Berkeley officials say they will move ahead with an ordinance that would protect consumers’ personal financial information, despite a lawsuit challenging similar laws in San Mateo County and Daly City.
Wells Fargo and Bank of America filed suit in a San Francisco federal court Tuesday alleging that the existing San Mateo County and Daly City ordinances, which fine financial institutions for sharing consumer information without customers’ consent, violate federal law.
The filing came just hours before the Berkeley City Council asked the city manager’s office Tuesday night to develop a similar ordinance based on the San Mateo County model.
Councilmember Betty Olds said the city will watch the lawsuit carefully, but plans to move forward with its own ordinance.“It’s privacy,” she said. “Nothing makes us madder than having our financial secrets passed around.”
Assistant City Attorney Zach Cowan said it was too early to determine how the case might effect Berkeley’s ordinance, but said it will likely have an influence on how the measure is drafted.
“I’m sure it’s relevant, and when we get there, we get there,” he said.
Wells Fargo and Bank of America spokespeople said it is too early to determine whether they would pursue legal action against Berkeley or other local governments that pass financial privacy measures in the coming months.
The city of San Francisco and Marin, Alameda and Contra Costa counties are considering similar ordinances.
Under existing federal law, financial institutions may share or sell consumer information unless customers sign a document opting out. The San Mateo and Daly City ordinances prevent companies within their borders from sharing information unless customers opt in. Violations result in fines of up to $250,000.
Daly City passed its ordinance after the financial services industry spent more than $10 million on lobbying and campaign contributions to defeat a similar statewide measure drafted by state Sen. Jackie Speier, D-San Mateo.
Spokespeople for Wells Fargo and Bank of America said their companies already have privacy policies that prohibit them from sharing consumers’ financial information with other institutions.
They said the banks filed suit because the local ordinances make it difficult for them to share customer information with their own affiliates and provide quality customer service.
For example, said Wells Fargo spokesperson Donna Uchida, the ordinances may prevent the company’s banking operation from telling its credit card operation that a customer is in solid financial standing and is deserving of a credit card.
City Councilmember Dona Spring said the Berkeley ordinance would allow companies to share information within their own walls.
“We have no interest in regulating banks other than protecting consumers,” she said.
Uchida also raised concerns about scattered municipalities passing different ordinances.
“We believe the patchwork approach... s going to confuse customers and create havoc in the marketplace,” she said.
Berkeley Mayor Shirley Dean raised similar concerns about a hodgepodge approach, arguing that the issue would best be handled on the state level.
“What I would hate to see would be a lot of ordinances that are quite different,” she said.
If local government does address the issue, she said, it should be done on a countywide level to ensure greater uniformity.
But Jennette Gayer, consumer associate with the California Public Interest Research Group in Los Angeles, said local governments should take up the issue.
“If the state can’t get it done, then local government should get it done,” she said.
Gayer said a growing number of local laws would put increasing pressure on financial institutions to cave in to statewide consumer protections.
Tom Casey, San Mateo County Counsel, said he was confident that the county’s ordinance is legal under federal law and said he would “vigorously defend” the measure.