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Too many bank privacy notices?

By Marcie Geffner ·
Monday, June 4, 2012
Posted: 6 am ET

Consumers who toss bank privacy policy notices into their to-be-shredded file or directly into the trash might welcome new federal legislation that seeks to reduce the number of such mailings.

The newly introduced bill, H.R. 5817, would eliminate the annual notice requirement for federal financial institutions that haven't made any changes to their privacy practices, according to a bill summary by the Arkansas Bankers Association. Annual privacy policy disclosure requirements also would be eliminated for state-licensed financial institutions that are subject to state privacy protection laws or regulations or that become subject to such regulation in the future. Federal institutions that had made changes to their privacy policies would still be required to send out annual notices.

The two-page bill, formerly called the Eliminate Privacy Notice Confusion Act, was introduced by U.S. Rep. Blaine Leutkemeyer (R-Mo.) and has two co-sponsors, Reps. Scott Garrett (R-N.J.) and Lynn Westmoreland (R-Ga.). The bill was introduced May 17 and has been referred to the House Financial Services Committee.

The privacy notices are required by the Gramm-Leach-Bliley Financial Modernization Act of 1999. This federal law allows financial institutions to "share" their customers' personal information with other companies that are affiliates or have joint marketing agreements with them, but also allows consumers to opt out of any additional "sharing" of that information with other nonaffiliated companies or individuals.

The annual notices tell customers what kinds of information are collected, what types of affiliates might receive or purchase the information, and how the confidentiality of the information is protected. Some states have stricter laws that require an opt-in, rather than the more industry-friendly opt-out arrangement.

Among the supporters of the bill to eliminate some of the annual mailings is the Credit Union National Association, or CUNA, a trade group that represents credit unions.

CUNA CEO Bill Cheney said in a statement that the bill would eliminate a number of unnecessary and confusing mailings that consumers often ignore.

"It will reduce costs for credit unions and reduce confusion for credit union members," Cheney said.

Follow me on Twitter: @marciegeff.

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