Financial Privacy |
The Gramm-Leach Bliley Act |
The Financial Modernization Act of 1999, also known as the "Gramm-Leach-Bliley
Act" or GLB Act, includes provisions to protect consumers’
personal financial information held by financial institutions. There
are three principal parts to the privacy requirements:
the Financial Privacy Rule, Safeguards Rule and pretexting provisions.
The GLB Act gives authority to eight federal agencies and the states
to administer and enforce the Financial
Privacy Rule and the Safeguards
Rule. These two regulations apply to "financial institutions,"
which include not only banks, securities firms, and insurance companies,
but also companies providing many other types of financial products
and services to consumers. Among these services are lending, brokering
or servicing any type of consumer loan, transferring or safeguarding
money, preparing individual tax returns, providing
financial advice or credit counseling, providing residential real estate
settlement services, collecting consumer debts
and an array of other activities. Such non-traditional "financial
institutions" are regulated by the FTC. For more information on
the types of financial activities covered, click
here.
The Financial Privacy Rule governs the collection and disclosure of customers' personal financial information by financial institutions. It also applies to companies, whether or not they are financial institutions, who receive such information. For a summary overview of the Financial Privacy Rule, see In Brief: The Financial Privacy Requirements of the Gramm-Leach-Bliley Act.
The Safeguards Rule requires all financial institutions to design, implement and maintain safeguards to protect customer information. The Safeguards Rule applies not only to financial institutions that collect information from their own customers, but also to financial institutions "such as credit reporting agencies" that receive customer information from other financial institutions.
The Pretexting provisions of the GLB Act protect consumers from individuals and companies that obtain their personal financial information under false pretenses, a practice known as "pretexting."