Too many creditors think that utilizing the Privacy Notice form of Regulation P is all there is to compliance with the Gramm, Leach, Bliley Act (Act). Regrettably, that is not the case.

The GLBA is a federal statute that establishes the concept of protecting nonpublic personal information (NPP) of consumers. This concept has become enshrined in law; and, as consumers each of us benefits from the limitations imposed upon creditors in utilizing NPP.

What I too often see is that creditors give the Privacy Notice outlined at Regulation P, but fail to have an established Privacy Policy as required by the Act. Both elements are required in order to comply with the law. And, compliance can be tricky.

One issue that frequently arises is the sharing of NPP by creditors in response to a competitor’s request for “ledger experience” with the consumer. This occurs when the consumer lists the sharing creditor as an established account reference. May the sharing creditor share what is truly NPP? The short answer is yes, if done properly. See Back to Basics, Continued—Beware of the Intersection of the Gramm-Leach-Bliley Financial Privacy Law and the Fair Credit Reporting Act. How can this be?

Regulation P makes exceptions to the notice and opt out requirements when sharing of NPP is with the consent or at the direction of the consumer; and also when NPP is disclosed in connection with servicing or processing a financial product or service that a consumer requests or authorizes. See Sections 1016.14(a)(1) and 1016.15(a)(1) of Regulation P. eCFR :: 12 CFR 1016.14 -- Exceptions to notice and opt out requirements for processing and servicing transactions. and eCFR :: 12 CFR 1016.15 -- Other exceptions to notice and opt out requirements.

But, the devil is often in the detail. Make sure that the Privacy Policy itself does not restrict the creditor from following the instruction of the consumer. That is, be careful not to use language in the Privacy Policy that provides that the creditor will not share information about the creditworthiness of the consumer in all circumstances. Leave room for the Act exception when the consumer specifically asks the creditor to share his or her NPP relating to creditworthiness.

Please Note: This is the two hundred-forty-fourth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking Dentons - Consumer Finance Report.