Privacy and Gramm-Leach-Bliley Compliance
Under the Gramm-Leach-Bliley Financial Modernization
Act of 2000, mortgage companies, along with many other
financial services companies, are required to notify
consumers of their privacy policies, and to disclose
the details about how they gather and share information.
Mortgagers typically collect personal financial information
as part of the mortgage approval process. As part of
the Act, financial services companies must issue consumers
privacy notices, or in the case of online companies,
create an online privacy notice.
This sort of disclosure is especially important in
the area of online mortgage companies, which fared worst
in a study by the Center for Democracy and Technology
in the area of GLB compliance and offering opt-out choices
to consumers. The online world offers great convenience,
and the financial service sector has been in the forefront
of providing services through this medium. But, privacy
concerns must be met in the online marketplace.
The privacy notice, according to the legislation, has
to present a clear and accurate statement about the
company’s privacy practices. It must detail what
information the company may collect about customers,
how it shares that information, and how it protects
that information. Also, by the Act, consumers may demand
that a company not share information with some, but
not all, third parties. The privacy notice must explain
to the consumer how they may opt out of that information
sharing. Under GLB, consumers do not have the right
to request that a financial institution not share personal
information with its affiliates. An affiliate is defined
as a business entity that is controlled by the company
in some way. Also, there is no opt-out right in certain
other circumstances, such as information that must be
shared with an outside company that provides services
such as data processing or account servicing.
Even without explicitly “opting out,” companies
are prohibited from sharing account numbers to non-affiliates
for the purpose of telemarketing or other types of marketing.