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Safeguarding Your Privacy: Understanding Consumer Protections in American Financial Institutions

Big New York Financial News

When you initiate the process of opening a bank account or seeking a loan, the financial institution may request personal details from you, such as your Social Security number and income. Privacy practices can vary among different financial institutions; however, federal regulations exist to ensure consumer protection and uphold your privacy. It is important to be aware of your rights regarding opting out of information sharing, allowing you to maintain the confidentiality of your financial matters.

Financial Privacy Basics

Federal law requires banks and other financial companies to provide their customers with privacy notices upon account opening and annually if any changes occur.  The notice will contain information like:

  • What personal financial information the company collects;
  • Whether the company intends to share your personal financial information with other companies;
  • What you can do to limit some of that sharing; and
  • How the company protects your personal financial information.

In addition, if a financial company does not plan to share your information except as permitted by law, the notice will tell you this.

The privacy notice may be included as an insert with your monthly statement or bill or it may be sent to you in a separate mailing. If you agree to electronic delivery from an online financial company, the notice may be sent to you by email or it may be made available to you on the company’s website.

If you have more than one account with the same company, the company may send you only one privacy notice for all of your accounts or it may send you separate notices for each of your accounts.

If you have a joint account with another person (for example, a joint checking account or a mortgage loan), the financial company may send a notice to one of you or to each person listed on the account. If the company provides an opportunity to opt out, it must let one of the account holders opt out for all joint account holders.

If the company changes its privacy policy, it is required to send you a revised privacy notice.

Make sure you read all privacy notices you receive. If you have questions, reach out to the financial company.

Your Right to Opt-out

Federal privacy laws give you the right to stop (or “opt out” of) some sharing of your personal financial information. There are two categories of companies a financial company may share your information with:

  • Affiliates, or members of the same corporate group, and
  • Non-affiliates, or companies outside of the corporate group.

With respect to non-affiliates, there is certain information you cannot opt out of sharing. For example :

  • Information that would be used to promote and market the financial company’s own products or products offered under a joint agreement between two financial companies;
  • Records of your transactions–such as your loan payments, credit card or debit card purchases, and checking and savings account statements–to firms that provide data processing and mailing services for your company;
  • Information about you in response to a court order; and
  • Your payment history on loans and credit cards to credit bureaus.

You may be able to opt out of sharing certain information with affiliates. For example, if a company intends to provide an affiliate with personal information from your credit report or loan application, you will usually first be given a chance to opt out. However, the company can share information with affiliates when the information is based solely on your transactions with that company (transaction information includes whether you pay your bills on time, the type of accounts you have with the company, and so forth) without your express permission.

In some cases, your financial company may give you the choice to opt out of different types of sharing. For example, you could opt out of certain categories of information the company provides to other companies but allow the company to share other kinds of information.

If you do not opt out within a “reasonable period of time”–generally about 30 days after the company mails the notice– then the company is free to share certain personal financial information.  However, you can decide to opt out of information sharing at any time.  If you did not opt out the first time you received a privacy notice from a financial company, you can always change your mind and notify the company that you want to opt out at a later date. Contact your financial company and ask for instructions on how to opt out.

Remember, however, that any personal financial information that was shared before you opted out cannot be retrieved.

If you want to opt out of information sharing, you must follow the directions provided by your financial company. For example, you may have to call a toll-free number or fill out a form and return the form to the company.

Credit bureaus may also sell information about you to lenders and insurers who use the information to decide whether to send you unsolicited offers of credit or insurance. This is known as prescreening. You can opt out of receiving these prescreened offers by calling 1-888-567-8688.

Source: https://www.fdic.gov/resources/consumers/consumer-assistance-topics/financial-privacy.html

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