WASHINGTON - Financial services industry lobbyists in California said Wednesday that they would urge Gov. Gray Davis to veto a privacy bill adopted last week by the state Legislature.

Federal regulators would step in on their side if it became law, the lobbyists said.

Last week it appeared the industry had suffered a setback in its year-long effort to prevent state lawmakers from passing tougher privacy laws. But the bill may not be as tough as it initially seemed, industry officials said.

The legislation would prevent credit card issuers from sharing information on spending or behavior patterns among affiliates or third parties unless customers were given a chance to opt out. By Jan. 1, the companies would have to supply a toll-free telephone number and a form that customers could mail in to block such data transfers.

A 1993 state law, however, already requires issuers to notify customers of their right to prevent information sharing, said California Deputy Attorney General Susan E. Henrichsen. The law also obliges issuers to provide a preprinted form or a toll-free number consumers could use to opt out, she said.

Still, the California Bankers Association is pressing for a veto. An official said complying with the dual notification requirement would be too burdensome, because companies are already bogged down trying to comply with privacy provisions of the federal Gramm-Leach-Bliley Act of 1999.

"Had they given us until July 1 next year, when people have to comply with Gramm-Leach-Bliley, that might have been sufficient," said James "Jamie" Clark, the association's vice president of strategic relations.

Credit card companies are united against the bill for the same reason.

"It would place unnecessary burdens on us to comply by Jan. 1," said a spokeswoman for Discover Financial Services Inc., based in Riverwoods, Ill.

Visa U.S.A. also opposes the bill. The changes it would require would come during its busiest time of the year, the Christmas shopping season, a Visa spokeswoman said.

The California bill also would require annual notices sent to customers of their right to opt out, as does Gramm-Leach-Bliley. But that provision would not take effect until April 1, 2002.

Even if Gov. Davis signed the legislation, industry officials said, it would conflict with federal laws and would be preempted by U.S. regulators.

For example, they said, a key provision of the bill that would prevent issuers from sharing cardholders' marketing information with affiliates or subsidiaries would be preempted by the federal Fair Credit Reporting Act, which prohibits states from restricting how a bank shares customer information within its corporate family until Jan. 1, 2004.

Mathew Street, associate general counsel of the American Bankers Association, said that provision of the Fair Credit law "is a powerful expression of Congress' total control over interstate commerce."

And, if the part of the bill that restricts data transfers with third parties survives, its impact would be minimal because it applies to a narrower scope of personal information than Gramm-Leach-Bliley , Mr. Clark said.

The California bill limits the use of "marketing information," which includes data on cardholders' shopping patterns, spending history, and behavioral characteristics. It does not include information necessary for day-to-day operations, such as processing and fraud protection, as well as for acquiring credit card accounts.

Gramm-Leach-Bliley requires financial institutions to block the sharing a broader range of data of financial data, including bank account and other information, with third-party marketers.

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