The Financial Modernization Act (also called Gramm-Leach-Bliley,
or GLB, after the chief sponsors), was supposed to help consumers
understand how their banks, insurance companies, and other financial
institutions handle personal information and give them some control over
its use. Each institution was required to notify its customers about its
privacy policy and consumers’ rights by July 1, 2001.
But many of those notices were more confusing than
enlightening, and an incorrect email being circulated is making things
worse. Now NCL and several other organizations are asking for changes in
government regulations to standardize annual GLB privacy notices to
clarify them. They also want it to be easier for consumers to exercise
their rights under the law.
The most important thing for consumers to know is that
financial institutions can share their "nonpublic personal
information" (such as credit limits, account balances, or what types
of products or services they purchase) with others. If financial
institutions want to sell that information to "unaffiliated third
parties" (other companies that aren’t legally related to them) they
must give customers the right to say no. Advocates argue this right to
"opt-out" should be explained in simple language and that
consumers need a toll-free number, email, or pre-addressed postcard to
respond.
Another point that may be unclear from the notices is
that they can "opt-out" any time; GLB set no cut-off date.
However, if the financial institution gives a deadline and the customer
hasn’t said no by then, the information may be shared. And once someone
else has it, it’s impossible to get it back.
Unfortunately, the anonymous email by an unknown author
being circulated implies that people must act by July 1, 2001 or their
credit information will be released to anyone who requests it. It also
incorrectly refers to credit bureaus. Under a different law, the Fair
Credit Reporting Act (FCRA), bureaus can only release information to those
who have a legitimate need, such as companies from whom consumers are
applying for credit, insurance, employment, or rental housing.
Consumers can’t "opt-out" of credit bureaus providing
information from their credit files for these purposes. However, the FCRA does
give consumers the right to block that information from being provided to
lenders and insurers who want to send them offers they never requested. To
avoid these "pre-screened" offers, consumers can call a
toll-free number operated by the major bureaus, 888-567-8688.
