Senate Bill S1404

                                
 
BILL NUMBER: S1404

SPONSOR: CARLUCCI
 
TITLE OF BILL:

An act to amend the general business law, in relation to prohibiting
issuers from accepting nonpublic personal information of holders from a
third-party

 
PURPOSE:

This bill would prohibit card issuers from accepting or soliciting
nonpublic personal information about a cardholder from a person other
than the card holder.

 
SUMMARY OF PROVISIONS:

Section one of this bill adds a new Section 518-b to the General Busi-
ness Law, which would prohibit issuers of credit cards and debit cards
from accepting or soliciting the nonpublic personal information of a
cardholder from a person other than the card holder, while allowing for
              

the transmission of this information between these companies to facili-
tate services authorized by the cardholder. A violation of these
provisions would be punishable by a civil penalty not to exceed two
thousand dollars for each such violation.

Section two of the bill provides that the bill takes effect on the first
of September next succeeding the date on which this bill becomes law.

 
JUSTIFICATION:

Third-parties should not be permitted to give personal information about
a credit or debit cardholder to the issuer of the card. The cardholder
is ultimately responsible for the use of the card, and their credit
history is effected by any use of or changes to the account. Any errors
in the information provided by a third-party might be recorded on a
consumer credit report, where even providing a different street address
can affect a consumer's credit history. Also, if a third party were
permitted to give the address of the cardholder to the issuer, they
might be able to divert monthly statements to another address or raise
the limit of the line of credit attached to the card. Likewise, in the
case of a divorced spouse or when a child is a third-party user of their
parent's card, such a user might be able to cause harm to the cardholder
or the cardholder's credit by giving inaccurate or misleading informa-
tion to the issuer.

In recognition of the fact that the cardholder is ultimately responsible
for the use of their card, this legislation would make them the sole
source of personal information about themselves. At the same time, this
bill would not limit the transmittal of financial or transaction infor-
mation by merchants or businesses, in recognition of the fact that the
transmittal of these types of information is necessary for the use of
credit and debit cards. Finally, this bill also conforms with current
federal legislation (the Gramm-Leach-Bliley Act) on this issue.

 
PRIOR LEGISLATIVE HISTORY:

2005-2006: Consumer Protection Committee (S.4687/A.9321)
2007-2008:  Consumer Protection Committee (S.4308/A/6852)
2011-2012: Consumer Protection Committee (S.5061)
2013: Rules Committee (S.760)
2014: Consumer Protection Committee (S.6280).
2017-18: S4056 - CONSUMER PROTECTION

 
FISCAL IMPACT:

None to the state.

 
EFFECTIVE DATE:
On the first of September next succeeding the date on which it shall
have become a law.