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F I S C A L I M P A C T R E P O R T

SPONSOR

Picraux

ORIGINAL DATE

LAST UPDATED

2/5/07

HB

612

SHORT TITLE

Consent for Sharing of Certain Financial Info

SB

ANALYST

C.Sanchez

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates,

SB 606

SOURCES OF INFORMATION

LFC Files

Responses Received From

Financial Institutions Division

Attorney General’s Office (AGO)

SUMMARY

Synopsis of Bill

According to the Attorney General’s Office, HB 612 parallels certain sections of the federal law,

specifically, 15 U.S.C. §§ 6802 and 6809, regarding the duties and obligations of financial

institutions to protect nonpublic personal information of consumers.

HB 612 prohibits financial institutions from disclosing nonpublic personal information to any

nonaffiliated third-party without the express prior consent of the consumer. HB 612 further

prohibits any financial institution from discriminating against any otherwise qualified consumer

who refuses to give consent.

In order to obtain consumer consent, a financial institution must use a separate document, signed

and dated by the consumer. The form must clearly and conspicuously disclose that, by signing,

the consumer is consenting to the disclosure of nonpublic personal information to third parties

not affiliated with the financial institution. Such consent will remain in effect until revoked or

House Bill 612 – Page

2

modified by the consumer.

FISCAL IMPLICATIONS

Other than any costs potentially incurred by the Office of the Attorney General, the Securities

Division or the Financial Institutions Division to draft any exceptions to the restrictions and

limitations of HB 612, any direct fiscal impact to the State would appear to be nominal, if any.

SIGNIFICANT ISSUES

HB 612 provides greater protection to consumers than the federal law by requiring financial

institutions to obtain the express, written consent of the consumer prior to disclosing nonpublic

personal information to third parties not affiliated with the financial institution, rather than rely

upon an “opt-out" clause.

HB 612 further empowers the Office of the Attorney General to draft, after consultation with the

Director of the Securities Division and the Director of the Financial Institutions Division, any

exceptions to the prohibition against disclosure of nonpublic personal information. Any such

exceptions are to be fashioned along the lines of the federal law.

PERFORMANCE IMPLICATIONS

The cost of hearings cannot be determined since the number and length of hearings necessary is

unknown.

ADMINISTRATIVE IMPLICATIONS

The time required of division personnel to perform the requirements of this bill cannot be

determined at this time.

DUPLICATION,

SB 606

TECHNICAL ISSUES

According to the Attorney General’s Office, the term “financial institution" as defined by HB

612 is both broader and narrower than the same term as defined under federal law. On the one

hand, persons “in the business of making loans," a term not included in either 15 U.S.C. §6802

or §6809, may be broadly construed to include such entities as Small Loan licensees and

“holders" under the Motor Vehicle Sales Finance Act. Thus, these entities otherwise engaged in

financial activities, including the lending of money, would, presumably, be subject to the

restrictions and limitations of HB 612.

However, on the other hand, the term “financial institution" as defined by HB 612 does not

include such entities as credit counseling services and credit repair organizations whereas the

federal law does. What is also unclear is whether farm credit institutions or secondary market

institutions would be subject to the prohibitions of HB 612.

House Bill 612 – Page

3

Also not covered by HB 612 is the re-use of information. Unlike the federal law, HB 612 does

not restrict nonaffiliated third parties that receive nonpublic personal information from a

financial institution from disclosing such information to any other person. Similarly, the federal

law prohibits disclosure of any list, description or grouping of consumers that is derived from

nonpublic personal information; HB 612 does not.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Status Quo

CS/mt