National Consumers League

Personal Finance

NCL Personal Finance Issues

Just how private is your personal information?

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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.