Makes provisions for privacy in banking, insurance, and other financial transactions, forbidding disclosure of personal information without prior consent

6 Co-sponsors

• Ruth Hassell-Thompson
• Craig M. Johnson
• Liz Krueger
• Kevin S. Parker
• John L. Sampson
• Antoine M. Thompson

Title of bill

An act to amend the general business law, in relation to privacy in banking, insurance, and other financial transactions

Purpose

The intent of this bill is to protect the privacy of individuals' confidential financial information by prohibiting financial institutions from disclosing such information without the individual's consent.

Summary of provisions

Prohibits financial institutions from disclosing directly or through an affiliate nonpublic personal information about customers to a nonaffiliated third party without first obtaining the customer's permission and requires financial institutions to establish safeguards to ensure the confidentiality of records and protect against anticipated threats or hazards to their security or integrity. Requires financial institutions to provide a clear and conspicuous written notice to individuals upon request, at the time a customer relationship is established and annually thereafter, and specifies what the notice must contain. Prohibits financial institutions from disclosing an individual's account number or access code for a credit account, deposit account or similar account to any nonaffiliated third party for use in telemarketing, direct mail marketings or marketing through electronic mail. Requires financial institutions to maintain financial privacy notification records and retain copies of each customer's approval of disclo- sures of confidential customer information for at least four years.

Justification

Without adequate laws to place restrictions on the transfer of non public information, information is transferred routinely to the detriment of individuals' right to privacy. Once disclosed, it is very difficult to prevent further dissemination of information. The federal Financial Services Modernization Act of 1999 adopted an "opt-out" provision for information sharing. This method places the burden on the consumer to notify financial institution that they do not wish to share their nonpublic information with third parties. Congress specifically provided that states could enact more stringent privacy protections. The "opt-out" approach does not go far enough to protect personal financial information. Consumers are unaware of the availability of the opt-out choice or do not know how to exercise it. The burden of protection should fall on those who seek the benefit most immediately from its disclosure -the financial institutions. The opt-in approach is the only way to protect individuals' privacy and protect against harassment and the illegal use of personal information that could have devastating results on consumers' financial or credit history. Personal financial information held by banks, insurance companies an d securities firms, for example reveals specific details of an individual's financial status and spending patterns. The unauthorized disclosure of such information has resulted in an increase in identity fraud crimes; subjects unwary individuals to unnecessary mail, telephone and Internet solicitations; and the loss of confidence in financial institutions generally.

Legislative history

2008 Referred to Consumer Protection.

Fiscal implications

None.

Effective date

November 1, 2010