The federal financial regulatory agencies have just issued a final rule addressing how companies can use certain consumer information received from their affiliates to market goods and services to consumers. In some instances, this rule will require that a company (1) notify a consumer before it uses information received from an affiliate to market products or services to the consumer; and (2) provide the consumer with the opportunity to opt-out of such use. This new notice is in addition to opt-out notices already required under the Fair Credit Reporting Act and Gramm-Leach-Bliley Act. Compliance with this rule will be required by October 1, 2008.
Although the Final Rule will impose significant additional compliance challenges for affiliated companies, we
believe that by structuring their programs to meet the detailed requirements of the Final Rule, companies
should be able to continue their cross-selling programs. For example, most affiliated companies should be able to structure their affiliate-marketing practices to fit within one or more exceptions included in the Final Rule and, as a result, could avoid providing notice and opt-out altogether. Alternatively, affiliated companies may elect to provide all of their customers with notice and an opportunity to opt out of such cross-marketing activities. In either case, the Final Rule will impose new and unique requirements that likely will require changes in existing policies and procedures for providing notices and implementing opt-outs, and for crossmarketing products or services among affiliated companies. This memorandum analyzes the Final Rule and highlights issues that companies are likely to face when complying with the Final Rule.
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