SACRAMENTO, Calif. – For the second straight year, Governor Schwarznegger vetoed the data security bill pushed by the credit union lobby, even after credit unions returned to the legislature this year to address some of the concerns he expressed last year.
Robert Arnould, chief lobbyist for the California CU League, which led the effort to pass the bill, attributed the veto to the Governor’s anti-regulatory stance and to the opposition by the powerful retailing lobby.
But the credit union lobbyist vowed to continue to push for the bill to bring new security standards to electronic transactions. "We have no intention of giving up on this issue. It’s simply too large of a problem for our members," Arnould told The Credit Union Journal yesterday. He suggested the only way to get legislation passed is after Schwarzeneggar’s term expires in 2010 or if there is another major data breach that will prompt legislative action.
The bill passed both the state Assembly and Senate by wide margins and was supported by a coalition of consumer groups, law enforcement and credit unions. Neither the bankers or the two credit card giants, MasterCard and Visa, participated in the initiative.
Like last year’s bill, this year’s measure would have required retailers to adopt strict new security provisions and to disclose to customers when they have been responsible for a breach. Those retailers responsible for the breach would be required to pay costs to credit unions and others to notify their customers.
But, unlike last year’s bill, the offending retailer would not be required to pay the costs for credit unions or banks to reissue cards.
In his veto message, Governor Schwarzenegger said that requiring companies to notify consumers about breaches, even when there is no evidence of any personal data being stolen, would result in significant costs for businesses, as well as state government. "As I stated in last year’s veto of a similar bill, this bill attempts to legislate in an area where the marketplace has already assigned responsibilities and liabilities that provide for the protection of consumers," said the Governor.
