Zip your lenders' lips with opt-out notices
By Laura Bruce • Bankrate.com

Stop! Don't throw out any "junk" mail from your bank, credit union or other financial institutions without carefully inspecting it. You could be tossing out your chance for privacy.

Everyone in America who has an account with a bank, credit union, savings and loan or a mortgage company, or has an insurance policy or an investment account, can expect to get a fistful of notices once a year that will let him or her limit the amount of personal information those companies can share or sell.

It's part of the Gramm-Leach-Bliley Financial Modernization Act of 1999. This law gives consumers a bit of say-so in how their personal information is shared among companies.

Loose laws against information-sharing
The federal privacy law divides business relationships into three sections:

1. Affiliated companies
2. Joint marketing
3. Unaffiliated third parties

Financial institutions have the right to share your personal information with affiliates and companies with which they have joint marketing agreements, but the law gives you the right to tell them not to share information with nonaffiliated third-party companies and individuals.

If a bank owns an insurance company, or has a joint marketing agreement with an insurance company, it can give that company information about you, and there's nothing you can do to stop them.

But, you can tell the bank not to release your information to a totally unaffiliated car dealership that contacts your bank looking for folks with fat bank accounts.

There are exceptions to the nonaffiliated third-party rule. Your information can be shared with a third party if it's needed to conduct normal business. For instance, if your bank uses a third party to print account statements -- or if sharing the information will protect against fraud or if there's reason to believe the information is publicly available -- in the phone book, in court records, etc.

You may also opt out of having information about your creditworthiness shared with your financial institutions' affiliates.

In general, Gramm-Leach-Bliley says there are three things institutions have to do:

1. Tell customers what kinds of information they collect and the types of businesses to which they sell or give that information.
2. If the institution intends to sell or give your information to a company outside its corporate family, it has to give you a way to "opt out" or say, "No, I don't want you to share my information."
3. The institution has to tell you how they protect the confidentiality of your information.

An opt-out illusion?
Since the Gramm-Leach-Bliley Act became law, consumer awareness of privacy issues has improved, says Tena Friery, research director of San Diego-based Privacy Rights Clearinghouse.

"Most people now have at least a vague awareness of and have seen the privacy notices," Friery says. "And as awareness increases, so does the public outcry over information sharing practices," she says. "The more people know, the less they like it."