NATION Official: Law's timing opens gap for ID theft

A recent consumer credit law pre-empts any tougher state protections.
LOS ANGELES TIMES
SACRAMENTO, Calif. -- California Attorney General Bill Lockyer warned Tuesday that the timing of new federal protections against identity theft threatens to expose state consumers to the very scams the laws were designed to prevent.
Some of the new federal safeguards will take effect in June, others Dec. 1. However, the law signed earlier this month by President Bush prohibits states from enacting stricter protections in the field of consumer credit than those approved by Congress (known as pre-emption).
That appears to mean that new state identity-theft laws effective today are pre-empted, "leaving consumers with no protection for six months to a year," Locker said.
In a letter to the Federal Trade Commission and the governing board of the Federal Reserve System, Lockyer said identity thieves and other criminals could seize on the gap to prey on victims.
State legislation
One California law that would be pre-empted is a pioneering and highly controversial consumer privacy safeguard that requires banks and other financial institutions to obtain permission before they can sell or share their customers' confidential financial information with other businesses.
The bill by Democratic Sen. Jackie Speier was opposed by major business interests in the Legislature. But a compromise version was signed into law by then-Gov. Gray Davis last summer. Some of the same interests prevailed later in Congress that passed the pre-emption bill as part of an overhaul of the Fair Credit Reporting Act.
Lockyer made the appeal to federal regulators as president of the National Association of Attorneys General. The letter also was signed by Attorney General William H. Sorrell of Vermont, the organization's president-elect.
Request for action
Lockyer suggested that the federal regulation be reconsidered or clarified so there would be no gap in protection between Thursday, when he said the pre-emption provisions would take hold, and later implementation in June and next December of the identity theft provisions.
Spokesman Tom Dresslar said keeping consumer protections intact without interruption could involve nothing more than several hours of work to rewrite the regulation and then to notify banks, stock brokers, credit-card companies, insurance carriers and others of the change.
"It's not a major task. It takes half a day to put out a clarifying letter," he said.