information, have paid the appropriate fee, and provided a $50,000 bond. The DMV indicates that it enforces the requirements that confidential information be obtained only for specified reasons and kept secure and confidential. For example, CRAs must sign a security agreement and agree to Terms and Conditions, and the distribution of restricted or confidential information in violation of law is subject to a penalty up to $100,000. In addition, DMV indicates that the security agreement must be signed annually by the CRA's employees. DMV also indicates that it would require proof of an authorization from the authorized contractor. Support : None Known Opposition : None Known HISTORY Source : California Association of Collectors Related Pending Legislation : SB 433 (Harman), which would have required that DMV submit a report to the Legislature on January 1, 2011 regarding all requests for address information made to the department by insurers and financial institutions in 2010, was returned to the Secretary of the Senate pursuant to Joint Rule 56. Prior Legislation : None Known Prior Vote : Assembly Transportation Committee (Ayes 14, Noes 0) Assembly Appropriations Committee (Ayes 17, Noes 0) Assembly Floor (Ayes 73, Noes 0) ************** AB 953 (Eng) Page 8 of ?