Financial institutions may soon have a cheaper way to notify consumers about their privacy policies.
Under a new proposal issued by the Consumer Financial Protection Bureau (CFPB), financial institutions could avoid the requirement to mail an annual privacy notice to customers by instead referring them to an online notice, which is posted “in a clear and conspicuous manner” on the bank’s website.
“Consumers need clear information about how their personal information is being used by financial institutions,” CFPB Director Richard Cordray said in a statement. “This proposal would make it easier for consumers to find and access privacy policies, while also making it cheaper for industry to provide disclosures.”
The Gramm-Leach-Bliley Act (GLBA) mandates that financial institutions provide customers with details about how their nonpublic personal customer information is collected, used, and disclosed as well as whether customers can limit disclosures to third parties. Currently, the rule requires that an annual notice be provided via mail.
But, in what the CFPB said was an attempt to improve privacy notices and save financial institutions money, the agency would offer an alternative. In order to qualify for the incentive, certain requirements must be met.
Institutions would still need to provide a brief disclosure in another customer communication (such as a billing statement) that the institution’s policy is available online and in paper by request at a toll-free number. The policy itself must be posted “in a clear and conspicuous manner” on the bank’s website.
While touting the benefits to consumers of constant access to privacy policies and the ability to comparison shop among institutions with regard to privacy issues, the CFPB estimated that the switch could save banks up to $17 million each year by avoiding annual mailings.
The proposal is currently open for public comment.
To read the proposal, click here.