This content was published prior to the combination of Dentons Sirote. Learn more about Dentons Sirote. 

Some time ago, I wrote about the ability of competitors to discuss between themselves a consumer’s creditworthiness. See here. Specifically, I raised the issue of whether the “ledger exception” under the Fair Credit Reporting Act (FCRA) would also apply to the prohibition against sharing nonpublic personal information (NPP) under the Gramm-Leach-Bliley Financial Privacy Act (GLB).

A similar question as to the relationship between these two laws arises in connection with the sale of accounts receivable—from one creditor to another. This is certainly a frequent event. But, what about the sale of “paid out” account information? This occurs routinely also. Can credit history in connection with such paid outs be transferred from a selling creditor to a buying creditor?

There is a GLB exception to the general prohibition against sharing NPP, allowing a selling creditor to share NPP with a buying creditor “in connection with a proposed or actual sale, merger, transfer, or exchange of all or a portion of a business or operating unit if the disclosure of nonpublic personal information concerns solely consumers of such business or unit.” In that event, such NPP may be shared with the buyer. That is, the exception in GLB Regulation P is not limited to active accounts. So, for GLB purposes, a selling creditor should be able to transfer account information, including transactions and experience information on both active and paid out customers.

Also, under the FCRA, a creditor may share its own transactions and experience information. However, that may not include copies of credit reports or consumer information that comes from third parties.

So, what about the NPP that is in the nature of a credit report existing in an active customer’s file? Since the GLB exception does not specifically negate the FCRA limitation, it seems appropriate for a selling creditor to remove from both active and paid out files, copies of any credit reports or consumer information that comes from third parties, prior to selling such accounts and account information to a buying creditor.

Please note: This is the one hundred thirtieth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking here.