The proposed rule [PDF] would allow companies that limit their consumer data-sharing, and meet other requirements, to promote more effective disclosure by posting their annual privacy notices online.
“Consumers need clear information about how their personal information is being used by financial institutions,” CFPB Director Richard Cordray says in a statement. “This proposal would make it easier for consumers to find and access privacy policies, while also making it cheaper for industry to provide disclosures.”
Currently, banking institutions are required under the Gramm-Leach-Bliley Act to mail annual privacy notices describing whether or how the institution shares consumers’ nonpublic personal information. Institutions that share consumers’ nonpublic information must notify customers of their right to opt out of the sharing and how to do so.
Tuesday’s proposal would apply to banks and nonbanks that are within the CFPB’s jurisdiction under the GLBA.
If an institution chooses to use the new method they must employ the model disclosure form developed by federal regulatory agencies in 2009. The company would also be required to inform consumers annually about the availability of the online disclosures. However, instead of sending a separate notice the institution could include an insert in regular consumer correspondence such as a monthly bill. Consumers would have the ability to request a paper notice by calling a toll-free number.
Officials with the CFPB say the proposed rule comes with several benefits including the ability for consumers to comparison shop. The use of the model disclosure form would allow consumers who are concerned about their personal information to easily compare banking institutions.
The Bureau estimates that the banking industry could save about $17 million annually if they switch to online disclosures.
Comments on the proposed rule will be accepted for 30 days after its publication in the Federal Register.
CFPB Proposes Rule to Promote More Effective Privacy Disclosures [Consumer Financial Protection Bureau]