CFPB Proposes Rule on Privacy Notices

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The CFPB moved one step closer to allowing online privacy disclosures in lieu of individually-delivered disclosures, proposing a rule to amend Regulation P, the implementing regulation for the Gramm-Leach-Bliley Act to create an alternative delivery method for annual disclosures. The CFPB opined that the proposed rule would provide easier, more stable access to privacy notices, as opposed to individually-provided notices, which may be easily lost. Regulation P and the GLBA require financial institutions to provide initial and annual privacy notices to consumers in certain circumstances. The privacy notices are typically mailed out to consumers. However, responding to industry concern that the notices “cause information overload” and are an “unnecessary expense,” the CFPB issued a proposal to allow financial institutions to post their annual notice on their website under certain conditions. According to the CFPB, online posting of privacy notices would reduce notification costs—the CFPB estimates a potential $17 million in annual industry savings. The alternative method of delivery would only be available if (1) the financial institution does not share the consumer’s nonpublic personal information with a nonaffiliated third party in a manner that triggers GLBA’s opt-out rights, (2) the financial institution does not include in its annual privacy notice an opt-notice required under the Fair Credit Reporting Act; (4) the annual privacy notice is not the only notice provided to satisfy the FCRA requirements and (5) the financial institution uses the model form provided in Regulation P. Despite the option of an alternative delivery method, financial institutions would still be required to mail out the annual privacy notice if it changes it privacy practices or engages in information-sharing activities that trigger a consumer’s opt-out rights. Comments are due by June 12, 2014.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 

Topics:  CFPB, Gramm-Leach-Blilely Act, Notice Requirements, Posting Requirements, Privacy Policy, Regulation P

Published In: Consumer Protection Updates, Finance & Banking Updates, Privacy Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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