October 24, 2014
The Consumer Financial Protection Bureau recently finalized a rule that is expected to result in more effective privacy disclosures from financial institutions to their customers. The rule will go into effect immediately once it is published in the Federal Register.
The New Rule: Banks’ Privacy Disclosures to Consumers
The new rule is an amendment to the Annual Privacy Notice Requirement, which requires financial institutions to send annual privacy notices to their customers pursuant to the terms of the Gramm-Leach-Bliley Act. Under the new rule, rather than mailing annual privacy notices to their customers, financial institutions will be allowed to post privacy notices online if they satisfy certain conditions (e.g., not sharing consumer data in a way that would trigger opt-out rights).
This rule will, among other things, allow financial institutions to notify consumers on their monthly bills that the annual privacy notice is available online (and in paper format upon request). The Consumer Financial Protection Bureau has praised the new rule for, among other things, providing consumers with constant access to privacy policies (vs. a hard copy once a year), incentivizing banks to limit data sharing in order to reduce the cost of providing paper notices (if data sharing triggers consumer rights to opt-out, however, paper notices are still required), educating consumers about various types of privacy policies (available online), and reducing costs for banks that typically would have to provide annual hard copy privacy notices.
As we have previously reported, privacy is the best policy. As the Consumer Financial Protection Bureau’s new rule illustrates, providing consumers with unfettered access to privacy notices is imperative.
If you are interested in learning more about this topic or need to review your privacy practices, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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