BILL ANALYSIS
AB 1509
Page 1
Date of Hearing: May 10, 1999
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Louis J. Papan, Chair
AB 1509 (Machado) - As Introduced: February 26, 1999
SUBJECT : Areias-Robbins Credit Card Full Disclosure Act Of
1986." Civil Code 1748.10-1748.12, disclosures.
SUMMARY : Requires credit card issuers to notify card holders of
their right to "opt out" of the issuer's dissemination of the
cardholder's personal information. Specifically, this bill :
1)Modifies the definition of "marketing information" to include
"a subsidiary or affiliate organization of the company that
collects the information."
2)Provides that at least 60 days prior to the initial disclosure
of marketing information concerning a cardholder to any
person, the card issuer must furnish the cardholder written
notice AND advise of a toll-free telephone number concerning
the card holder's right to prohibit disclosure of cardholder
information to marketers. The alternative of notice OR phone
has been eliminated.
3)On and after January 1, 2000, requires each credit card issuer
who discloses marketing information for consideration to
clearly and conspicuously disclose, at least once per calendar
year, at intervals of not less than six months nor more than
12 months, to every cardholder the cardholder's right to
prohibit the future disclosure of marketing information.
4)Provides that the cardholder's election to prohibit disclosure
of marketing information shall be effective only with respect
to marketing information that is disclosed to any party after
the card issuer has received and processed the cardholder's
election not to exceed three working weeks, and shall not
apply to certain specified communications.
EXISTING LAW : Currently the card issuer may provide either
printed notice or notice of a toll-free telephone number to
allow the cardholder to elect not to have personal information
disseminated. This notice may be provided in the credit
application or with delivery of the credit card. There is no
AB 1509
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point type required.
FISCAL EFFECT : Minor
COMMENTS : This bill is a matter of equity and protection of
one's good name and reputation and not having personal
information treated as some fungible commodity. It is also
about not having unwarranted intrusions and inundation of
consumers with unwanted offers of credit.
The issues involve the balancing of rights and obligations
between business and consumers in credit transactions.
Purchasing goods and services on time allows the seller to sell
more goods or services and the consumer to acquire necessary or
desired items over time when the consumer has insufficient funds
for an immediate purchase. For the seller-creditor, the issue
is what personal information will be demanded from the debtor to
achieve a level of financial risk comfort. In order to obtain
that information, credit reporting agencies gather and transmit
consumer credit and personal information to users of their
services. Because much of this information is processed in
large quantities by numerous persons, there is a degree of error
which can result in disastrous consequences for the individual.
In addition this processing of personal information is happening
outside of the purview of the affected person. Errors can occur
exposing the consumer to unanticipated risks.
As the proponents point out, in an era of mergers and
acquisitions and creation of holding companies pursuing multiple
lines of business, intra-holding company transfer of information
becomes an issue. This point is addressed in the bill by
definition at lines 35 and 36 on page 2.
As a technical correction the CFR reference on page 4, line 10
should be changed to 12 C.F.R. 226.9. Also for purposes of
definition, "cardholder" on line 10 of page 4 is defined as:
12 C.F.R. 226.2 (a) (8)
(8) Cardholder means a natural person to whom a credit card is
issued for consumer credit purposes, or a natural person who has
agreed with the card issuer to pay consumer credit obligations
arising from the issuance of a credit card to another natural
person. For purposes of Sec. 226.12(a) and (b), the term
includes any person to whom a credit card is issued for any
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purpose, including business, commercial, or agricultural use, or
a person who has agreed with the card issuer to pay obligations
arising from the issuance of such a credit card to another
person.
REGISTERED SUPPORT / OPPOSITION :
Support
Consumers Union
Privacy Rights Clearinghouse
Opposition
None received
Analysis Prepared by : William C. George / B. & F. / (916)
319-3081