Caveat Vendor

Can There Be Too Much Notice? House of Representatives Says Yes.

March 15, 2013

Behnam Dayanim

Earlier this week, the House passed by voice vote a bill to amend the Gramm-Leach-Bliley Act to provide an exception to the annual privacy notice requirement.

Currently, under the GLB Act, a financial institution must provide annual notice of the institution’s policies and practices with respect to disclosing nonpublic personal information to affiliates and nonaffiliated third parties. The notice must include information regarding (1) the categories of personal information collected; (2) to whom it may be disclosed; (3) the institution’s policies with regard to individuals who are no longer customers; and (4) the ways in which the institution keeps such information secure.

The “Eliminate Privacy Notice Confusion Act” creates an exception to the annual notice requirement. If the financial institution has not changed its policy or practice in the proceeding twelve months and only discloses information to third parties in manners otherwise permitted by the GLB Act and its regulations, the institution is not required to provide an annual disclosure until the institution changes its policy.

Proponents argue that the new exception will reconcile the GLB Act with the Fair Debt Collection Practices Act, cut down on paper waste and will reduce confusion by helping consumers focus on important documents. Previous versions of the bill were passed by the House in both the 111th and 112th Congresses, with the most recent vote occurring last December. The Senate failed to consider the 2012 measure before the end of the session. The bipartisan bill was referred to the Senate Committee on Banking Housing and Urban Affairs on Wednesday.

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