On September 4, 2008, a divided panel of the US Court of Appeals for the Ninth Circuit reinstated part of California's financial privacy law, allowing consumers to prevent banks from sharing certain financial information with affiliated companies.¹ While the statute was previously held to be preempted by the federal Fair Credit Reporting Act(FCRA) with respect to affiliate sharing of consumer credit report information, on remand the district court struck all of the affiliate sharing provisions from the law. The appeals court has now reversed that ruling and has directed the district court to reinstate the California law with respect to affiliate sharing of information not covered by FCRA. As a result, it is likely the district court will issue a ruling requiring banks and other financial institutions to afford customers a chance to object before sharing any non-credit information with affiliates. It will not, however, always be clear what types of information this covers. For more on the ruling, see our recent Email Alert.

¹Am. Bankers Ass'n v. Lockyer, No. 05-17206 (9th Cir.) (opinion filed Sept. 4, 2008).