California passes online privacy bill.

The United States' first online privacy bill went into effect July 1 in California. California Assembly Bill No. 68, the Online Privacy and Disclosure Act of 2003, which was signed October 14, 2003, by then-Governor Gray Davis, requires all commercial entities that collect personal information online to clearly post a privacy policy and makes it unlawful for an online entity to violate its posted privacy policy.

Although most legitimate online businesses post privacy policies on their Web sites, not all do. California's bill is meant to protect consumers and make them more comfortable about doing business online while rewarding online businesses that post and follow a fair, effective privacy policy.

"The law isn't clear on what recourse individuals may have, if any, if somebody chooses not to honor their posted privacy commitments," said State Assemblyman Joseph Simitian. "This bill provides for meaningful and accessible enforcement under California law."

California's landmark financial privacy law also took effect July 1, and not all businesses are pleased. According to USA Today, banks said they would renew their fight to overturn restrictions on how they can share customer information. The new law requires financial institutions to get permission from customers before sharing information, such as a customer's bank balance or spending habits, with a non affiliated company. Customers can also opt out of having their information shared or sold to companies with joint marketing agreements, such as a bank that has a contract with another firm to offer its customers credit cards.

Banks contend the Fair and Accurate Credit Transactions Act, passed by Congress last year, pre-empts California's restrictions on how affiliated companies can share customer data. Three trade associations--the American Bankers Association, the Financial Services Roundtable, and the Consumer Bankers Association--sued to overturn a part of the law that requires banks to give consumers the option to stop the sale of their information to an affiliate that is not in the same line of business. For instance, the state law says a customer could stop a bank from sharing data with an insurance company owned by the same corporation. A U.S. district court upheld the law and dismissed the suit, saying that the 1999 Gramm-Leach-Bliley Act allows states to enact stricter rules. The trade groups said they would appeal the decision.