There has been quite a bit of media attention in past months regarding the privacy policies that the federal government has implemented to help protect you, the consumer, in regards to your personal privacy within the financial industry. Even though all businesses throughout the industry are required to notify you of their compliance to these issues, as well as exactly what their particular policy is and its affects on you, the terminology used can be a bit overwhelming. For this reason, a translation from "Big Bank to Consumer" is provided here for your use.
First, you need to know which companies are required to send out privacy notices:
- Banks and credit unions
- Credit card companies
- Mortgage companies
- Insurance companies
- Brokerage firms of securities and commodities
- Department stores that handle their own credit cards
- Auto dealerships that offer their own financing
- Credit counseling services
- Financial advisors and planners
- Payday loan, cash advance, and check cashing lenders
These are all businesses within the financial industry, as they all have access to your personal financial records. What these companies are required to inform you of is the following:
- What type of financial information they collect
- Whether or not they plan to share your financial information with other companies, affiliates (same company) or not (not the same company)
- How the company plans on protecting your financial information
- What you can do to opt out to stop or limit some of the sharing between these companies
Why They Share
Companies share your information with each other for a few reasons. The first one makes the most sense; so they can make money off of you. The remaining two reasons are to let you know about other products and services that might benefit you, as well as to introduce new products to you.
Please note that privacy policies can and will differ between companies, so be sure to read all of the fine print on each individual policy.
What “Opting Out” Affects
Stopping the transfer of your personal financial information, or “opting out” as it is referred to in the industry, requires a few steps on your part. You are granted a certain “reasonable” period of time (usually 30 days) after receiving the privacy policy to complete the opting out process. If you don’t opt out during this time, the company is free to share any information that the law allows. You can, however, contact this company and inform them of your intent to opt out any time after the 30 days is up, and they will set you onto the right path for completing the process. Any information shared after the thirty day period has ended and before you opted out can not be taken back.
Keep in mind that not all of your information can be kept secret, because the law protects both the consumer and the company’s financial interests. Some items that you cannot opt out of are:
- Information regarding your timely payment of bills, credit card charges, and other financial items that have a direct effect on your credit report.
- Information about you in response to a court order.
- Any info about you that helps to promote and market the company under an agreement by two financial companies.
A point worth mentioning regarding your credit report is this: Just because you can’t stop financial institutions from sharing your information regarding your credit history, doesn't mean you can't stop the credit bureaus from selling (yes, selling) your credit information to lenders and insurers who will, in turn, offer you “pre-screened” offers of credit or insurers. To opt out of such offers, call 1-888-567-8688.
For more information on the Federal Reserve Board and the privacy policies within the financial industry, visit their website at www.federalreserve.gov/pubs/privacy.
