Important Ninth Circuit Ruling for California Privacy Rights

In an important victory for privacy rights, the Ninth Circuit Court of Appeals yesterday reinstated a portion of California's landmark financial privacy law that allows consumers to prevent banks from sharing information with affiliated companies about a customer's savings account or buying habits.

The California Financial Information Privacy Act, which the ACLU worked to pass for many years, has been held up in legal battles for more than three years.

On July 1, 2004, the California Financial Information Privacy Act became operative and promised to provide California consumers with important privacy rights. But, in 2005, the court held that the statute conflicted with the federal law that set nationwide standards for regulating consumer credit reports, the Fair Credit Reporting Act (FCRA).

However, yesterday, the Ninth Circuit ruled that the portions of the California law that required banks to give customers the opportunity to object before the sharing of information that had nothing to do with credit, insurance, or employment, should be enforced.

Deputy Attorney General Catherine Ysrael, the state's lawyer in the case, explained that the law is important because it helps stop information about personal habits and buying patterns of customers being gleaned from accounts and credit card statements and then shared with affiliated retailers. "The California Legislature intended for consumers to be the final arbiters of how their information is disseminated. The court rightly concluded that the Legislature "would rather have a weakened statute than no statute at all."

Yesterday's decision was a victory for the financial privacy rights of tens of millions of Californians and hopefully this important portion of the law will now finally be enforced.