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CFPB Finalizes Rule Permitting Online Posting of Privacy Notices
Practical Law Legal Update 4-585-2945 (Approx. 3 pages)
CFPB Finalizes Rule Permitting Online Posting of Privacy Notices
by Practical Law Intellectual Property & Technology
| Published on 21 Oct 2014 • USA (National/Federal) |
The Consumer Financial Protection Bureau (CFPB) has authorized financial institutions that meet certain conditions to deliver their annual privacy notices to consumers by posting them online.
On October 20, 2014, the Consumer Financial Protection Bureau (CFPB) announced a final rule amending the annual privacy notice requirement under the Gramm-Leach-Bliley Act (GLBA). The new rule allows financial institutions that satisfy certain conditions to deliver privacy notices by posting them online rather than by providing copies to individual consumers.
The rule amends the general GLBA requirement that financial institutions send customers individual annual privacy notices describing whether and how the financial institution shares consumers' non-public information. Financial institutions that do not meet the new rule's conditions cannot post their policies online and must deliver privacy notices through previously available methods.
In order to take advantage of the new delivery method, financial institutions must:
- Not share non-public information about consumers in such a way that consumers would have opt out rights under GLBA.
- Not have changed their privacy practices since the last time a privacy notice was delivered.
- Use the model disclosure form developed by federal regulatory agencies in 2009.
- Annually inform consumers about the availability of the privacy notice, though they may now do so as part of a regular communication, such as a billing statement.
According to the CFPB,the new rule benefits financial institutions and consumers by providing:
- Up-to-date access to privacy policies.
- Incentives to limit data sharing, as only financial institutions that do not share data with third-parties are eligible for the new delivery method.
- Education for consumers about their privacy rights, which are explained in the model disclosure form.
- Reduced costs for companies to provide privacy notices.
The new rule is substantially similar to the rule as it was proposed in May (for more information on the proposed amendment, see Legal Update, CFPB Proposes New GLB Privacy Notice Rule for Financial Institutions). It will take effect immediately when published in the Federal Register.