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As is generally the case, determining the benefits of an event depends on the point of view of the assessor. On May 12, pursuant to the Gramm-Leach-Bliley Act (the “Act”) [FOOTNOTE 1]the Federal Trade Commission (FTC) issued its final rule, outlining how a financial institution can comply with the Act. [FOOTNOTE 2] The Act itself seeks to protect consumer financial information by placing certain restrictions and affirmative obligations on financial institutions. Principally, the Act requires that a financial institution provide its customers with notice of its privacy policies and practices and prohibits a financial institution from disclosing nonpublic personal information about a consumer to nonaffiliated third parties unless the institution satisfies various disclosure and opt-out requirements and the consumer has not elected to opt out of the disclosure. To ensure proper compliance with the Act, the FTC, as well as other banking agencies and regulatory authorities, issued regulations to implement the act’s requirements and restrictions. With the publication of these final rules, the focus has shifted from drafting their content to the consequences of their implementation. Appropriately, the consumer fares well under the FTC rule. The rule imposes on financial institutions three main requirements: notice, annual notice and a reasonable opportunity to “opt out.” Both the initial and annual notices must be clear, conspicuous and accurate and must describe the conditions under which a financial institution may disclose nonpublic personal information to nonaffiliated third parties and affiliates. The rule provides details on the content of the notices, as well as sample language and delivery instructions. Similar provisions are provided regarding the opt-out notice. Additionally, consumers must be able to exercise their opt-out right at any time. Following the mandate of the Act, the rule also describes the conditions under which a financial institution may disclose nonpublic personal information about consumers to nonaffiliated third parties. Inevitably, if one group benefits, another is harmed. Since its publication, several private companies have spoken out against the FTC rule, lamenting its effects on long-standing business practices, specifically the provisions that serve to prevent the selling of “credit header” information. This information — including names, addresses, social security numbers and other personal details — is routinely sold by credit bureaus to companies for marketing purposes or to help debt collectors and private investigators locate people. The FTC rule has defined financial information in such a way that in the future this information cannot be sold without the prior approval of the individual. Unlike the FTC rule, the joint final rule issued by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp. and the Office of Thrift Supervision [FOOTNOTE 3]has not been attacked. The joint rule implements the requirements outlined in the Act and is substantively identical to the FTC rule. Minor differences include the definitions appropriate for institutions within each agency’s primary jurisdiction. The Act, as well as the various agencies’ final rules, take effect Nov. 13; however, in order to provide sufficient time for financial institutions to establish policies and procedures and put in place systems to implement the requirements, the time for full compliance with the final rules is optional until July 1, 2001. The number of institutions and individuals affected by these rules is overwhelming; only time and real-world practice will determine their final effect. ::::FOOTNOTES:::: FN1The Act was enacted on November 12, 1999 and can be cited as Pub. L. 106-102. FN216 CFR Part 313. FN312 CFR Part 40, 216, 332 and 573 respectively. Stefania R. Geraci is an associate at Brown Raysman Millstein Felder & Steiner LLPin New York.

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