Legislature(2007 - 2008)BELTZ 211

03/31/2008 01:30 PM Senate JUDICIARY


Download Mp3. <- Right click and save file as

Audio Topic
01:42:17 PM Start
01:42:30 PM HB65
03:02:21 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 65 PERSONAL INFORMATION & CONSUMER CREDIT TELECONFERENCED
Heard & Held
+ HB 88 TVS AND MONITORS IN MOTOR VEHICLES TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
         HB  65-PERSONAL INFORMATION & CONSUMER CREDIT                                                                      
                                                                                                                                
1:42:30 PM                                                                                                                    
CHAIR FRENCH  announced the  consideration of  HB 65.  Before the                                                               
committee was SCS CSHB 65(L&C).  The committee is trying to steer                                                               
a  middle  ground between  gutting  the  bill and  shutting  down                                                               
business in the state of Alaska,  he said. He asked the sponsor's                                                               
representative to explain the proposed amendments.                                                                              
                                                                                                                                
KAREN  LIDSTER, staff  to Representative  Coghill, said  that the                                                               
amendments  are the  result  of discussion  in  the hearing  last                                                               
Saturday.                                                                                                                       
                                                                                                                                
CHAIR   FRENCH  explained   the  process   for  considering   the                                                               
amendments and Ms. Lidster agreed.                                                                                              
                                                                                                                                
CHAIR  FRENCH moved  Amendment  1,  25-LS0311\T.3, Banister,  and                                                               
objected for discussion purposes.                                                                                               
                                                                                                                                
                      A M E N D M E N T 1                                                                                   
                                                                                                                                
     OFFERED IN THE SENATE                                                                                                      
          TO:  SCS CSHB 65(L&C)                                                                                                 
                                                                                                                                
     Page 2, line 19, following "investigation":                                                                                
          Delete "or"                                                                                                           
          Insert "and"                                                                                                          
                                                                                                                                
MS.  LIDSTER explained  that the  change narrows  the scope  with                                                               
respect to  what the  requirements would be  if a  covered person                                                               
finds there is a breach of personal information.                                                                                
                                                                                                                                
1:45:08 PM                                                                                                                    
SENATOR  McGUIRE said  she wants  to  avoid a  situation where  a                                                               
misplaced  file or  some other  small technical  breach encumbers                                                               
business by  requiring constant reporting for  things that aren't                                                               
really  relevant.  She suggested  that  a  better definition  for                                                               
"breach" might be the place to start.                                                                                           
                                                                                                                                
1:46:44 PM                                                                                                                    
MS.  LIDSTER  directed  attention  to  page 5,  line  23,  for  a                                                               
definition of breach of security.                                                                                               
                                                                                                                                
     (1)    "breach  of  the  security"  means  unauthorized                                                                    
     acquisition,  or  reasonable   belief  of  unauthorized                                                                    
     acquisition, of  personal information  that compromises                                                                    
     the  security,  confidentiality,  or integrity  of  the                                                                    
     personal  information  maintained  by  the  information                                                                    
     collector;                                                                                                                 
                                                                                                                                
The definition then  talks about types of breach -  whether it is                                                               
paper-based or with a computer  device. Subsection (b) on page 2,                                                               
says that the information collector  makes the disclosure without                                                               
unreasonable delay after determining the  scope of the breach and                                                               
restoring  the integrity  of the  information system.  Subsection                                                               
(c)   says  that   after  appropriate   investigation,  if   it's                                                               
determined that there  is not a reasonable likelihood  of harm to                                                               
the consumer, then notification is  not necessary. "We think that                                                               
the definition and  then [subsections] (b) and (c)  cover that so                                                               
it doesn't  become something that  is onerous to  the businesses,                                                               
but  does  not leave  the  resident  in  a position  where  their                                                               
information is possibly in breach," she said.                                                                                   
                                                                                                                                
SENATOR McGUIRE pointed  out that even if the  file is misplaced,                                                               
it  still  requires reporting.  She  expressed  concern with  the                                                               
amendment because it  creates a situation where a  paper trail is                                                               
required in every instance.                                                                                                     
                                                                                                                                
1:49:14 PM                                                                                                                    
CHAIR FRENCH recounted his experience  with the Department of Law                                                               
with respect  to immediately locating  every one of the  files in                                                               
the department's  possession. With  that in  mind, he  isn't sure                                                               
that a  juror would penalize a  company that believed a  file had                                                               
been  misplaced and  didn't  report a  breach.  It's a  different                                                               
matter if the file is missing 72  hours later, he said. If a file                                                               
pops after  going missing for  hour, no  one ever knows  about it                                                               
unless something bad happened, he said.                                                                                         
                                                                                                                                
MS. LIDSTER  said that if  a file with "personal  information" as                                                               
defined  on page  6 goes  missing, any  business that  might have                                                               
that kind  of information must  be accountable to make  sure that                                                               
the  Alaska  resident is  protected.  A  lot  of harm  can  occur                                                               
quickly  if someone's  checking account  or credit  cards numbers                                                               
are accessed, she said.                                                                                                         
                                                                                                                                
1:52:05 PM                                                                                                                    
SENATOR WIELECHOWSKI joined the meeting.                                                                                        
                                                                                                                                
SENATOR  McGUIRE  asked if  law  enforcement  agencies have  been                                                               
consulted and questioned whether  the Anchorage Police Department                                                               
would  suddenly  be   overwhelmed  with  consultations  regarding                                                               
missing files.                                                                                                                  
                                                                                                                                
MS. LIDSTER replied that change  came up in the committee hearing                                                               
on Saturday.  She hasn't consulted with  law enforcement agencies                                                               
to find  out who  might handle  the calls  and what  impact those                                                               
might have.                                                                                                                     
                                                                                                                                
SENATOR THERRIAULT  said that  his concern with  line 19  is that                                                               
local agencies  would be consulted.  If a file went  missing from                                                               
the Wells Fargo Bank in North  Pole, he'd hate to think that only                                                               
the city  police would be  contacted. If  a breach occurred  at a                                                               
village  health clinic,  someone might  only consult  the Village                                                               
Public  Safety  Officer  (VPSO).  Perhaps Mr.  Sniffen  wants  to                                                               
comment but  the committee might  want to consider  dropping that                                                               
option, he said.                                                                                                                
                                                                                                                                
1:54:31 PM                                                                                                                    
SENATOR McGUIRE  said the committee  might want to  designate who                                                               
would  be  contacted so  there's  no  ambiguity about  where  the                                                               
report is made.                                                                                                                 
                                                                                                                                
CHAIR FRENCH  suggested that  the word  "relevant" should  be the                                                               
tipoff.                                                                                                                         
                                                                                                                                
SENATOR  McGUIRE questioned  how  a merchant  in Anchorage  would                                                               
know  whether to  call Ed  Sniffen with  the DOL,  the APD  fraud                                                               
unit, or  the FBI. She doesn't  have that same comfort  level and                                                               
she'd   like  to   know  who   is  envisioned   and  under   what                                                               
circumstance.                                                                                                                   
                                                                                                                                
SENATOR  THERRIAULT said  he'd  like Mr.  Sniffen  to comment  on                                                               
whether the  DOL would be  likely to pass regulations  to provide                                                               
that level of specificity if the amendment were to pass.                                                                        
                                                                                                                                
1:56:30 PM                                                                                                                    
ED SNIFFEN,  Senior Assistant  Attorney General,  Civil Division,                                                               
Commercial/Fair  Business  Section,   Department  of  Law  (DOL),                                                               
surmised  that depending  on  the  type of  breach,  it would  be                                                               
difficult to  pinpoint which  agency should  be notified.  If the                                                               
breach  is in  Alaska,  notifying the  attorney general's  office                                                               
would  probably  satisfy  any circumstance.  If  the  information                                                               
needed to  be forwarded to  another federal or local  agency that                                                               
could probably  be done. If  a breach affecting  Alaska residents                                                               
occurred  outside  the  state  and the  company  was  already  in                                                               
consultation  with   a  federal  agency  about   whether  or  not                                                               
disclosure  is  required, that  too  would  probably satisfy  the                                                               
requirement. He expects  that when a federal  agency is notified,                                                               
the information  will be passed  along to the  attorney general's                                                               
office.                                                                                                                         
                                                                                                                                
MR. SNIFFEN said  that sophisticated companies would  know who to                                                               
contact, but  whether or  not a  local merchant  would know  is a                                                               
trickier  call. The  DOL  could adopt  regulations  to make  that                                                               
clear, but  that might not  help the local merchant  much. Making                                                               
it  too specific  would require  additional  reporting for  folks                                                               
working on a  broader level outside the state. When  he reads the                                                               
language he agrees  with Senator McGuire and he  also agrees with                                                               
Senator Therriault that  you don't want someone  reporting to the                                                               
VPSO. "You  want to  report to  someone who  actually understands                                                               
what's going on, and can  make a meaningful review of the…breach,                                                               
and  decide  if disclosure  is  required."  He would  not  oppose                                                               
removing  reference to  "local" agency,  but some  municipalities                                                               
outside the  state may  have the  authority and  be well  able to                                                               
make a competent review. To some  extent it's a moving target and                                                               
the current language is probably clear enough, he said.                                                                         
                                                                                                                                
2:00:22 PM                                                                                                                    
CHAIR FRENCH  asked his  view on  changing the  "or" to  "and" on                                                               
page 2, line 19.                                                                                                                
                                                                                                                                
MR. SNIFFEN  replied it's good  change that will avoid  the self-                                                               
policing  issue that  Senator  Therriault  raised. Requiring  the                                                               
additional informal consultation wouldn't be onerous.                                                                           
                                                                                                                                
CHAIR FRENCH asked if  he would be willing to have  his name on a                                                               
hotline posted at credit card businesses across the state.                                                                      
                                                                                                                                
MR. SNIFFEN suggested the attorney general's name be posted.                                                                    
                                                                                                                                
CHAIR FRENCH  removed his objection  to Amendment 1 and  asked if                                                               
there was further objection.                                                                                                    
                                                                                                                                
2:02:40 PM                                                                                                                    
SENATOR  McGUIRE said  she likes  the  premise of  the bill,  but                                                               
she's nervous about the mandatory  reporting requirement and that                                                               
businesses would have to figure it out.                                                                                         
                                                                                                                                
CHAIR  FRENCH  said he  could  support  removing the  phrase  "or                                                               
local"  because  that option  may  not  be helpful.  Notifying  a                                                               
relevant federal or state agency  gets to the level of government                                                               
official that  inspires more confidence  and eliminates  the VPSO                                                               
issue  altogether.  The  underlying  issue of  whether  you  must                                                               
notify law  enforcement on the way  to arriving at a  decision to                                                               
not make a  disclosure is a balance point  that's worth striking,                                                               
he said.  Without the  "or" in the  phrase "after  an appropriate                                                               
investigation  or  after  consultation," many  security  breaches                                                               
will never be disclosed.                                                                                                        
                                                                                                                                
2:05:02 PM                                                                                                                    
SENATOR McGUIRE said that's why  it's so important to be specific                                                               
about whom to  consult. The assumption is that the  person who is                                                               
contacted will  have a  broader knowledge-base  to say  that this                                                               
does in fact constitute a breach.                                                                                               
                                                                                                                                
CHAIR  FRENCH said  he agrees  with  her point,  but Amendment  1                                                               
deals with the first half of line  19 on page 2. It asks if there                                                               
must be  a report  to somebody  and he's  come to  the conclusion                                                               
that there should be.                                                                                                           
                                                                                                                                
2:06:34 PM                                                                                                                    
SENATOR WIELECHOWSKI said he can  envision times when it might be                                                               
beneficial to  contact a  local agency.  For example,  the health                                                               
and social services department has  a large presence in Anchorage                                                               
and  it gathers  private  information. He'd  hate  to think  that                                                               
contacting that agency would not be a consideration.                                                                            
                                                                                                                                
CHAIR FRENCH asked if he means  you'd consult that agency about a                                                               
breach.                                                                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI  replied  he   understands  the  thrust  of                                                               
Senator McGuire's  question, and  he can  envision times  when it                                                               
might be beneficial to contact a local agency.                                                                                  
                                                                                                                                
CHAIR  FRENCH called  a point  of order  saying that  Amendment 1                                                               
does  not  determine  with  whom  to  consult;  it  asks  whether                                                               
consultation is required.                                                                                                       
                                                                                                                                
SENATOR McGUIRE  said that's technically  true, but with  whom to                                                               
consult becomes relevant  if the amendment passes  since it would                                                               
require the  consultation. She asked  Senator Therriault  if this                                                               
was contemplated in the first iterations of the bill.                                                                           
                                                                                                                                
2:08:49 PM                                                                                                                    
SENATOR  THERRIAULT relayed  that  subsection (c)  wasn't in  the                                                               
previous version  of the bill. He  agreed with the Chair  that it                                                               
lessens the sting of the disclosure provisions.                                                                                 
                                                                                                                                
CHAIR  FRENCH said  he agrees  that the  agency issue  needs some                                                               
clarification,  but  he  tends  to  favor  at  least  having  the                                                               
consultation  take place  before deciding  that disclosure  isn't                                                               
necessary.                                                                                                                      
                                                                                                                                
2:10:09 PM                                                                                                                    
SENATOR  McGUIRE  asked  if  Mr. Sniffen  could  give  that  some                                                               
thought overnight.                                                                                                              
                                                                                                                                
MR. SNIFFEN agreed to do so.                                                                                                    
                                                                                                                                
SENATOR McGUIRE reiterated that she  wants to make sure that it's                                                               
clear, so there aren't unwitting law violators.                                                                                 
                                                                                                                                
CHAIR  FRENCH  suggested  the  committee   first  decide  on  the                                                               
amendment.  He  withdrew his  objection  and  finding no  further                                                               
objection  or  discussion,  he  announced  that  Amendment  1  is                                                               
adopted. He added  that the committee would continue  to focus on                                                               
the second  part of the sentence  to make sure that  people doing                                                               
business in the state aren't confused or misled.                                                                                
                                                                                                                                
2:12:48 PM                                                                                                                    
CHAIR  FRENCH moved  Amendment 2,  25-LS0311\T.4, Bannister,  and                                                               
objected for discussion purposes.                                                                                               
                                                                                                                                
                      A M E N D M E N T 2                                                                                   
                                                                                                                                
     OFFERED IN THE SENATE                                                                                                      
          TO:  SCS CSHB 65(L&C)                                                                                                 
                                                                                                                                
     Page 9, line 2:                                                                                                            
          Delete ", except as provided for insurers under                                                                       
     (g) of this section,"                                                                                                      
                                                                                                                                
     Page 9, lines 5 - 15:                                                                                                      
          Delete all material.                                                                                                  
                                                                                                                                
     Reletter the following subsections accordingly.                                                                            
                                                                                                                                
     Page 15, line 18:                                                                                                          
          Delete "or"                                                                                                           
                                                                                                                                
     Page 15, line 26, following "screening":                                                                                   
          Insert "; or                                                                                                          
               (11) a person for use for insurance purposes                                                                     
     in  setting  a  rate,  adjusting a  rate,  adjusting  a                                                                    
     claim, or underwriting, except  that this paragraph may                                                                    
     not be  interpreted to authorize an  insurance practice                                                                    
     that is prohibited by other law"                                                                                           
                                                                                                                                
MS. LIDSTER said  the amendment removes subsection (g)  on page 9                                                               
and inserts paragraph  (11) on page 15. It  would allow insurance                                                               
companies  access  to  a   consumer's  information  for  specific                                                               
purposes when  there is a  security freeze. The amendment  is the                                                               
result  of  committee discussion  during  the  last hearing,  she                                                               
said.  The sponsor  continues  to believe  that  when a  consumer                                                               
places a security  freeze on his or her information  it should be                                                               
secured and  frozen, unless the  consumer specifically  lifts the                                                               
freeze. This  amendment is  not the  sponsor's first  choice, she                                                               
said.                                                                                                                           
                                                                                                                                
2:16:13 PM                                                                                                                    
CHAIR FRENCH read  the explanation attached to  the amendment and                                                               
asked if it's an accurate synopsis.                                                                                             
                                                                                                                                
MS. LIDSTER said it is.                                                                                                         
                                                                                                                                
SENATOR THERRIAULT said  he understands that the  issue of people                                                               
stealing  personal information  to  apply for  insurance isn't  a                                                               
real concern.  However, he'd like  Mr. Sniffen or  Ms. Hillebrand                                                               
to weigh in about unintended consequences.                                                                                      
                                                                                                                                
CHAIR FRENCH  asked for  clarification that  this does  not cover                                                               
the circumstance of a person who  loses their wallet and places a                                                               
credit freeze on their information and  then wants to get a quote                                                               
for the purpose of buying insurance.                                                                                            
                                                                                                                                
MS. LIDSTER explained  that if she placed a credit  freeze on her                                                               
information  and then  wanted  to get  an  insurance policy,  the                                                               
insurance company would need access  to her financial information                                                               
to  do  a  credit  check. As  originally  drafted  the  insurance                                                               
companies would  not have access,  but the amendment  would allow                                                               
access for the specific purpose.                                                                                                
                                                                                                                                
CHAIR  FRENCH  asked if  he  would  have  to give  the  insurance                                                               
company permission to access his information.                                                                                   
                                                                                                                                
2:18:48 PM                                                                                                                    
MS. LIDSTER replied not if this amendment is adopted.                                                                           
                                                                                                                                
CHAIR  FRENCH  pointed out  that  he  would have  instigated  the                                                               
request by having asked for an insurance quote.                                                                                 
                                                                                                                                
MS.  LIDSTER agreed,  but  the amendment  takes  the question  of                                                               
giving permission out of the equation, she said.                                                                                
                                                                                                                                
SENATOR  McGUIRE  asked to  hear  from  Mr. Sniffen  because  she                                                               
recalled  that  a  bill  passed   several  years  ago  said  that                                                               
insurance companies  would not  use credit scores  as a  means of                                                               
ascertaining rates.                                                                                                             
                                                                                                                                
2:20:22 PM                                                                                                                    
MR.  SNIFFEN said  he  believes  there is  an  exemption in  that                                                               
legislation   to  allow   insurance  companies   to  use   credit                                                               
information for the first two years only.                                                                                       
                                                                                                                                
SENATOR McGUIRE  said if the  consumer can  lift the ban  and the                                                               
consumer wants  to buy the  insurance she questions the  need for                                                               
more than  the standard "I give  permission to lift my  freeze or                                                               
not."                                                                                                                           
                                                                                                                                
MS. LIDSTER said it's a policy choice for the committee.                                                                        
                                                                                                                                
CHAIR  FRENCH  characterized the  provision  as  a concession  to                                                               
industry.                                                                                                                       
                                                                                                                                
MS. LIDSTER agreed.                                                                                                             
                                                                                                                                
2:22:46 PM                                                                                                                    
SENATOR  THERRIAULT commented  that Senator  McGuire being  under                                                               
the impression that  industry is no longer allowed  to use credit                                                               
scores is  an indication of what  happened to that bill.  "It got                                                               
nibbled to  death." Regardless of  what legislators  thought they                                                               
did,  insurance  companies can,  for  the  first two  years,  use                                                               
credit scores to  quote a rate to buy insurance  in Alaska. After                                                               
two years,  the insurance company  presumably knows  your history                                                               
so it's no longer necessary to  have access to your credit score.                                                               
That's  why we  need  to be  careful that  we're  not creating  a                                                               
bigger  loophole  than  we  think,  he  said.  He  suggested  the                                                               
committee ask Mr. Sniffen to weigh in.                                                                                          
                                                                                                                                
CHAIR FRENCH asked  Mr. Sniffen what danger  proposed Amendment 2                                                               
presents.                                                                                                                       
                                                                                                                                
MR. SNIFFEN said it's entirely a  policy call, but he's not aware                                                               
of  any harm  that has  come  to Alaskans  from insurance  agents                                                               
having access to  this information. He understands that  a lot of                                                               
other states allow  these kinds of exemptions so  he assumes that                                                               
the debate has taken place elsewhere  and it's fallen on the side                                                               
of  allowing  the  exemption.   Nonetheless,  from  the  consumer                                                               
perspective  it's   another  loophole  that  perhaps   should  be                                                               
avoided, he said.                                                                                                               
                                                                                                                                
2:26:10 PM                                                                                                                    
CHAIR FRENCH cited  the hypothetical example of  applying for new                                                               
car insurance after having placed  a freeze on his credit because                                                               
of a  lost wallet.  He questioned  whether the  insurance company                                                               
wouldn't tell him he must lift the freeze if he wants a quote.                                                                  
                                                                                                                                
MR. SNIFFEN agreed that would likely happen.                                                                                    
                                                                                                                                
CHAIR FRENCH  asked if he would  need to lift the  freeze for all                                                               
purposes or just to complete that particular transaction.                                                                       
                                                                                                                                
MR. SNIFFEN replied he believes the  freeze could be lifted for a                                                               
period  of  time, but  he  isn't  sure  about  lifting it  for  a                                                               
specific transaction.  There are ways  to do it, but  the process                                                               
may be time consuming and carry associated fees, he added.                                                                      
                                                                                                                                
2:28:05 PM                                                                                                                    
CHAIR FRENCH commented that the  amendment doesn't seem to have a                                                               
lot of danger for either side.                                                                                                  
                                                                                                                                
SENATOR WIELECHOWSKI  expressed the  same sentiment He  asked Mr.                                                               
Sniffen what the real danger is in passing the amendment.                                                                       
                                                                                                                                
CHAIR FRENCH relayed that he heard  Mr. Sniffen say that the more                                                               
loopholes there are, the worse off you are.                                                                                     
                                                                                                                                
MR. SNIFFEN  said that in  the greater  scheme, he doesn't  see a                                                               
lot  of danger.  He hasn't  heard of  anyone using  the insurance                                                               
exemption in other states for  illegal purposes. But, he said, it                                                               
is another exemption.                                                                                                           
                                                                                                                                
SENATOR  McGUIRE  commented  that  she's  come  full  circle  and                                                               
believes  the  amendment  is consumer  friendly.  She  questioned                                                               
whether  there's  been  any discussion  about  removing  security                                                               
freezes that are  less blanket and more  targeted toward specific                                                               
authorized purposes.                                                                                                            
                                                                                                                                
2:31:34 PM                                                                                                                    
SENATOR  THERRIAULT  asked Ms.  Lidster  to  comment on  page  8,                                                               
Sec.45.48.130, dealing with access  and actions during a security                                                               
freeze.                                                                                                                         
                                                                                                                                
MS. LIDSTER  relayed that  the sponsor  found that  consumers can                                                               
not  lift  a  security  freeze  for  particular  parts  of  their                                                               
information.  If that  were allowed,  consumers could  manipulate                                                               
their  credit  rating by  "thawing"  only  the good  information.                                                               
"When you  freeze it, you  freeze it all;  when you lift  it, the                                                               
freeze comes off of everything," she said.                                                                                      
                                                                                                                                
SENATOR McGUIRE  clarified her point  was that the report  in its                                                               
entirety would be  available to a specific  authorized person and                                                               
for a specified function. There's value to that, she said.                                                                      
                                                                                                                                
2:33:24 PM                                                                                                                    
SENATOR  HUGGINS  described the  amendment  as  good and  narrow-                                                               
banded. It is  an exception, but it's one of  those things that's                                                               
mandatory, he said.                                                                                                             
                                                                                                                                
SENATOR  THERRIAULT asked  Ms. Hillebrand  to comment  on whether                                                               
other states have had problems with similar exceptions.                                                                         
                                                                                                                                
2:34:42 PM                                                                                                                    
GAIL  HILLEBRAND, Attorney  at Law,  Consumers  Union West  Coast                                                               
Office, said  the amendment  creates a  loophole, but  it doesn't                                                               
undermine the basic  purpose of the freeze. She  pointed out that                                                               
the security provisions  allow consumers to lift a  freeze for 15                                                               
minutes. It's not  that inconvenient. In most  other states where                                                               
insurance  has  been exempted,  it's  been  a concession  to  the                                                               
nature of the industry and it  hasn't interfered with the way the                                                               
freeze laws work, she said.                                                                                                     
                                                                                                                                
CHAIR FRENCH removed his objection  to Amendment 2 and finding no                                                               
further objection, he announced that Amendment 2 is adopted.                                                                    
                                                                                                                                
2:35:51 PM                                                                                                                    
CHAIR  FRENCH moved  Amendment 3,  25-LS0311\T.5, Bannister,  and                                                               
objected for discussion purposes.                                                                                               
                                                                                                                                
                      A M E N D M E N T 3                                                                                   
                                                                                                                                
     OFFERED IN THE SENATE                                                                                                      
          TO:  SCS CSHB 65(L&C)                                                                                                 
                                                                                                                                
     Page 18, line 19:                                                                                                          
          Delete "debt collection,"                                                                                             
                                                                                                                                
     Page 20, lines 9 - 10:                                                                                                     
          Delete "debt collection,"                                                                                             
                                                                                                                                
MS.   LIDSTER  explained   that  the   amendment  removes   "debt                                                               
collection"  as an  exception to  the prohibitions  for requests,                                                               
collections, and disclosures of a social security number.                                                                       
                                                                                                                                
SENATOR WIELECHOWSKI  asked what  the rationale was  for removing                                                               
that exception.                                                                                                                 
                                                                                                                                
MS. LIDSTER  said the  exemption for  debt collection  was overly                                                               
broad.                                                                                                                          
                                                                                                                                
2:38:59 PM                                                                                                                    
CHAIR FRENCH asked whose ox is being gored.                                                                                     
                                                                                                                                
MS. LIDSTER  surmised it's anyone  who is in business  and trying                                                               
to  collect  a   debt.  That  exemption  was   added  when  fraud                                                               
prevention and law enforcement issues were addressed.                                                                           
                                                                                                                                
CHAIR FRENCH asked  Mr. Sniffen to comment  on proposed Amendment                                                               
3.                                                                                                                              
                                                                                                                                
MR. SNIFFEN said DOL has no objection to removing the exemption.                                                                
                                                                                                                                
CHAIR FRENCH removed his objection  to Amendment 3 and finding no                                                               
further objection, he announced that Amendment 3 is adopted.                                                                    
                                                                                                                                
2:41:01 PM                                                                                                                    
CHAIR  FRENCH moved  Amendment 4,  25-LS0311\T.6, Bannister,  and                                                               
objected for discussion purposes.                                                                                               
                                                                                                                                
                      A M E N D M E N T 4                                                                                   
                                                                                                                                
     OFFERED IN THE SENATE                                                                                                      
          TO:  SCS CSHB 65(L&C)                                                                                                 
                                                                                                                                
     Page 18, line 13, following "person":                                                                                      
          Insert "or a transaction"                                                                                             
                                                                                                                                
     Page 18, line 16, following "person":                                                                                      
          Insert "or for a transaction"                                                                                         
                                                                                                                                
     Page 18, line 29:                                                                                                          
          Delete "expressly"                                                                                                    
                                                                                                                                
     Page 18, line 31, following "person":                                                                                      
          Insert "or for a transaction"                                                                                         
                                                                                                                                
     Page 19, line 3, following "person":                                                                                       
          Insert "or for a transaction"                                                                                         
                                                                                                                                
     Page 19, line 22:                                                                                                          
          Delete "expressly"                                                                                                    
                                                                                                                                
     Page 19, line 30:                                                                                                          
          Delete "the third party is a person"                                                                                  
          Insert "the disclosure is to a person or for a                                                                        
     transaction"                                                                                                               
                                                                                                                                
     Page 20, line 3:                                                                                                           
          Delete "the third party is"                                                                                           
          Insert "the disclosure is to a person or for a                                                                        
     transaction"                                                                                                               
                                                                                                                                
MS.  LIDSTER  explained  that the  amendment  addresses  concerns                                                               
voiced by  LexisNexis and  ChoicePoint Inc.  The intention  is to                                                               
allow  businesses that  are regulated  by the  Gramm-Leach-Bliley                                                               
Financial Modernization  Act (GLBA) or the  Fair Credit Reporting                                                               
Act (FCRA)  to conduct regulated transactions  with entities that                                                               
are  not  regulated.  The  phrase  "or  for  a  transaction"  was                                                               
inserted  on pages  18-20 as  listed  in the  above amendment  to                                                               
clarify  that  if the  entity  isn't  regulated, the  transaction                                                               
would  be.  Further  concern  was   that  the  phrase  "expressly                                                               
authorized"  was too  limiting.  Thus, the  term "expressly"  was                                                               
removed from page 18, line 29 and from page 19, line 22.                                                                        
                                                                                                                                
MS. LIDSTER characterized  it as a fair compromise  to let either                                                               
the person  or the transaction  be regulated  by the GLBA  or the                                                               
FCRA.                                                                                                                           
                                                                                                                                
2:46:10 PM                                                                                                                    
CHAIR  FRENCH referred  to page  18, line  2, paragraph  (1), and                                                               
asked  if  there's a  reason  that  the word  "expressly"  wasn't                                                               
deleted there as well.                                                                                                          
                                                                                                                                
MS. LIDSTER replied  it was an oversight; she'd  appreciate it if                                                               
the committee would delete that reference as well.                                                                              
                                                                                                                                
CHAIR FRENCH said the committee would deal with that separately.                                                                
                                                                                                                                
SENATOR  THERRIAULT   asked  about   inserting  the   phrase  "or                                                               
transaction" in that location.                                                                                                  
                                                                                                                                
CHAIR FRENCH pointed  out that the construction  of the amendment                                                               
is to  insert the phrase "or  transaction" when it refers  to the                                                               
GLBA  or the  FCRA, but  not in  paragraph (1)  of Sec.45.48.410,                                                               
Sec.45.48.420, and Sec.45.48.430.                                                                                               
                                                                                                                                
MS. LIDSTER agreed.                                                                                                             
                                                                                                                                
CHAIR  FRENCH   asked  the  representatives  from   the  affected                                                               
industry if they'd seen the amendment and cared to comment.                                                                     
                                                                                                                                
2:48:02 PM                                                                                                                    
JON  BURTON,  Assistant  Vice  President,  State  and  Government                                                               
Relations, ChoicePoint  Inc., said  he knows with  certitude that                                                               
the language that  he and others in the industry  provided to the                                                               
sponsor and this  committee would work for  ChoicePoint. He can't                                                               
give  an opinion  as  to  whether the  language  in the  proposed                                                               
amendment would alleviate  the problem. We will  continue to work                                                               
with the sponsor, he said.                                                                                                      
                                                                                                                                
AUDREY  ROBINSON, Manager,  State  and  Government Affairs,  Reed                                                               
Elsevier,  parent   company  for  LexisNexis,  stated   that  she                                                               
consulted  outside counsel  when  she learned  that an  amendment                                                               
adding  the  word  "transaction"  was  contemplated.  Those  GLBA                                                               
experts indicated  that the language  suggested in  the amendment                                                               
is outside the  scope of the GLBA statute.  LexisNexis and others                                                               
in the  industry suggested the  "or" amendment.  It appropriately                                                               
says that the  use or the purpose is regulated  and therefore you                                                               
fall  under  the  prosecutorial  jurisdiction  of  the  FTC.  She                                                               
doesn't   know  if   the  proposed   amendment  would   work  for                                                               
LexisNexis.                                                                                                                     
                                                                                                                                
2:50:30 PM                                                                                                                    
JENNIFER   FLYNN,  Senior   Manager,  Consumer   Data  Industries                                                               
Association (CDIA),  said CDIA represents the  consumer reporting                                                               
industry.  There hasn't  been  time to  contact  members to  know                                                               
whether  or not  the amendment  will  work, but  LexisNexis is  a                                                               
member and if it doesn't work for  them it won't work for us, she                                                               
said.  Industry  did offer  language  it  knows would  work,  she                                                               
added.                                                                                                                          
                                                                                                                                
MURRAY   JOHNSTON,  Director,   State  and   Government  Affairs,                                                               
Experian said he appreciates the  sponsor's efforts, but he needs                                                               
to  have his  attorney review  the language  before he's  able to                                                               
comment on the proposed amendment.                                                                                              
                                                                                                                                
CHAIR  FRENCH asked  Ms.  Hillebrand  if she's  had  a chance  to                                                               
review the amendment.                                                                                                           
                                                                                                                                
MS. HILLEBRAND, said she too  received the proposed language just                                                               
today. She continued:                                                                                                           
                                                                                                                                
     The language in print -  not looking at the amendment -                                                                    
     requires both the person and  the purpose to be the one                                                                    
     that  is called  for  in a  specific  federal law.  The                                                                    
     amendment  would allow  it  to be  the  person and  the                                                                    
     purpose or the  transaction and the purpose.  That is a                                                                    
     softening of the bill, but  still ties the idea to that                                                                    
     federal law  and the [indic.] transaction  that's under                                                                    
     the federal  law. The problem  that we had  with simply                                                                    
     saying 'person or purpose,' which  is what the industry                                                                    
     had  initially proposed,  is that  that would  open the                                                                    
     exemption up  to businesses and transactions  that have                                                                    
     never been  contemplated to be covered  by that federal                                                                    
     law.                                                                                                                       
                                                                                                                                
     Just imagine…  Sears, Maytag or an  local auto mechanic                                                                    
     who's asking  for your ssn.  The purpose of  the Gramm-                                                                    
     Leach-Bliley  Act  never  intended to  apply  to  those                                                                    
     folks  with respect  to non  credit activities  and yet                                                                    
     one of  the purposes  under GLBA is  resolving customer                                                                    
     disputes  or inquiries.  If you  take that  out of  the                                                                    
     financial institution  … trust transaction  setting you                                                                    
     get  kind of  a surprising  result. You  know your  car                                                                    
     mechanic shouldn't have to ask  you for your ssn if you                                                                    
     have a complaint about the quality of your car repair.                                                                     
                                                                                                                                
     Similarly Gramm-Leach-Bliley  has a purpose for  use by                                                                    
     self-regulatory agencies.  That's a known thing  in the                                                                    
     financial area, but outside the  financial area if it's                                                                    
     just  a purpose  that's  permitted, that  could be  the                                                                    
     direct  marketing association,  which  are exactly  the                                                                    
     folks who we  might be worried are using  ssns a little                                                                    
     too much.                                                                                                                  
                                                                                                                                
     And finally,  Gramm- Leach-Bliley  and the  Fair Credit                                                                    
     Reporting  Act  both  have a  consent  exception.  And,                                                                    
     again,  just  putting  in the  paperwork  outside  this                                                                    
     natural context  could be troubling. And  that's why we                                                                    
     have been  very pleased that  the sponsor has  not gone                                                                    
     to a "or purposes"  approach. This language does soften                                                                    
     the  bill for  industry without,  we think,  decimating                                                                    
     it.                                                                                                                        
                                                                                                                                
CHAIR FRENCH asked Mr. Sniffen to comment.                                                                                      
                                                                                                                                
2:54:01 PM                                                                                                                    
MR.  SNIFFEN  said  he  agrees   with  Ms.  Hillebrand  that  the                                                               
industry-suggested "or"  language would broaden the  scope of the                                                               
act  beyond  what  the  sponsor   intended.  He  hasn't  had  the                                                               
opportunity  to think  through the  transaction  language in  the                                                               
proposed amendment, but it may work for the industry.                                                                           
                                                                                                                                
CHAIR  FRENCH  agreed  with Ms.  Hillebrand  that  the  amendment                                                               
softens the  bill, but  the language  suggested by  industry goes                                                               
too far toward gutting the bill.                                                                                                
                                                                                                                                
2:55:34 PM                                                                                                                    
SENATOR THERRIAULT referred to  Sec.45.48.410, paragraph (5), and                                                               
questioned whether  anyone would  be excluded  from asking  for a                                                               
consumer's social security  number for the purpose  of a business                                                               
transaction.                                                                                                                    
                                                                                                                                
MS.  LIDSTER  replied  the exceptions  were  added  as  important                                                               
consumer protections and  to continue to allow  business to work.                                                               
It probably goes  back to who is doing the  background check, she                                                               
said.                                                                                                                           
                                                                                                                                
CHAIR  FRENCH asked,  as  a  landlord, if  he  would  be able  to                                                               
continue to ask for social security numbers to do credit checks.                                                                
                                                                                                                                
MS. LIDSTER replied there is an exception.                                                                                      
                                                                                                                                
CHAIR  FRENCH  removed  his  objection  and  finding  no  further                                                               
objection, announced that Amendment 4 is adopted.                                                                               
                                                                                                                                
CHAIR FRENCH  said the bill  will be carried  over so it  will be                                                               
open for more discussion on that point.                                                                                         
                                                                                                                                
2:58:18 PM                                                                                                                    
CHAIR  FRENCH moved  Amendment 5,  25-LS0311\T.7, Bannister,  and                                                               
objected for discussion purposes.                                                                                               
                                                                                                                                
                      A M E N D M E N T 5                                                                                   
                                                                                                                                
     OFFERED IN THE SENATE                                                                                                      
          TO:  SCS CSHB 65(L&C)                                                                                                 
                                                                                                                                
     Page 18, line 2, following "by":                                                                                           
          Insert "a"                                                                                                            
                                                                                                                                
     Page 18, line 29, following "by":                                                                                          
          Insert "a"                                                                                                            
                                                                                                                                
     Page 19, line 22, following "by":                                                                                          
          Insert "a"                                                                                                            
                                                                                                                                
MS. LIDSTER asked him to  withdraw the amendment because it needs                                                               
further clarification.                                                                                                          
                                                                                                                                
CHAIR FRENCH removed his objection and withdrew Amendment 5.                                                                    
                                                                                                                                
2:59:35 PM                                                                                                                    
CHAIR  FRENCH moved  Amendment  6,  25LS0311\T.8, Bannister,  and                                                               
objected for discussion purposes.                                                                                               
                                                                                                                                
                      A M E N D M E N T 6                                                                                   
                                                                                                                                
     OFFERED IN THE SENATE                                                                                                      
          TO:  SCS CSHB 65(L&C)                                                                                                 
                                                                                                                                
     Page 10, line 19, following "three":                                                                                       
          Insert "business"                                                                                                     
                                                                                                                                
MS. LIDSTER explained that this  clarifies that a security freeze                                                               
would  be lifted  within three  business days  after receiving  a                                                               
request.                                                                                                                        
                                                                                                                                
3:00:19 PM                                                                                                                    
CHAIR  FRENCH  removed  his  objection  and  finding  no  further                                                               
objection, announced that Amendment 6 is adopted.                                                                               
                                                                                                                                
CHAIR  FRENCH  moved  Amendment 7  and  objected  for  discussion                                                               
purposes.                                                                                                                       
                                                                                                                                
                          AMENDMENT 7                                                                                       
                                                                                                                                
     Page 18, line 2, following "is":                                                                                           
          Delete "expressly"                                                                                                    
                                                                                                                                
SENATOR WIELECHOWSKI asked to hear from Ms. Hillebrand.                                                                         
                                                                                                                                
MS.  HILLEBRAND said  it's a  conforming change  in light  of the                                                               
policy choices that have been made.                                                                                             
                                                                                                                                
CHAIR  FRENCH  removed  his  objection  and  finding  no  further                                                               
objection, announced that Amendment 7 is adopted.                                                                               
                                                                                                                                
CHAIR FRENCH  announced that he would  hold HB 65 until  the next                                                               
hearing.  At that  time  the  issue of  the  second  half of  the                                                               
sentence on  page 2, line  19, will  be addresses. Also,  it will                                                               
provide industry  several days  to review  the changes  that have                                                               
been made to Sec.45.48.410, Sec.45.48.420 and Sec.45.48.430.                                                                    

Document Name Date/Time Subjects