BILL ANALYSIS
AB 1509
Page 1
ASSEMBLY THIRD READING
AB 1509 (Machado)
As Amended May 18, 1999
Majority vote
BANKING AND FINANCE 12-0
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|Ayes:|Papan, Cox, Alquist, | | |
| |Campbell, | | |
| |Cardenas, Dutra, Florez, | | |
| |Frusetta, | | |
| |Gallegos, Machado, | | |
| |Mazzoni, | | |
| |Washington | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires credit card issuers to notify cardholders 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 cardholder's right to prohibit disclosure of cardholder
information to marketers. The alternative of notice or phone
has been eliminated.
3)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, effective January 1,
2000.
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
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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.
5)Modifies the title of the affected act by striking "Robbins."
EXISTING LAW states that 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
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 bill includes such transfers.
Cardholder means a natural person to whom a credit card is
issued for consumer credit purposes, or a natural person who has
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agreed with the card issuer to pay consumer credit obligations
arising from the issuance of a credit card to another natural
person. The term includes any person to whom a credit card is
issued for any 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.
Analysis Prepared by : William C. George / B. & F. / (916)
319-3081
FN: 0000809