SB-1 is Preempted by the FACT Act

A federal district court in Sacramento (England, J.) has found the "affiliate-sharing" provisions of "SB-1" preempted by the FACT Act. Better known as SB-1, California’s Financial Information Privacy Act (Fin. Code §4050) marked a sharp departure from federal privacy laws by requiring customer "opt-in" consent when financial institutions share nonpublic customer information with non-affiliates, and "opt-out" consent even when sharing such information with affiliates. This created compliance headaches, because an institution might have different "bundles" of customer information, each subject to a different privacy regime.

In June, in a suit brought by the American Bankers Association, the Financial Services Roundtable, and the Consumer Bankers Association, the Ninth Circuit held that SB-1 was preempted by the FACT Act’s "affiliate-sharing" preemption clause (15 U.S.C. § 1681a(d)(1). However, it remanded back to the district court to determine exactly which provisions of SB-1 were,