The Federal Trade Commission (FTC) and seven federal agencies recently released a model privacy notice which, if adopted by financial institutions, provides a safe harbor under the Gramm-Leach-Bliley Act (GLBA).  The GLBA has required that financial institutions provide customers clear and conspicuous notice about its privacy policies and practices since 2001; however, the privacy notices issued often were long and complex.  Congress passed a law in 2006 directing the FTC and federal financial regulators to draft a plain language, model privacy notice.

The model privacy notice is designed to:

• provide conspicuous privacy disclosures to consumers about data-sharing practices;

• enable consumers to easily identify and compare information-sharing practices among financial institutions; and

• be clear and succinct.

In connection with this new model privacy notice, the drafters eliminated the safe harbors associated with “sample clauses” that had previously been included in the privacy rules.  The FTC found that privacy policies, even those that included the sample clauses, were confusing to consumers.

The model privacy notice consists of two versions:  one with an opt-out provision and one without an opt-out provision.  The final rule goes into effect on December 17, 2009.

For further information, please contact:

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Matthew R. Mills
mills.matthew@arentfox.com
202.715.8582