Under the Gramm-Leach-Bliley Act, financial institutions must mail initial and annual privacy notices to their customers detailing the institution’s privacy policies regarding sharing the consumer’s nonpublic personal information. These annual notices are often long, confusing, and duplicative of previous notices that customers received. Many are left unread – and simply tossed in the trash.
Flooding consumers with confusing and duplicative privacy notices provides little to no benefit and often carries a significant hidden cost: it can desensitize consumers to reviewing far more important disclosures. Indeed, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray has acknowledged that reducing “redundant” disclosures “will make it easier for consumers to access important policies” on how their personal information is used.
In addition, the costs of mailing these annual notices are extremely high – in the hundreds of millions of dollars each and every year. Regulators have begun to recognize that the current system harms both consumers and industry while benefiting only lawyers and the U.S. Postal Service. Last October, CFPB issued a final rule, which allowed financial institutions that met certain requirements to deliver these annual notices online. While this is a welcome step, CFPB set a very high bar for an institution to actually be able to stop sending these duplicative notices. For example, any institution with affiliates will still likely be required to deliver their privacy notices via mail rather than through the online method.
The Bipartisan Policy Center supports pragmatic, bipartisan solutions that improve financial stability, economic growth, and consumer protection. This legislation is a prime example. It reduces unnecessary red tape while keeping in place important disclosure protections for consumers. We strongly urge Congress to pass S.423 and President Obama to sign it into law.
KEYWORDS: PRESIDENT BARACK OBAMA, CONSUMER FINANCIAL PROTECTION BUREAU (CFPB), RICHARD CORDRAY, TOM COTTON, ELIZABETH WARREN, HEIDI HEITKAMP, 114TH CONGRESS, JERRY MORAN, GRAMM-LEACH-BLILEY ACT, JEFF MERKLEY, TIM SCOTT