Short Form Privacy Notice Possible
The four federal banking agencies, working with the FTC, SEC, NCUA and CFTC will request comment on a possible short form privacy notice. The Gramm-Leach-Bliley Act requires all financial institutions to provide customers with an annual notice about the company's privacy procedures, including how to opt-out of certain types of information sharing. Critics, including members of Congress, have complained that the existing notices are too confusing and legalistic.
Earlier this year, the ICBA strongly urged the agencies to develop a short-form privacy notice to alleviate burden on banks and make the form more useful for our customers. We also strongly recommended that the agencies take action to eliminate the annual notice requirement and only require supplemental notice if the bank changes its privacy practices or procedures.
The agencies hope to develop a short-form notice that will be both meaningful and simple to understand, possibly modeled after existing nutrition labels. Three possible options are being suggested, although others would be considered. The first option would be a short notice, but banks would be required to provide the full long-form to a customer on request. The second option would include all the information required by the statute but using a standard format and language so consumers could easily compare banks' privacy policies and practices. The third option also would be a standard format, but each bank could describe its own policies within designated space. In addition to the three optional short form notice formats, the agencies also are considering the use of a standard opt-out form.
The agencies will seek input on a number of questions, such as what the goal of a privacy notice should be, whether there are special issues to consider, how privacy notices can be most useful to consumers, what key elements should be included in a short form notice, whether standardized formats would be helpful, and whether use of a short form should be mandatory. The agencies intend to hold focus groups with consumers to get additional feedback. Once published in the Federal Register, the agencies will accept comments for 90 days.