CFPB Reduces Privacy Notice Burden With New Rule
October 21, 2014
October 21, 2014
The Consumer Financial Protection Bureau (CFPB) finalized a rule Monday to streamline privacy disclosures from financial institutions to their members. The new rule, originally proposed in May, allows companies that limit their consumer data-sharing and meet other requirements to post their annual privacy notices online rather than delivering them individually to consumers.
“Consumers need clear and accessible information about how their personal information is being used in the marketplace, but some of these requirements were redundant,” said CFPB Director Richard Cordray. “Posting privacy notices online will make it easier for consumers to access these important policies, while also making it cheaper for financial institutions to provide disclosures.”
Financial institutions were required to send annual privacy notices to their consumers describing whether and how they share consumers’ nonpublic personal information under the Gramm-Leach-Bliley Act. If a financial institution shares this information with an unaffiliated third party, its privacy notices typically must notify consumers of their right to opt out and instruct them how to do so.
Under the new CFPB rule, financial institutions that satisfy certain conditions — such as not sharing data in ways that trigger consumers’ opt-out rights — will be able to post privacy notices online rather than sending annual paper copies to consumers.
“The privacy notice rule will save credit unions time and money, allowing them to return additional savings to their members and put an even greater focus on the end user experience,” said Gayle Gustafson, lending leader at Rivermark Community Credit Union and chair of the NWCUA’s Regulatory Advisory Committee. “Additionally, consumers now will be able to find the privacy notice any time online, resulting in less resources wasted. The CFPB was able to address through rulemaking an issue that has been a legislative priority for credit unions. This is the type of approach to regulations that we want to see where consumers actually benefit and credit union members are not harmed.”
The U.S. House of Representatives passed the Eliminate Privacy Notice Confusion Act, H.R. 749, last spring in an attempt to solve this problem at the legislative level, but it’s been stalled in the Senate.
“Credit Unions continue to advocate for this issue at the federal level,” said Jennifer Wagner, the NWCUA’s vice president of legislative affairs, “and while a statutory change is the ultimate fix, it’s great to see an interim fix with this rule while we’re dealing with a body that’s garnered a reputation as a ‘do nothing Congress.’”
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Posted in Advocacy News.