Legislature(2005 - 2006)BUTROVICH 205

02/28/2006 08:30 AM JUDICIARY

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* first hearing in first committee of referral
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= bill was previously heard/scheduled
Heard & Held
Heard & Held
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Heard & Held
Heard & Held
           SB 222-PROTECTION OF PERSONAL INFORMATION                                                                        
CHAIR RALPH SEEKINS announced SB 222 to be up for consideration.                                                                
8:39:54 AM                                                                                                                    
JOHN  GEORGE, American  Council  of Life  Insurers, informed  the                                                               
committee  that  life  insurance  policies follow  a  person  all                                                               
around  the country  unlike  automobile  or homeowners  insurance                                                               
policies.  Once a  person dies,  the company  must ensure  proper                                                               
identification in  order to finish  the business that  the policy                                                               
dictates  and a  social security  number  is an  ideal method  of                                                               
identification. He  said the restrictions  posed in SB  222 would                                                               
not work for life insurance companies.                                                                                          
8:42:39 AM                                                                                                                    
MR.  GEORGE  said  SB  222  would  impair  the  ability  of  life                                                               
insurance companies  to do business.  He recommended  carving out                                                               
life  insurance companies  so that  they would  not apply  to the                                                               
bill   since  they   already   are   controlled  extensively   by                                                               
8:44:05 AM                                                                                                                    
SENATOR  HOLLIS  FRENCH  asked the  reason  that  life  insurance                                                               
institutions  have  not  moved   forward  to  more  sophisticated                                                               
methods of  identification other  than a social  security number,                                                               
such as fingerprinting or retinal scans.                                                                                        
MR. GEORGE responded  it would not be practical  or convenient to                                                               
do  so. A  social  security number  follows  a person  throughout                                                               
their life and  insurance companies require it when  they pay out                                                               
8:45:44 AM                                                                                                                    
SENATOR  GENE  THERRIAULT said  it  was  not  the intent  of  the                                                               
sponsors to limit internal use of the social security number.                                                                   
MR. GEORGE  agreed the  bill does not  specifically state  that a                                                               
company could not  use the social security  number internally but                                                               
questioned whether the bill would allow it.                                                                                     
8:47:37 AM                                                                                                                    
MR. JOHN BURTON testified that  he was representing Choice Point,                                                               
a  data   information  company  that  provides   information  and                                                               
verification  to  a  cross  section   of  the  economy,  such  as                                                               
financial  institutions, insurance  companies,  banks, local  law                                                               
enforcement  and  state  and   federal  government  agencies.  He                                                               
highlighted Section 45.48.800  in the bill and  said Choice Point                                                               
opposes  any   regulation  or  prohibition  on   consumer  credit                                                               
information. He  said credit  header data  is a  consumer's name,                                                               
address, social  security number and  date of birth. They  do not                                                               
contain credit information.                                                                                                     
8:50:12 AM                                                                                                                    
MR. BURTON  continued saying credit  header data is  the backbone                                                               
of   a  database   that  Choice   Point  provides   to  financial                                                               
institutions and others for fraud  prevention, tips and leads for                                                               
locating people,  and for US  Patriot Act compliance. He  said no                                                               
state  today  has  restrictions on  credit  header  data  because                                                               
federal  law already  regulates  it.  He believes  SB  222 to  be                                                               
unnecessary legislation.                                                                                                        
8:52:43 AM                                                                                                                    
MR. BURTON added  his next concern regards  restriction on social                                                               
security numbers and  the use of them.  Section 45.48.500 appears                                                               
to mirror California law on  social security access. Choice Point                                                               
has no objection over California  law but they have problems with                                                               
paragraph (6)(b),  which he  said relates  back to  credit header                                                               
8:54:23 AM                                                                                                                    
Financial  institutions, law  enforcement,  banks, and  insurance                                                               
companies  facilitate   thousands  of  transactions   daily.  The                                                               
economy is built on the  ready and regulatory flow of information                                                               
from business to  business. A social security number  is a unique                                                               
form  of  identification and  if  it  weren't a  social  security                                                               
number, it  would be  some other form  of identification  and the                                                               
issue would be the same. He  said he could not imagine a scenario                                                               
where  a  bank would  have  to  secure  permission to  utilize  a                                                               
person's  social security  number  for  identification and  fraud                                                               
prevention purposes for every single transaction.                                                                               
8:56:11 AM                                                                                                                    
SENATOR THERRIAULT said banks do  not use social security numbers                                                               
in order  to cash  checks or  do regular  business. He  asked Mr.                                                               
Burton the reason for using the bank example.                                                                                   
MR.  BURTON agreed  that  his comments  should  be more  directed                                                               
toward  the   overreaching  fraud  prevention   and  verification                                                               
services that Choice Point provides.  He said the social security                                                               
number still  remains the  most accurate  and reliable  method of                                                               
8:58:18 AM                                                                                                                    
SENATOR  FRENCH  asked  Mr.  Burton   whether  California  had  a                                                               
provision like (6)(b).                                                                                                          
MR. BURTON did not know.                                                                                                        
SENATOR FRENCH  asked what the  effect would be for  passing that                                                               
provision as far as common banking transactions.                                                                                
MR. BURTON  said every single  transaction would  require consent                                                               
and that would seriously slow down the ability to do business.                                                                  
9:00:30 AM                                                                                                                    
SENATOR  FRENCH suggested  it would  be  just one  more piece  of                                                               
paper to sign when setting up an account.                                                                                       
MR.  BURTON  asserted  it  would place  a  tremendous  burden  on                                                               
everyone  involved.  He  spoke   briefly  about  his  concern  of                                                               
ensuring  the  legislative  intent  of the  bill.  He  added  his                                                               
opinion that  some definitional  changes need  to be  made before                                                               
the bill is passed out.                                                                                                         
9:04:12 AM                                                                                                                    
ED SNIFFEN,  Assistant Attorney General, Department  of Law (DOL)                                                               
testified the  DOL supports the  efforts to curb  identity theft.                                                               
He  expressed  concern over  Article  1  and  noted it  does  not                                                               
provide a  requirement for  state government  to comply  with the                                                               
terms of  the bill. He said  it is imperative for  state agencies                                                               
to take extreme caution to protect personal information.                                                                        
He expressed concern  that the state might have  liability for an                                                               
inadvertent  disclosure  simply  due   to  the  sheer  volume  of                                                               
information that  the state  is required to  deal with  daily. He                                                               
cautioned against  making the state  a target for  litigation. He                                                               
suggested an  amendment to AS  45.48.060 that would  provide that                                                               
an action  could not  be brought  against a  governmental entity.                                                               
The state  would still be required  to comply with all  the terms                                                               
of the bill.                                                                                                                    
9:07:46 AM                                                                                                                    
MR. SNIFFEN  explained that there  are ways to require  the state                                                               
to comply with  the requirements but not have  a liability issue.                                                               
He noted there wasn't an agency  set up to address the regulatory                                                               
issues as noted in Section 45.48.303(3)(A)(B)(C).                                                                               
9:09:17 AM                                                                                                                    
MR. SNIFFEN summarized with a  reference to Section 45.48.410 and                                                               
said   the  provision   that  requires   additional  governmental                                                               
prohibition seems unclear  as to whether that  would also include                                                               
a requirement imposed by state regulation.                                                                                      
9:11:18 AM                                                                                                                    
SENATOR THERRIAULT  asked for  clarification whether  his concern                                                               
was over the word "expressly."                                                                                                  
MR.  SNIFFEN replied  yes.  It seems  unclear  because there  are                                                               
arguments that could be made  that express authorization needs to                                                               
come from the Legislature and may  not be sufficient to come from                                                               
the agency.                                                                                                                     
9:13:38 AM                                                                                                                    
CHAIR  SEEKINS  closed  public  testimony  and  held  SB  222  in                                                               

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