CALIFORNIA PRIVACY BILL IS LAW.

After four years of dispute over whether financial institutions can share consumers' personal information without their express permission, California Gov. Gray Davis Aug. 27 signed the opt-in privacy bill into law.

California is the fourth state to adopt such an opt-in rather than an opt-out requirement. The three other opt-in states are New Mexico, North Dakota and Vermont.

The bill made it through the legislature only after consumer groups signed up almost twice as many persons as the 375,000 needed to put an even more restrictive privacy initiative before the voters next spring. In North Dakota, a similar referendum was approved by 72 percent of the voters.

Under the current Gramm-Leach-Bliley federal financial modernization law, which passed in 1999, financial institutions can share personal information unless prohibited from doing so by state law.

Davis predicted California's opt-in law would become a model for other states to follow and would "sweep across America like a prairie wildfire."

Insurers, however, don't intend to give states the chance to adopt opt-in laws similar to the new California law. They are pushing hard to get an opt-out requirement as federal law in the Fair Credit Reporting Act, which is before Congress now and must be passed by the end of this year to avoid expiration, and say the FCRA would preempt California's law, which doesn't go into effect until July 2004.

Above all, insurers who do business in many states don't want different standards they must follow in different states.

"For the sake of commerce, for the sake of the consumer, for the sake of low cost, there needs to be one privacy standard," said Frank Keating of the American Council of Life Insurers.

Privacy groups and consumer advocates also would approve of one standard, but want it to allow consumers to opt-in, not require them to opt-out, before their information is shared.

California will test how much strength insurers and consumers have with the electorate on the opt-in issue this October, when voters will decide if Davis should continue as governor or be recalled.

Davis clearly thinks voters will feel strongly in favor of the opt-in standard as he tried to rally their support at the Pacific Stock Exchange signing ceremony in San Francisco even though he had opposed some variations of the bill before its final passage.

"Most Californians are stunned to learn that financial corporations trade their names for money," he said. "That is wrong, and when I sign this bill, that practice will stop."