Announced Actions for August 17, 2004

Commission authorization of the staff to file joint amicus brief: The Commission has authorized the staff of the FTC to file an amicus brief, jointly with the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and the National Credit Union Administration, in the matter of American Bankers Ass’n (ABA) v. Lockyer, No. 04-16334 (9th Cir.). The issues presented in the case concern whether the U.S. Court of Appeals for the Ninth Circuit should reverse a district court ruling upholding a California statute restricting the sharing of consumer information among corporate affiliates, over the plaintiffs’ objections that such provisions are expressly preempted by the Fair Credit Reporting Act (FCRA).

The brief states that in 2003, prior to the passage of the Fair and Accurate Credit Transactions Act (FACT Act), the California legislature enacted the California Financial Information Privacy Act, commonly known as “SB1.” This statute prohibits a financial institution from sharing a consumer’s nonpublic personal information with an affiliate “unless the financial institution: 1) has properly notified the consumer that it may so disclose the consumer’s information; and 2) has given the consumer an opportunity to direct that such information not be disclosed and the consumer has not so directed.” The FCRA, enforced by the FTC and the other agencies, provides that no state may impose any requirement or prohibition “with respect to the exchange of information among persons affiliated by common ownership or common corporate control.” The ABA argued that this provision preempted SB1, but the district court rejected that argument, ruling that the FCRA preemption provision applies only to “consumer reports,” as that term is used in the FCRA, and not to other types of consumer information.

“The district court’s decision defeats Congress’ objective” to “ensure the operational efficiency of [the] national credit system by creating a number of preemptive national standards,” according to the brief. It also, “ . . . could encourage other states to enact laws that impose unique notice requirements or other limitations on the sharing of information among affiliates, further frustrating Congress’ objective. As a result, institutions could face inconsistent or conflicting requirements, which could cause confusion among institutions and consumers alike.” In addition, “Institutions could confront the prospect of civil liability under state laws that Congress specifically sought to preempt.”

Further, the brief states that, “. . . state-by-state regulation of affiliate information sharing and use could create inefficiencies and increase regulatory burdens on institutions, driving up the cost of financial services and harming both financial institutions and consumers.” Accordingly, the agencies write, “ . . . the Court must reverse the erroneous decision of the district court and find that Federal law preempts SB1 insofar as SB1 purports to impose restrictions on information sharing among affiliates.”

The Commission vote authorizing the staff to file the brief, a copy of which can be found as a link to this press release on the FTC’s Web site, was 3-0-2, with Commissioners Mozelle W. Thompson and Pamela Jones Harbour not participating. (FTC File No. P859907; staff contact is John F. Daly, Office of the General Counsel, 202-326-2244.)

Commission approval of final consent order: Following a public comment period, the Commission has approved a final consent order in the matter concerning Dynamic Health of Florida, LLC, et al. The Commission vote to approve the final consent order was 5-0. (FTC File No. 042-3002, Docket No 9317; staff contact is Janet Evans, Bureau of Consumer Protection, 202-326-2125; see press release dated June 16, 2004.)

Copies of the documents mentioned in this release are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.