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SANTA CLARA COUNTY CODE OF ORDINANCES: Division B4 PRIVACY OF FINANCIAL INFORMATION

Copyrighted by SANTA CLARA COUNTY CODE & Municipal Code Corporation, 1998.

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Division B4
PRIVACY OF FINANCIAL INFORMATION

Sec. B4-1. Short title.

This division shall be known and may be cited as the "County of Santa Clara Financial Information Privacy Ordinance." This division shall become operative on January 1, 2004.

(Ord. No. NS-300.706, 2-11-03)

Sec. B4-2. Purpose.

(a) It is the purpose and intent of the Board of Supervisors that the operation of financial institutions as defined in this division should be regulated so as to provide customers of financial institutions notice and meaningful choice about how customers' personal information is shared or sold by their financial institutions.

(b) The intent of the Board of Supervisors in enacting this division is to (1) afford consumers greater privacy protection than that provided in the federal Gramm-Leach-Bliley Act (15 U.S.C. § 6801 et seq.), and (2) supplement the federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) by affording greater protection to consumers than is provided under the Fair Credit Reporting Act. The provisions of this division should be interpreted to be consistent with these purposes.

(Ord. No. NS-300.706, 2-11-03)

Sec. B4-3. Definitions.

For purposes of this division:

(a) "Confidential consumer information" means personally identifiable information (1) that a consumer provides to a financial institution to obtain a product or service from the financial institution, (2) about a consumer resulting from any transaction involving a product or service between the financial institution and a consumer, or (3) that the financial institution otherwise obtains about a consumer in connection with providing a product or service to that consumer. Confidential consumer information does not include publicly available information that is lawfully made available to the general public from (1) federal, state, or local government records, (2) widely distributed media, or (3) disclosures to the general public that are required to be made by federal, state, or local law. Confidential consumer information shall include any list, description, or other grouping of consumers, and publicly available information pertaining to them that is derived using any confidential consumer information, but shall not include any list, description, or other grouping of consumers, and publicly available information pertaining to them that is derived without using any confidential consumer information.

(b) Confidential consumer information includes, but is not limited to, the following:

(1) Information a consumer provides to a financial institution on an application to obtain a loan, credit card, or other financial product or service.

(2) Account balance information, payment history, overdraft history, and credit or debit card purchase information.

(3) The fact that an individual is or has been a customer of a financial institution or has obtained a financial product or service from a financial institution.

(4) Any information about a financial institution's customer if it is disclosed in a manner that indicates that the individual is or has been the financial institution's customer.

(5) Any information that a consumer provides to a financial institution or that a financial institution or its agent otherwise obtains in connection with collecting on a loan or servicing a loan.

(6) Any information collected through an Internet cookie or any information collecting device from a Web server.

(7) Information from a consumer report.

(8) A consumer's Social Security number.

(c) "Financial institution" generally means any institution located and doing business in unincorporated County of Santa Clara that significantly engages in financial activities as described in Section 1843(k) of Title 12 of the United States Code. The term "financial institution" does not include the Federal Agricultural Mortgage Corporation or any entity chartered and operating under the Farm Credit Act of 1971 (12 U.S.C. § 2001 et seq.), provided that the entity does not sell or transfer confidential consumer information to a nonaffiliated third party. The term "financial institution" does not include institutions chartered by Congress specifically to engage in a proposed or actual securitization, secondary market sale, including sales of servicing rights, or similar transactions related to a transaction of the consumer, as long as those institutions do not sell or transfer confidential consumer information to a nonaffiliated third party. The term "financial institution" does not include any person licensed as a dealer under Article 1 of Chapter 4 of Division 5 of the Vehicle Code (Vehicle Code § 11700 et seq.) that enters into contracts for the installment sale or lease of motor vehicles pursuant to the requirements of Chapter 2b (Civil Code § 2981 et seq.) or 2d (Civil Code § 2985.7 et seq.) of Title 14 of Part 4 of Division 3 of the Civil Code and assigns substantially all of those contracts to financial institutions within 30 days. The term "financial institution" does not include any provider of professional services, or any wholly owned affiliate thereof, that is prohibited by rules of professional ethics or applicable law from voluntarily disclosing confidential client information without the consent of the client.

(d) "Affiliate" means any person or entity that, directly or indirectly, controls, is controlled by, or is under common control with another person or entity. A franchisor, including any affiliate thereof, shall be deemed an affiliate of the franchisee for purposes of this division.

(e) "Nonaffiliated third party" means any entity that is not an affiliate of, or related by common ownership or affiliated by corporate control with, the financial institution.

(f) "Consumer" means a natural person, or that person's legal representative, that obtains or has obtained a financial product or service from a financial institution that is to be used primarily for personal, family, or household purposes, and the person (A) resides in unincorporated County of Santa Clara, or (B) obtains or has obtained the product or service while present in unincorporated County of Santa Clara. For purposes of this division, a person shall be considered a resident of unincorporated County of Santa Clara if the person's last known mailing address, as shown on the records of the financial institution, is located in unincorporated County of Santa Clara.

(g) "Control" means the direct or indirect possession of power to direct or cause the direction of the management and policies of another entity. Control includes any of the following: (1) ownership or power to vote 25 percent or more of the outstanding shares of any class of voting security of a company, acting through one or more persons, (2) power in any manner over the election of a majority of the directors, or of individuals exercising similar functions, or (3) power to exercise a directing influence over the management of policies of a company.

(h) "Necessary to effect, administer, or enforce" means the following:

(1) The disclosure is required, or is a usual, appropriate, or acceptable method to carry out the transaction or the product or service business of which the transaction is a part, and record or service or maintain the consumer's account in the ordinary course of providing the financial service or financial product, or to administer or service benefits or claims relating to the transaction or the product or service business of which it is a part, and includes the following:

(A) Providing the consumer or the consumer's agent or broker with a confirmation, statement, or other record of the transaction, or information on the status or value of the financial service or financial product.

(B) The accrual or recognition of incentives or bonuses associated with the transaction that are provided by the financial institution or another party involved in providing the financial service or product.

(2) The disclosure is required or is a lawful method to enforce the rights of the financial institution or of other persons engaged in carrying out the financial transaction or providing the product or service.

(3) The disclosure is required, or is a usual, appropriate, or acceptable method for insurance underwriting at the consumer's request, for reinsurance purposes, or for any of the following purposes as they relate to a consumer's insurance:

(A) Account administration.

(B) Reporting, investigating, or preventing fraud or material misrepresentation.

(C) Processing premium payments.

(D) Processing insurance claims.

(E) Administering insurance benefits, including utilization review activities.

(F) For internal research purposes.

(G) As otherwise required or specifically permitted by federal or state law.

(4) The disclosure is required, or is a usual, appropriate or acceptable method, in connection with the following:

(A) The authorization, settlement, billing, processing, clearing, transferring, reconciling, or collection of amounts charged, debited, or otherwise paid using debit, credit or other payment card, check or account number, or by other payment means.

(B) The transfer of receivables, accounts, or interest therein.

(C) The audit of debit, credit, or other payment information.

(i) "Financial product or service" means any product or service that a financial holding company could offer by engaging in an activity that is financial in nature or incidental to financial activity under Subsection (k) of Section 1843 of Title 12 of the United States Code (the United States Bank Holding Company Act of 1956). Financial service includes a financial institution's evaluation or brokerage of information that the financial institution collects in connection with a request or an application from a consumer for financial product or service.

(j) "Clearly and conspicuously" means displayed in a manner that is readily noticeable, readable, and understandable to consumers. Factors to be considered in determining whether a notice or disclosure is clear and conspicuous include prominence, proximity, absence of distracting elements, and clarity and understanding of the disclosure.

(k) "Widely distributed media" means publicly available information from a telephone book, a television or radio program, a newspaper or a Web site that is available to the general public on an unrestricted basis.

(Ord. No. NS-300.706, 2-11-03)

Sec. B4-4. Non-disclosure of confidential consumer information.

(a) A financial institution shall not disclose to or share a consumer's confidential consumer information with any nonaffiliated third party unless (1) the financial institution has provided written or electronic notice to the consumer to whom the confidential consumer information relates and (2) the financial institution has obtained a written or electronic consent acknowledgment from the consumer that authorizes the financial institution to disclose or share the confidential consumer information. A financial institution shall not deny a consumer a financial product or a financial service because the consumer has not provided the consent required by this section to authorize the financial institution to disclose or share his or her confidential consumer information with any nonaffiliated third party.

(b) Nothing in this division shall prohibit a financial institution from marketing its own products and services or the products and services of others to the financial institution's own customers, provided no confidential consumer information is disclosed except as permitted by Section B4-6.

(c) Except as otherwise provided in this division, an entity that receives confidential consumer information from a financial institution under this division shall not disclose this information to any other entity, unless the disclosure would be lawful if made directly to the other entity by the financial institution.

(Ord. No. NS-300.706, 2-11-03; Ord. No. NS-300.724, § 1, 11-18-03)

Sec. B4-5. Notice and consent.

(a) Nothing in this division shall require a financial institution to provide a written or electronic notice to a consumer pursuant to Section B4-4(a) if the financial institution does not disclose confidential consumer information to any nonaffiliated third party other than as provided in Section B4-6.

(b) A financial institution shall provide written or electronic notices and consent acknowledgments required by this division to consumers as separate documents that are easily identifiable and distinguishable from other documents that otherwise may be provided to a consumer. A notice provided to a member of a household pursuant to Section B4-4 shall be considered notice to all members of that household unless that household contains another individual who also has a separate account with the financial institution. Such notices may be sent to the consumer with other notices required under the federal Gramm-Leach-Bliley Act (15 U.S.C. Sections 6801 et seq.).

(c) Written notices required by this division shall include at least the following:

(1) The specific types of information that would be disclosed or shared,

(2) The general circumstances under which the information would be disclosed or shared,

(3) The specific types of persons or businesses that would receive the information, and

(4) The specific proposed types of uses for the information.

(d) The notices required by this division shall be issued to the consumer as frequently as is required by the federal Gramm-Leach-Bliley Act, 15 U.S.C. Sec. 6803(a). Unless revoked by the consumer, consent received by a consumer, as described in the notice, shall be notice deemed valid until such time as another notice is required to be issued to the consumer.

(Ord. No. NS-300.706, 2-11-03; Ord. No. NS-300.724, § 2, 11-18-03)

Sec. B4-6. Exempt disclosures.

(a) This division shall not apply to information that is not personally identifiable to a particular person.

(b) Sections B4-4 and B4-5 shall not prohibit the release of confidential consumer information under the following circumstances:

(1) The confidential consumer information is necessary to effect, administer, or enforce a transaction requested or authorized by the consumer, or in connection with servicing or processing a financial product or service requested or authorized by the consumer, or in connection with maintaining or servicing the consumer's account with the financial institution, or with another entity as part of a private label credit card program or other extension of credit on behalf of such entity, or in connection with a proposed or actual securitization or secondary market sale, including sales of servicing rights, related to a transaction of the consumer.

(2) The confidential consumer information is released with the consent of or at the direction of the consumer.

(3) The confidential consumer information is:

(A) Released to protect the confidentiality or security of the financial institution's records pertaining to the consumer, the service or product, or the transaction therein.

(B) Released to protect against or prevent actual or potential fraud, identity theft, unauthorized transactions, claims or other liability.

(C) Released for required institutional risk control, or for resolving customer disputes or inquiries.

(D) Released to persons holding a legal or beneficial interest relating to the consumer.

(E) Released to persons acting in a fiduciary or representative capacity on behalf of the consumer.

(4) The confidential consumer information is released to provide information to insurance rate advisory organizations, guaranty funds or agencies, applicable rating agencies of the financial institution, persons assessing the institution's compliance with industry standards, and the institution's attorneys, accountants, and auditors.

(5) The confidential consumer information is released to the extent specifically required or specifically permitted under other provisions of law and in accordance with the Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3401 et seq.), to law enforcement agencies, including a federal functional regulator, the Secretary of the Treasury with respect to 12 U.S.C. Secs. 1951-1959, the California Department of Insurance, or the Federal Trade Commission, and self-regulatory organizations.

(6) The confidential consumer information is released (A) to a consumer reporting agency in accordance with the Fair Credit Reporting Act (15 U.S.C. Sec. 1681 et seq.), or (B) from a consumer report reported by a consumer reporting agency.

(7) The confidential consumer information is released in connection with a proposed or actual sale, merger, transfer, or exchange of all or a portion of a business or operating unit if the disclosure of confidential consumer information solely concerns consumers of the business or unit.

(8) The confidential consumer information is released to comply with federal, state, or local laws, rules, and other applicable legal requirements; to comply with a properly authorized civil, criminal, or regulatory investigation or subpoena or summons by federal, state, or local authorities; or to respond to judicial process or government regulatory authorities having jurisdiction over the financial institution for examination, compliance, or other purposes as authorized by law.

(9) When a financial institution is reporting a known or suspected instance of elder or dependent adult financial abuse or is cooperating with a local adult protecting services agency investigation of known or suspected elder or dependent adult financial abuse pursuant to Article 3 (commencing with Section 15630) of Chapter 11 of Part 3 of Division 9 of the Welfare and Institutions Code.

(10) The confidential consumer information is released to a nonaffiliated third party in order for the nonaffiliated third party to perform services for or functions on behalf of, the financial institution in connection with the financial institution's products and services, such as mailing services, data processing or analysis, or customer surveys, provided that all of the following requirements are met:

(A) The services to be performed by the nonaffiliated third party would be lawful if performed by the financial institution.

(B) If the confidential consumer information is disclosed to a nonaffiliated third party, there is a written contract between the nonaffiliated third party and the financial institution that prohibits the nonaffiliated third party from disclosing or using the confidential consumer information other than to carry out the purpose for which the financial institution disclosed the information, as set forth in the written contract.

(C) The confidential consumer information provided to the nonaffiliated third party is limited to that which is reasonably necessary for the nonaffiliated third party to perform services contracted for on behalf of the financial institution.

(11) The confidential consumer information is released to identify or locate missing and abducted children, witnesses, criminals and fugitives, parties to lawsuits, parents delinquent in child support payments, organ and bone marrow donors, pension funds beneficiaries, and missing heirs.

(c) Nothing in this division is intended to change existing law relating to access by law enforcement agencies to information held by financial institutions.

(Ord. No. NS-300.706, 2-11-03; Ord. No. NS-300.724, § 3, 11-18-03)

Sec. B4-7. Administrative fines.

(a) Any financial institution that negligently discloses or shares confidential consumer information in violation of this division shall be liable, irrespective of the amount of damages suffered by the consumer as a result of that violation, for an administrative fine not to exceed $2,500.00 per violation.

(b) Any financial institution that knowingly and willfully obtains, discloses, or uses confidential consumer information in violation of this division shall be liable upon a first violation, for an administrative fine not to exceed $2,500.00 per violation, or upon a second violation for an administrative fine not to exceed $10,000.00 per violation, or upon a third or subsequent violation for an administrative fine not to exceed $25,000.00 per violation.

(c) Any financial institution that knowingly and willfully obtains, discloses, or uses confidential consumer information in violations of this division for financial gain shall be liable upon a first violation of this division for an administrative fine not to exceed $5,000.00 per violation, or upon a second violation for an administrative fine not to exceed $25,000.00 per violation, or upon a third or subsequent violation for an administrative penalty not to exceed $250,000.00 per violation and shall be subject to disgorgement of any proceeds or other consideration obtained as a result of the violation.

(d) Nothing in this division shall be construed as authorizing an administrative fine under both Paragraphs (b) and (c) for the same violation.

(Ord. No. NS-300.706, 2-11-03)

Sec. B4-8. Fair Credit Reporting Act or federal conflict.

This division shall not be construed in a manner that is inconsistent with the federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.).

(Ord. No. NS-300.706, 2-11-03)

Sec. B4-9. Severability.

The provisions of this division shall be severable, and if any section, subsection, phrase, clause, sentence, or word in this division is declared to be invalid, unconstitutional, or preempted by federal or state law or regulation, the validity of the remainder of this ordinance shall not be affected thereby.

(Ord. No. NS-300.706, 2-11-03)

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