LRB-2844/2
RJM:wlj:jf
2003 - 2004 LEGISLATURE
November 11, 2003 - Introduced by Senators Chvala, Hansen, Carpenter and
Risser, cosponsored by Representatives
Schneider, Staskunas, Miller,
Berceau, J. Lehman and
Taylor. Referred to Committee on Agriculture,
Financial Institutions and Insurance.
SB309,1,4
1An Act to amend chapter 138 (title); and
to create 138.25 and 601.415 (13) of
2the statutes;
relating to: the disclosure of personal financial information by
3financial institutions, granting rule-making authority, and providing
4penalties.
Analysis by the Legislative Reference Bureau
Currently, federal law generally allows a financial institution to disclose
personal, financial information relating to a customer of the financial institution,
unless the customer "opts out" of the financial institution's policy of disclosing such
information to third parties. However, federal law permits the states to more strictly
regulate such disclosures. This bill generally prohibits any financial institution from
disclosing personal, financial information relating to a customer of the financial
institution, unless the customer "opts in" or consents to the disclosure. The bill
specifies numerous exceptions to this prohibition.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB309, s. 1
5Section
1. Chapter 138 (title) of the statutes is amended to read:
SB309,2,4
1Chapter 138
2
money and rates of interest
,
3
licensed lenders, and financial
4
privacy
SB309, s. 2
5Section
2. 138.25 of the statutes is created to read:
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6138.25 Financial privacy. (1) Definitions. In this section:
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(a) "Credit reporting agency" means any person who regularly engages in
8whole or in part in the practice of assembling or evaluating consumer credit
9information or other information on consumers for the purpose of reporting to 3rd
10parties on the credit rating or creditworthiness of any consumer.
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(b) "Customer" means any individual who deposits, or invests with, borrows
12from, or purchases or seeks to purchase goods or services from a financial institution
13or who acts as a surety or guarantor on a loan made by a financial institution.
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(c) "Financial institution" means any of the following and any subsidiary of any
15of the following:
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1. A bank, savings bank, savings and loan association, or credit union that is
17organized under the laws of this state, the United States, or any other state or
18territory.
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2. Any other entity the business of which is engaging in financial activities as
20described in
12 USC 1843 (k), unless the entity is excluded from the definition of
21"financial institution" under
15 USC 6809 (3) (B) to (D).
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(d) "Insurer" has the meaning given in s. 600.03 (27).
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(e) "Public agency" means a county, city, village, town, or school district; an
24agency of this state, of another state, of the United States, or of a county, city, village,
1town, or school district; or a board, commission, council, or committee in the United
2States government or in state government in this state or another state.
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3(2) Disclosure of financial records prohibited. Except as provided under
4sub. (3), a financial institution and its officers, employees, agents, and directors may
5not disclose to any person any financial information relating to a customer of the
6financial institution. Financial institutions shall adopt reasonable procedures to
7assure compliance with this subsection.
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8(3) Exceptions. Subsection (2) does not prohibit any of the following activities:
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(a) Disclosure of financial information relating to a customer to that customer
10after he or she presents proper identification.
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(b) Disclosure of financial information relating to a customer, if the disclosure
12is authorized by the customer and is limited to the scope and purpose that the
13customer authorizes.
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(c) Disclosure of financial information to a public agency.
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(d) The preparation, examination, handling, or maintenance of financial
16records by any officer, employee, or agent of a financial institution that has custody
17of the records.
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(e) The examination of financial records by a certified public accountant while
19engaged by the financial institution to perform an independent audit.
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(f) The disclosure of financial information to a collection agency or its
21employees or agents, or to any person engaged by the financial institution to assist
22in recovering an amount owed to the financial institution, if the disclosure is made
23in the furtherance of recovering such amount.
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1(g) The publication of information derived from financial records if the
2information cannot be identified as relating to any particular customer, deposit, or
3account.
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(h) The making of reports, disclosures, or returns required by federal or state
5law.
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(i) The disclosure of any information permitted to be disclosed under the laws
7governing dishonor of negotiable instruments.
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(j) The exchange, in the regular course of business, of credit information
9between a financial institution and a credit reporting agency, provided such
10exchange is in compliance with any applicable federal law.
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(k) The exchange, in the regular course of business, of information between a
12financial institution and an account verification service, provided such exchange is
13in compliance with any applicable federal law.
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(L) The exchange, in the regular course of business, of information between a
15financial institution and a mercantile agency, provided such exchange is solely for
16the purpose of reporting to 3rd parties on the credit rating or creditworthiness of any
17business and is in compliance with any applicable federal law.
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(m) The exchange of loan information that specifically affects a sale,
19foreclosure, or loan closing, provided such exchange is for the purpose of
20accomplishing such sale, foreclosure, or loan closing.
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(n) The sharing of information, within an industry network, concerning
22suspected criminal activities.
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(p) Except as otherwise provided in this paragraph, disclosure requested
24pursuant to subpoena, provided that no disclosure shall be made until 10 days after
25the financial institution has notified the customer that financial information has
1been requested by subpoena. The financial institution shall serve the notice by first
2class mail to the customer at the most recent address known to the financial
3institution. The notice need not be given if the subpoena is issued by or on behalf of
4a public agency.
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(q) Disclosure required by order of court.
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(r) Disclosure of financial information by a financial institution to the directors,
7officers, employees, or agents of an affiliate of the financial institution, if the
8disclosure is made in compliance with any applicable federal law.
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(s) Disclosure of financial information by one financial institution to another
10financial institution in connection with a proposed merger, consolidation,
11acquisition, or other reorganization involving the institutions, if the disclosure is
12made in compliance with any applicable federal law.
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(t) Disclosure in accordance with rules adopted by the department of financial
14institutions.
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15(4) Penalties. (a) Any person that willfully violates sub. (2) may be required
16to forfeit not more than $1,000 for each violation.
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(b) Any person that violates sub. (2) as a result of a failure by a financial
18institution to provide reasonable supervision of its employees to prevent violations
19may be required to forfeit not more than $1,000 for each violation.
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20(5) Enforcement. (a) The commissioner of insurance shall enforce sub. (2) with
21respect to insurers.
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(b) Except as provided in par. (a), the department of financial institutions shall
23enforce sub. (2) with respect to all of the following:
SB309,5,2524
1. Banks, savings banks, savings and loan associations, and credit unions and
25any subsidiary of such an entity.
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12. Persons required to obtain a license under s. 138.09, 138.12, 217.03,
2218.0114, 218.02, 218.04, 218.05, or 551.31.
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3. Persons required to obtain a certificate of registration under s. 224.72 (1m).
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(c) Except as provided in pars. (a) and (b), a customer may commence an action
5to enforce sub. (2) against any financial institution that violates sub. (2) with regard
6to information relating to that customer. Any forfeiture ordered in an action under
7this paragraph shall be paid to the customer.