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30 March 2007
[Federal Register: March 29, 2007 (Volume 72, Number 60)]
[Proposed Rules]
[Page 14939-15000]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29mr07-31]
[[Page 14939]]
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Part III
Department of the Treasury
Office of the Comptroller of the Currency
12 CFR Part 40
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Office of Thrift Supervision
12 CFR Part 573
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Federal Reserve System
12 CFR Part 216
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Federal Deposit Insurance Corporation
12 CFR Part 332
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National Credit Union Administration
12 CFR Part 716
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Federal Trade Commission
16 CFR Part 313
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Commodity Futures Trading Commission
17 CFR Part 160
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Securities and Exchange Commission
17 CFR Part 248
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Interagency Proposal for Model Privacy Form Under the Gramm-Leach-
Bliley Act; Proposed Rule
[[Page 14940]]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 40
[Docket ID OCC-2007-0003]
RIN 1557-AC80
FEDERAL RESERVE SYSTEM
12 CFR Part 216
[Docket No. R-1280]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 332
RIN 3064-AD16
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 573
[Docket ID OTS-2007-0005]
RIN 1550-AC12
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 716
RIN 3133-AC84
FEDERAL TRADE COMMISSION
16 CFR Part 313
[Project No. 034815]
RIN 3084-AA94
COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 160
RIN 3038-AC04
SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 248
[Release Nos. 34-55497, IA-2598, IC-27755; File No. S7-09-07]
RIN 3235-AJO6
Interagency Proposal for Model Privacy Form Under the Gramm-
Leach-Bliley Act
AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision,
Treasury (OTS); National Credit Union Administration (NCUA); Federal
Trade Commission (FTC); Commodity Futures Trading Commission (CFTC);
and Securities and Exchange Commission (SEC).
ACTION: Proposed rule.
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SUMMARY: The OCC, Board, FDIC, OTS, NCUA, FTC, CFTC, and SEC (the
Agencies) are proposing amendments to their rules that implement the
privacy provisions of the Gramm-Leach-Bliley Act (GLB Act), Title V,
Subtitle A. These rules require financial institutions to provide
initial and annual privacy notices to their customers. As required
under section 728 of the Financial Services Regulatory Relief Act of
2006 (Regulatory Relief Act or Act), the Agencies are proposing a safe
harbor model privacy form that financial institutions may use to
provide disclosures under the privacy rules. Institutions that use
notices based on the Sample Clauses currently contained in most of the
privacy rules would lose the benefit of a safe harbor for compliance
with respect to those notices if they are provided more than one year
following the date of publication of a final rule. Similarly,
institutions that use notices based on the Sample Clauses in the SEC's
privacy rule could no longer rely on the guidance provided with respect
to those notices if they are provided more than one year following the
date of publication of a final rule.
DATES: Comments must be submitted on or before May 29, 2007.
For information regarding the effective dates of the provisions
proposed in this document, see the discussion under ``Proposed
Effective Dates'' in the SUPPLEMENTARY INFORMATION section.
ADDRESSES: Because the Agencies will jointly review all of the comments
submitted, interested parties may send comments to any of the Agencies
and need not send comments (or copies) to all of the Agencies.
Commenters are encouraged to use the title ``Model Privacy Form'' to
facilitate the organization and distribution of comments among the
Agencies. Interested parties are invited to submit written comments to:
Office of the Comptroller of the Currency: You may submit comments
by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to
http://www.regulations.gov, select ``Comptroller of the Currency'' from
the agency drop-down menu, then click ``Submit.'' In the ``Docket ID''
column, select ``OCC-2007-0003'' to submit or view public comments and
to view supporting and related materials for this notice of proposed
rulemaking. The ``User Tips'' link at the top of the Regulations.gov
home page provides information on using Regulations.gov, including
instructions for submitting or viewing public comments, viewing other
supporting and related materials, and viewing the docket after the
close of the comment period.
Mail: Office of the Comptroller of the Currency, 250 E
Street, SW., Mail Stop 1-5, Washington, DC 20219.
Hand Delivery/Courier: 250 E Street, SW., Attn: Public
Information Room, Mail Stop 1-5, Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket Number OCC-2007-0003'' in your comment. In general, OCC will
enter all comments received into the docket and publish them on
Regulations.gov without change, including any business or personal
information that you provide such as name and address information, e-
mail addresses, or phone numbers. Comments, including attachments and
other supporting materials, received are part of the public record and
subject to public disclosure. Do not enclose any information in your
comment or supporting materials that you consider confidential or
inappropriate for public disclosure.
You may review comments and other related materials by any of the
following methods:
Viewing Comments Electronically: Go to http://www.regulations.gov
, select ``Comptroller of the Currency'' from the
agency drop-down menu, then click ``Submit.'' In the ``Docket ID''
column, select ``OCC-2007-0003'' to view public comments for this
notice of proposed rulemaking.
Viewing Comments Personally: You may personally inspect
and photocopy comments at the OCC's Public Information Room, 250 E
Street, SW., Washington, DC. You can make an appointment to inspect
comments by calling (202) 874-5043.
Docket: You may also view or request available background
documents and project summaries using the methods described above.
Board of Governors of the Federal Reserve System: You may submit
comments, identified by Docket No. R-1280, by any of the following
methods:
Agency Web Site: http://www.federalreserve.gov Follow the instructions for submitting comments at http://www.federalreserve.gov/.
.
[[Page 14941]]
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
number in the subject line of the message.
Fax: 202/452-3819 or 202/452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, your
comments will not be edited to remove any identifying or contact
information. Public comments may also be viewed electronically or in
paper in Room MP-500 of the Board's Martin Building (20th and C
Streets, NW.,) between 9 a.m. and 5 p.m. on weekdays.
FDIC: You may submit comments by any of the following methods:
Agency Web Site: http://www.fdic.gov/regulations/laws/federal.
Follow instructions for submitting comments on the Agency Web Site.
E-mail: Comments@FDIC.gov. Include ``Model Privacy Form'' in the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention: Comments,
Federal Deposit Insurance Corporation, 550 17th Street, NW.,
Washington, DC 20429.
Hand Delivery/Courier: Guard station at the rear of the 550 17th
Street Building (located on F Street) on business days between 7 a.m.
and 5 p.m. (EST).
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments.
Public Inspection: All comments received will be posted without
change to http://www.fdic.gov/regulations/laws/federal including any
personal information provided. Comments may be inspected and
photocopied in the FDIC Public Information Center, 3501 North Fairfax
Drive, Room E-1002, Arlington, VA 22226, between 9 a.m. and 5 p.m.
(EST) on business days. Paper copies of public comments may be ordered
from the Public Information Center by telephone at (877) 275-3342 or
(703) 562-2200.
Office of Thrift Supervision: You may submit comments, identified
by OTS-2007-0005, by any of the following methods:
Federal eRulemaking Portal: Go to http://www.regulations.gov
, select ``Office of Thrift Supervision'' from the
agency drop-down menu, then click submit. Select Docket ID ``OTS-2007-
0005'' to submit or view public comments and to view supporting and
related materials for this notice of proposed rulemaking. The ``User
Tips'' link at the top of the page provides information on using
Regulations.gov, including instructions for submitting or viewing
public comments, viewing other supporting and related materials, and
viewing the docket after the close of the comment period.
Mail: Regulation Comments, Chief Counsel's Office, Office
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552,
Attention: OTS-2007-0005.
Hand Delivery/Courier: Guard's Desk, East Lobby Entrance,
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention:
Regulation Comments, Chief Counsel's Office, Attention: OTS-2007-0005.
Instructions: All submissions received must include the agency name
and docket number for this rulemaking. All comments received will be
entered into the docket and posted on Regulations.gov without change,
including any personal information provided. Comments, including
attachments and other supporting materials received are part of the
public record and subject to public disclosure. Do not enclose any
information in your comment or supporting materials that you consider
confidential or inappropriate for public disclosure.
Viewing Comments Electronically: Go to http://www.regulations.gov,
select ``Office of Thrift Supervision'' from the agency drop-down menu,
then click ``Submit.'' Select Docket ID ``OTS-2007-0005'' to view
public comments for this notice of proposed rulemaking.
Viewing Comments On-Site: You may inspect comments at the Public
Reading Room, 1700 G Street, NW., by appointment. To make an
appointment for access, call (202) 906-5922, send an e-mail to
public.info@ots.treas.gov, or send a facsimile transmission to (202)
906-6518. (Prior notice identifying the materials you will be
requesting will assist us in serving you.) We schedule appointments on
business days between 10 a.m. and 4 p.m. In most cases, appointments
will be available the next business day following the date we receive a
request.
National Credit Union Administration: Comments should be directed
to Mary Rupp, Secretary of the Board. You may submit comments by any of
the following methods (Please send comments by one method only):
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA Web Site: http://www.ncua.gov/news/proposed_regs/proposed_regs.html.
Follow the instructions for submitting comments. E-mail: Address to regcomments@ncua.gov. Include ``[Your
`[Your
name] Comments on Proposed Rule Part 716 (Model Form for Privacy
Notice)'' in the e-mail subject line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Mary Rupp, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria,
Virginia 22314-3428.
Hand Delivery/Courier: Same as mail address.
Federal Trade Commission: All persons are invited to submit written
comments. Comments should refer to ``Model Privacy Form, FTC File No.
P034815'' to facilitate the organization of comments. Comments filed in
paper form should include this reference both in the text and on the
envelope, and should be mailed or delivered to: Federal Trade
Commission/Office of the Secretary, Room 135 (Annex C), 600
Pennsylvania Avenue, NW., Washington, DC 20580. Because paper mail in
the Washington area and at the Commission is subject to delay, please
consider submitting your comments in electronic form, as prescribed
below. If the comment contains any material for which confidential
treatment is requested, it must be filed in paper (rather than
electronic) form, and the first page of the document must be clearly
labeled ``Confidential.'' \1\ The FTC is requesting that any comment
filed in paper form be sent by courier or overnight service, if
possible.
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\1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must also
be accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------
Comments filed in electronic form should be submitted by using the
following Web link: https://secure.commentworks.com/ftc-modelform (and
following the instructions on the Web-based form). To ensure that the
Commission considers an electronic comment, you must file it on the
Web-based form at the Web link https://secure.commentworks.com/ftc-modelform.
If this notice appears at www.regulations.gov, you may also
file an electronic comment through that
[[Page 14942]]
Web site. The Commission will consider all comments that
http://www.regulations.gov forwards to it.\2\ The FTC Act and other laws the
Commission administers permit the collection of public comments to
consider and use in this proceeding as appropriate. All timely and
responsive public comments with all required fields completed, whether
filed in paper or electronic form, will be considered by the
Commission, and will be available to the public on the FTC Web site, to
the extent practicable, at http://www.ftc.gov. As a matter of
discretion, the Commission makes every effort to remove home contact
information for individuals it receives from the public comments before
placing those comments on the FTC Web site. More information, including
routine uses permitted by the Privacy Act, may be found in the FTC's
privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
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\2\ An electronic comment can be filed by (1) clicking on http://www.regulations.gov
; (2) selecting ``Federal Trade Commission'' at
``Search for Open Regulations;'' (3) locating the summary of this
notice; (4) clicking on ``Submit a Comment on this Regulation;'' and
(5) completing the form. For a given electronic comment, any
information placed in the following fields--``Title,'' ``First
Name,'' ``Last Name,'' ``Organization Name,'' ``State,''
``Comment,'' and ``Attachment''--will be publicly available on the
FTC Web site. The fields marked with an asterisk on the form are
required in order for the FTC to fully consider a particular
comment. Commenters may choose not to fill in one or more of these
fields, but if they do so, their comments may not be considered.
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Commodity Futures Trading Commission: Comments should be directed
to Eileen Donovan, Acting Secretary of the Commission, Commodity
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street,
NW., Washington, DC 20581. Comments may be sent by facsimile
transmission to (202) 418-5528 or by e-mail to secretary@cftc.gov.
Securities and Exchange Commission: Comments may be submitted by
any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml.
); or Send an e-mail to rule-comments@sec.gov. Please include
File Number S7-09-07 and ``Model Privacy Form'' on the subject line; or
Use the Federal eRulemaking Portal (http://www.regulations.gov
). Follow the instructions for submitting comments.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number S7-09-07 and ``Model
Privacy Form.'' This file number should be included on the subject line
if e-mail is used. To help us process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/proposed.shtml
). Comments are also available for public
inspection and copying in the Commission's Public Reference Room, 100 F
Street, NE., Washington, DC 20549. All comments received will be posted
without change; we do not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly.
FOR FURTHER INFORMATION CONTACT: OCC: Amy Friend, Assistant Chief
Counsel, (202) 874-5200; Heidi Thomas, Special Counsel, Jonathan
Mitchell, Attorney, Legislative and Regulatory Activities Division,
(202) 874-5090; David H. Nebhut, Director, Policy Analysis, (202) 874-
5387; or Paul Utterback, NBE Compliance Specialist, (202) 874-4428,
Office of the Comptroller of the Currency, 250 E Street, SW.,
Washington, DC 20219.
Board: Adrianne Threatt, Counsel, Legal Division, (202) 452-3554;
Jeanne Hogarth, Consumer Policies Program Manager, or Krista Ayoub,
Senior Attorney, or Ky Tran-Trong, Counsel, Division of Consumer and
Community Affairs, (202) 452-3667; or Michelle E. Shore, Federal
Reserve Board Clearance Officer, (202) 452-3829 (for Paperwork
Reduction Act questions only), Board of Governors of the Federal
Reserve System, 20th Street and Constitution Avenue, NW., Washington,
DC 20551.
FDIC: David P. Lafleur, Senior Policy Analyst, Compliance Section,
Division of Supervision and Consumer Protection, (202) 898-6569; or
Ruth R. Amberg, Senior Counsel, (202) 898-3736, or Kimberly A. Stock,
Attorney, (202) 898-3815, Legal Division; Federal Deposit Insurance
Corporation, 550 17th Street, NW., Washington, DC 20429.
OTS: Ekita Mitchell, Consumer Regulations Analyst, Examinations,
Supervision, and Consumer Protection, (202) 906-6451; or Richard
Bennett, Counsel, Regulations and Legislation Division, (202) 906-7409,
1700 G Street, NW., Washington, DC 20552.
NCUA: Regina Metz, Staff Attorney, (703) 518-6561, or Ross Kendall,
Staff Attorney, Office of General Counsel, (703) 518-6562, National
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia
22314-3428.
FTC: Loretta Garrison, Senior Attorney, Division of Privacy and
Identity Protection, Bureau of Consumer Protection, (202) 326-3043,
Federal Trade Commission, 600 Pennsylvania Avenue, NW., Stop NJ-3158,
Washington, DC 20580.
CFTC: Laura Richards, Senior Assistant General Counsel, (202) 418-
5126, or Gail B. Scott, Attorney, Office of General Counsel, (202) 418-
5139, Commodity Futures Trading Commission, Three Lafayette Centre,
1155 21st Street, NW., Washington, DC 20581.
SEC: Catherine McGuire, Chief Counsel, or Brice Prince, Special
Counsel, Office of the Chief Counsel, Division of Market Regulation,
(202) 551-5550; or Penelope Saltzman, Branch Chief, or Vincent Meehan,
Senior Counsel, Office of Regulatory Policy, Division of Investment
Management, (202) 551-6792, Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The Agencies are proposing amendments to
each of their rules (which are consistent and comparable) that
implement the privacy provisions of the GLB Act: 12 CFR part 40 (OCC);
12 CFR part 216 (Board); 12 CFR part 332 (FDIC); 12 CFR part 573 (OTS);
12 CFR part 716 (NCUA); 16 CFR part 313 (FTC); 17 CFR part 160 (CFTC);
and 17 CFR part 248 (SEC) (collectively, the ``privacy rule'').\3\
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\3\ Because each Agency's privacy rule has the same section
numbers, relevant sections will be cited, for example, as ``section
--.6'' unless otherwise noted.
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I. Background
The Regulatory Relief Act was enacted on October 13, 2006.\4\
Section 728 of the Act directs the Agencies to ``jointly develop a
model form which may be used, at the option of the financial
institution, for the provision of disclosures under [section 503 of the
GLB Act].'' \5\ The Regulatory Relief Act stipulates that the model
form shall be a safe harbor for financial institutions
[[Page 14943]]
that elect to use it. Section 728 further directs that the model form
shall:
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\4\ Pub. L. 109-351 (Oct. 13, 2006), 120 Stat. 1966.
\5\ Id., adding 15 U.S.C. 6803(e). Section 728 of the Regulatory
Relief Act directs the agencies named in Section 504(a)(1) of the
GLB Act, 15 U.S.C. 6804(a)(1), to develop a model form. The CFTC,
which did not become subject to Title V of the GLB Act until 2000,
is not named in that section. The Commodity Exchange Act (``CEA'')
was amended in 2000 by the Commodity Futures Modernization Act of
2000 to make the CFTC a ``federal functional regulator'' subject to
the GLB Act Title V. See Section 5g of the CEA, 7 U.S.C. 7b-2. The
CFTC interprets Section 728 of the Regulatory Relief Act as applying
to it through Section 5g.
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(A) Be comprehensible to consumers, with a clear format and design;
(B) Provide for clear and conspicuous disclosures;
(C) Enable consumers easily to identify the sharing practices of a
financial institution and to compare privacy practices among financial
institutions; and
(D) Be succinct, and use an easily readable type font.
The Agencies are required to propose a model form for public
comment by April 11, 2007.
A. The Gramm-Leach-Bliley Act Privacy Notices
Subtitle A of title V of the GLB Act, captioned Disclosure of
Nonpublic Personal Information,\6\ requires each financial institution
to provide a notice of its privacy policies and practices to its
customers who are consumers.\7\ In general, the privacy notices must
describe a financial institution's policies and practices with respect
to disclosing nonpublic personal information about a consumer to both
affiliated and nonaffiliated third parties.\8\ The notices also must
provide a consumer a reasonable opportunity to direct the institution
generally not to share nonpublic personal information \9\ about the
consumer (that is, to ``opt out'') with nonaffiliated third parties
other than as permitted by the statute (for example, sharing for
everyday business purposes, such as processing transactions and
maintaining customers' accounts, and in response to properly executed
governmental requests).\10\ The privacy notice must provide, where
applicable under the Fair Credit Reporting Act (FCRA), a notice and an
opportunity for a consumer to opt out of certain information sharing
among affiliates.\11\
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\6\ Codified at 15 U.S.C. 6801-6809.
\7\ 15 U.S.C. 6803(a). A ``customer'' means a consumer who has a
``customer relationship with a financial institution.'' Privacy
rule, section --.3(h), SEC section 248.3(j), CFTC section 160.3(k).
A ``consumer'' is ``an individual who obtains, from a financial
institution, financial products or services which are to be used
primarily for personal, family, or household purposes, and also
means the legal representative of such an individual.'' 15 U.S.C.
6809(9); privacy rule, section --.3(e), SEC section 248.3(g)(1),
CFTC section 160.3(h)(1).
\8\ 15 U.S.C. 6803(a)-(c).
\9\ 15 U.S.C. 6809(4). ``Nonpublic personal information'' is
generally defined as personally identifiable financial information
provided by a consumer to a financial institution, resulting from
any transaction or any service performed for the consumer, or
otherwise obtained by the financial institution. See privacy rule,
sections --.3(n) and (o), SEC sections 248.3(t) and (u), CFTC
sections 160.3(t) and (u).
\10\ 15 U.S.C. 6802; privacy rule, sections --.14 and --.15.
\11\ 15 U.S.C. 1681a(d)(2)(A)(iii) (FCRA); 15 U.S.C. 6803(c)(4)
(GLB Act).
---------------------------------------------------------------------------
The privacy rule requires a financial institution to provide a
privacy notice to its customers no later than when a customer
relationship is formed and annually for as long as the relationship
continues. The notice must accurately reflect the institution's
information collection and disclosure practices and must include
specific information. Section --.6 of the privacy rule requires the
privacy notice to include the following:
(1) The categories of nonpublic personal information that the
institution collects;
(2) With respect to both current and former customers, the
categories of nonpublic personal information that it discloses and the
categories of affiliates and nonaffiliated third parties to whom it
discloses such information other than as permitted by the exceptions in
sections --.14 and --.15;
(3) Where the institution relies on the exception in section --.13
to share nonpublic personal information (pertaining to joint
marketing), the categories of information disclosed, and the categories
of third parties with which the institution has contracted;
(4) Where applicable, an explanation of the consumer's right under
section --.10(a) to opt out of the disclosure of nonpublic personal
information to nonaffiliated third parties and the methods by which the
consumer may opt out;
(5) Disclosures made under section 603(d)(2)(A)(iii) of the FCRA
(pertaining to the ability to opt out of certain sharing with
affiliates) and the applicable opt-out notice;
(6) The institution's policies and practices with respect to
protecting the confidentiality and security of nonpublic personal
information; and
(7) Where applicable, a statement that the institution discloses
nonpublic personal information to nonaffiliated third parties pursuant
to the section --.14 and --.15 exceptions.
The privacy rule does not prescribe any specific format or
standardized wording for these notices. Instead, institutions may
design their own notices based on their individual practices provided
they comply with the law and meet the ``clear and conspicuous''
standard in the statute and the privacy rule.\12\ The Appendix to the
privacy rule contains model language (Sample Clauses) that institutions
may use in privacy notices to satisfy the privacy rule.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 6802, 6803; privacy rule, section --.3(b), SEC
248.3(c).
---------------------------------------------------------------------------
Financial institutions first were required to distribute privacy
notices to their customers by July 1, 2001.\13\ Many privacy notices in
the initial effort were long and complex. In addition, because the
privacy rule allows institutions flexibility in designing their privacy
notices, notices have been formatted in various ways and as a result
have been difficult to compare, even among financial institutions with
identical privacy policies.
---------------------------------------------------------------------------
\13\ The CFTC was added by Section 5g of the Commodity Exchange
Act, 7 U.S.C. 7b-2 (as amended by the Commodity Futures
Modernization Act of 2000), on December 21, 2000, and privacy
notices were required to be delivered to consumers by March 31,
2002.
---------------------------------------------------------------------------
In response to broad-based concerns expressed by representatives of
financial institutions, consumers, privacy advocates, and members of
Congress, the Agencies conducted a workshop in December 2001 to provide
a forum to consider how financial institutions could provide more
useful privacy notices to consumers.\14\ The workshop featured panel
presentations by financial institutions, consumer advocates, and
communications experts, and highlighted key communication principles to
improve the notices. A number of institutions, particularly those with
complex information-sharing practices, described the challenges they
faced in explaining their practices and the choices available to
consumers in a simple fashion while meeting all of the legal
requirements for notice. Some institutions described results of
consumer testing and their efforts to make privacy notices clearer and
more useful to consumers.
---------------------------------------------------------------------------
\14\ Get Noticed: Writing Effective Financial Privacy Notices,
Interagency Public Workshop (Dec. 4, 2001), workshop transcripts and
other supporting documents are available at http://www.ftc.gov/bcp/workshops/glb/index.html
.
---------------------------------------------------------------------------
On December 30, 2003, the Agencies published an Advance Notice of
Proposed Rulemaking to Consider Alternative Forms of Privacy Notices
under the Gramm-Leach-Bliley Act \15\ (ANPR) to solicit comment on a
wide range of issues related to improving privacy notices. The Agencies
sought, for example, comment on issues associated with the format,
elements, and language used in privacy notices that would make the
notices more accessible, readable, and useful, and whether to develop a
model privacy notice that would be short and simple. The Agencies also
solicited examples of
[[Page 14944]]
forms, model clauses, and other information, such as applicable
research that has been conducted in this area. The ANPR stated that the
Agencies expected that consumer testing would be a key component in the
development of any specific proposals.
---------------------------------------------------------------------------
\15\ See Interagency Proposal to Consider Alternative Forms of
Privacy Notices Under the Gramm-Leach-Bliley Act, 68 FR 75164 (Dec.
30, 2003), available at http://www.ftc.gov/os/2003/12/031223anprfinalglbnotices.pdf
.
---------------------------------------------------------------------------
During January and February 2004, the Agencies met with a number of
interested groups and individuals to discuss the issues raised in the
ANPR.\16\ The Agencies received forty-four comments in response to the
ANPR.\17\ While commenters expressed a variety of views on the
questions posed in the ANPR, many commenters agreed that the Agencies
should conduct consumer testing before proposing any alternative
privacy notice.
---------------------------------------------------------------------------
\16\ Summaries of the outside meetings are available at http://www.ftc.gov/privacy/privacyinitiatives/financial_rule_inrp.html
.
\17\ Public comments to the ANPR are available at http://www.ftc.gov/privacy/privacyinitiatives/financial_rule_inrp.html
.
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B. The Interagency Notice Project
In the summer of 2004, six Agencies \18\ agreed to launch a project
to fund consumer research (Notice Project). Their goals were to
identify barriers to consumer understanding of current privacy notices
and to develop an alternative privacy notice, or elements of a notice,
that consumers could more easily use and understand compared to current
notices. When the Agencies initiated this project, they contemplated
conducting the consumer research in two sequential phases. The first
phase was designed as qualitative testing, that is, form development
research. This research involved a series of in-depth individual
consumer interviews to develop an alternative privacy notice that would
be easier for consumers to use and understand. The second phase was
designed as quantitative testing, to test the effectiveness of the
alternative privacy notice developed in phase one among a larger number
of consumers. The first phase has been completed and resulted in the
model notice we are proposing for comment today. The Agencies expect to
conduct the second phase of testing after receipt of comments in
response to this proposal.\19\
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\18\ The six Agencies are the Board, FDIC, FTC, NCUA, OCC, and
SEC. Information related to the Notice Project can be found at
http://www.ftc.gov/privacy/privacyinitiatives/financial_rule_inrp.html
.
\19\ OTS has joined the Notice Project for the phase two
research.
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In September 2004, the six Agencies selected Kleimann Communication
Group, Inc. (Kleimann) as their contractor for the phase one form
development research. The research objectives of the Notice Project
included designing a privacy notice that consumers could understand and
use, that facilitated comparison of sharing practices and policies
across privacy notices, and that addressed all relevant legal
requirements of the GLB Act and FCRA. At the outset of the research,
the Agencies considered a range of possible options for the notice,
including a short notice, a layered approach (highlighting key
information upfront), as well as a longer fully-compliant notice. The
Agencies limited the project to paper-based notices, reasoning that a
successful paper notice could be readily adapted to another medium such
as the Internet. The Agencies used a readable font \20\ and, in order
not to confound the research findings on comprehension by introducing
too many variables into the test notice, expressly did not use color,
logos, or other graphical designs in the test notices. Instead, the
Agencies focused on formulating and testing content that consumers
could understand and use in order to develop a short, simplified
privacy notice that met the research objectives.
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\20\ The text of the prototype notice is in 10 point BK Avenir
Book font.
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The form development phase culminated in an extensive research
report released by the Agencies in March 2006. Prepared by Kleimann,
``Evolution of a Prototype Financial Privacy Notice,'' details the
process by which the Agencies and Kleimann developed an alternative
privacy notice.\21\ As explained more fully in the Kleimann Report,
over a one-year period, Kleimann conducted two focus groups followed by
a series of 46 in-depth, individual interviews, conducted sequentially
at seven sites around the country. The interviews tested consumers on
their ability to comprehend, use, and compare notices based on
variations in vocabulary, ordering of content, and format. The
structure, content, ordering of the text information, and title of the
proposed model form all reflect the research findings in the
qualitative consumer testing.
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\21\ See Kleimann Communication Group, Inc., Evolution of a
Prototype Financial Privacy Notice: A Report on the Form Development
Project (Feb. 28, 2006) (Kleimann Report). For a copy of the full
report, go to http://www.ftc.gov/privacy/privacyinitiatives/ftcfinalreport060228.pdf For the executive summary, go to http://.
//.
FTCFinalReportExecutiveSummary.pdf.
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The Agencies now are proposing the model privacy notice produced in
the form development phase with some minor revisions (the proposed
model form) for comment in accordance with the Regulatory Relief Act.
The Agencies contemplate that the safe harbor for the proposed model
form will be effective upon publication of the final rule in order to
permit institutions that elect to use the form to do so immediately.
The Agencies recognize that institutions may post their privacy notices
on their Internet sites, as well as deliver paper or email versions to
their customers. The Agencies contemplate that institutions that post a
pdf version of the proposed model privacy form may obtain a safe
harbor, but are requesting comment on whether to develop a Web-based
design for financial institutions to use on their Internet sites,
including comment on particular design and/or technical considerations.
The Agencies believe that the proposed model form meets all the
requirements of the Act and is easier to understand than most privacy
notices currently being disseminated. The following section describes
the proposed model form and highlights some key research findings. For
more detailed information on the research methodology and the form
development process, commenters are encouraged to review the full
Kleimann Report. The Agencies also are proposing instructions on how
institutions may obtain a safe harbor by using the proposed model form,
including an explanation of aspects of the form that may and may not be
varied.\22\ Institutions would not be able to vary content or format,
other than as described in this proposal, to take advantage of the safe
harbor. Moreover, institutions would not be able to include any other
information in the proposed model form nor incorporate this model form
into any other document.
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\22\ While the model form would provide a safe harbor,
institutions could continue to use other types of notices that vary
from the model form so long as these notices comply with the privacy
rule. For example, an institution could continue to use a simplified
notice as described in section --.6(c)(5) (NCUA 716.6(e)(5)) of the
privacy rule if it does not have affiliates and does not intend to
share nonpublic personal information with nonaffiliated third
parties outside of the exceptions provided in sections --.14 and
--.15.
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II. The Proposed Model Form
A. The Structure
The proposed model form has either two or three pages, depending on
whether the financial institution provides an opt-out. While the
research showed that page one alone was adequate for comprehension and
usability, page one together with page two address the legal
requirements of applicable Federal financial privacy laws and increase
consumer comprehension. Each of the pages of the model form is printed
separately and
[[Page 14945]]
only on one side of an 8.5 by 11 inch piece of paper because, during
testing, consumers expressed a preference for the model which allowed
them to view the information on pages one and two side-by-side.\23\ The
proposed model form in Appendix A is designed to be customized by each
financial institution that elects to use it by inserting, for example,
the institution's name, contact information, and information about
affiliates, nonaffiliates, or joint marketing partners, if any, with
which it shares personal information. In addition, the disclosure table
requires that each institution complete the responses in each of the
boxes provided in a manner that accurately reflects its information
sharing policies and practices.
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\23\ The proposed model form has the opt-out options and
instructions on a separate page. Staff of certain of the Agencies
issued Frequently Asked Questions in December 2001 (Privacy FAQs),
stating that a consumer should be able to detach a mail-in opt-out
form from a privacy notice without removing text from the privacy
policy. Otherwise, the institution may violate section --.9(e) of
the privacy rule, which requires that a privacy policy must be
provided in such a way that a customer can retain the text of the
notices or obtain them later. See F.4 of the Privacy FAQs, available
at http://www.ftc.gov/privacy/glbact/glb-faq.htm.
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Below is one example of a completed model form for a fictional
financial institution, Neptune, whose privacy policy provides for broad
sharing in a manner that triggers consumer opt-out rights. For
comparison, a second example is also provided for another fictional
institution, Mars, whose privacy policy limits sharing and does not
trigger consumer opt-out rights. Each of these institutions uses and
shares personal information in different ways; thus, their responses in
the disclosure table vary, as do the descriptions of their affiliates,
nonaffiliates, or joint marketing partners in the definition
section.\24\ Importantly, since Mars does not share in a way that
triggers an opt-out, the opt-out form (page 3 of the proposed model
form) is not required and so is not included in the Mars notice. Thus,
not every institution subject to the privacy rule will have to provide
page three of the model form; only those institutions whose privacy
practices require delivery of an opt-out notice or those institutions
that choose to provide opt-outs beyond those required by law.
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\24\ The Agencies understand that many consumers are not
familiar with institutions' information sharing practices. During
the Notice Project's initial research, some consumers expressed
concern about financial institutions changing their practices and
policies without adequately informing consumers about such changes.
A few consumers suggested that, at a minimum, the notices should be
dated to reflect the most recent revision so consumers would know
when the notice was last changed and could more easily identify the
most recent policy statement. Changes to an institution's policy may
be reflected in a revised notice under section --.8 of the privacy
rule or in an annual notice. Some institutions highlight changes to
their privacy notices in some distinctive way, so that consumers can
readily identify the change. As discussed later in Section V, the
Agencies invite comment on whether financial institutions should be
required to alert consumers to changes in an institution's privacy
practices as part of the proposed model form.
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[[Page 14946]]
Example 1. Neptune Model Privacy Form
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[[Page 14948]]
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[[Page 14949]]
Example 2. Mars Model Privacy Form
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[[Page 14950]]
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[[Page 14951]]
Example 3. Illustration of Type Size for the Various Elements of the
Model Form \25\
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\25\ See infra note and accompanying text. This illustration
displays the font sizes of the various elements in the model form.
[GRAPHIC] [TIFF OMITTED] TP29MR07.005
B. Page One--Background Information and the Disclosure Table
Page one of the proposed model form has four parts: (1) The title;
(2) an introductory section called the ``key frame,'' which provides
context to help the consumer better understand the required
disclosures; (3) a table that describes the types of sharing Federal
law allows, which of those types of sharing the institution actually
does, and whether the consumer can opt out of any type of the
institution's sharing; and (4) the institution's contact information.
The research showed that the title, ``FACTS What Does [name of
financial
[[Page 14952]]
institution] Do With Your Personal Information,'' is more likely to
catch consumers' attention so they will read the notice. The title can
be used by all institutions regardless of their information sharing
practices.
The ``key frame,'' with its three short headings--Why, What, and
How--is included because the research showed that, unless consumers
have some basic facts about information sharing, they are less likely
to understand why they are receiving a privacy notice and what to do
with one. The ``Why'' box tells consumers that Federal law requires
that the financial institution send the notice. The ``What'' box
explains the types of personal information financial institutions
collect and share.\26\ The ``How'' box explains that some information
sharing is necessary for all institutions in order to provide the
products and services that consumers request. It also briefly explains
what information consumers will find in the disclosure table below. The
research found that these particular headings and the bulleted
explanations enhanced consumers' understanding of the purpose of the
notice, enabled them to make an informed decision about the use of
their personal information, and aided their overall comprehension.
---------------------------------------------------------------------------
\26\ The Agencies recognize that some financial institutions may
not collect each type of information described in the ``What'' box.
As reflected in the introductory clause, which states that the
``information [collected] can include * * *,'' the standardized
terms are designed to reflect the range of information typically
collected by financial institutions required to provide privacy
notices under the GLB Act and FCRA, rather than the specific
information collected by each particular institution, and therefore,
are not to be modified to reflect an institution's particular
practices. The SEC's model privacy form reflects modified terms in
the ``What'' box that are intended to include the range of
information typically collected by brokers, dealers, investment
advisers registered with the Commission, and investment companies.
---------------------------------------------------------------------------
The disclosure table at the bottom of page one provides information
about the financial institution's sharing practices. The research found
that this table is the ``heart'' of the proposed model form,
``enabl[ing] consumers to understand the details of their financial
institution's sharing practices in the context of how other financial
institutions can share. It is critical for comprehension and
comparability.'' \27\ The table is featured on page one because it is
one of the most important elements of the model form.
---------------------------------------------------------------------------
\27\ See Kleimann Report, supra note , at v and 7.
---------------------------------------------------------------------------
Key research findings were that providing this information in a
table form greatly increased consumers' ability to readily identify and
understand an institution's sharing practices and what, if any, choices
they had to limit any of that sharing, and easily compare these
practices and choices among institutions. The Agencies asked Kleimann
to develop and test a ``prose'' version describing information sharing
practices since such a format would be more comparable to notices
currently used by financial institutions. However, the research found
that the table design of the proposed model form outperformed the prose
design on a variety of measures, including comprehension,
comparability, and usability.\28\
---------------------------------------------------------------------------
\28\ See id. at 185, 215, 256.
---------------------------------------------------------------------------
The disclosure table includes a description of the possible types
of sharing and uses of personal information and the associated opt-out
choices that must be disclosed. The opt-out disclosures are required
under: (1) Section 502(b) of the GLB Act (regarding certain sharing
with nonaffiliated third parties); (2) section 603(d)(2)(A) of the FCRA
(regarding sharing of creditworthiness and credit report information
among affiliates); and (3) section 624 of the FCRA, as added by section
214 of the Fair and Accurate Credit Transactions Act of 2003 (Fact
Act), 15 U.S.C. 1681s-3 (use of that information for marketing).\29\
The table provides important context about what information sharing a
financial institution actually does relative to what it could do. The
research showed that the table, with its standardized content,
facilitates easy comparison of information sharing practices among
different institutions. The structure of the disclosure table and the
reasons for sharing are designed to be consistent for all financial
institutions.\30\ The institution-specific information lies in the
answers to the questions within each of the boxes. Accordingly, even if
a financial institution does not share for one of the reasons listed in
the table (for example, it has no affiliates and therefore does not
share with affiliates), the institution could not exclude that reason
from the table, but would answer ``No'' under ``Does [name of financial
institution] share?''
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\29\ Pub. L. 108-159, 117 Stat. 1952. Section 624 provides that
information that may be shared among affiliates--including
transaction and experience information and certain creditworthiness
information--cannot be used for marketing purposes unless the
consumer has received a notice of such use and an opportunity to opt
out, and the consumer does not opt out. The Agencies have included
language pertaining to this affiliate marketing provision and the
related opt-out on the notice developed in the consumer research in
response to comments to the ANPR. While the Agencies have not yet
issued a final regulation implementing this provision of the FACT
Act, they are coordinating this rulemaking with the affiliate
marketing rulemaking to ensure that language addressing the section
624 opt-out as incorporated in this model form (when finalized)
would be deemed to comply with the affiliate marketing rule.
Institutions would not be required to include reference to this
provision until a final rule for section 624 is issued and becomes
effective, and only in the event that institutions choose to
consolidate the 624 notice and opt-out with the GLB Act privacy
notice.
\30\ The reasons for sharing are grouped into three main
categories. The first three reasons describe what financial
institutions do with their consumers' personal information. The next
three reasons describe what a financial institution's affiliates do
with that information. The last reason describes what nonaffiliated
companies may do with the personal information, other than acting as
a service provider to or acting jointly with the financial
institution (that is, outside the exceptions provided in sections
--.13, --.14, and --.15). This generally means marketing by the
nonaffiliated company.
---------------------------------------------------------------------------
The language used in the disclosure table is based on Kleimann's
research. The simplified phrases describing information sharing
practices were continually refined through the consumer testing process
to allow consumers to better understand the information sharing and use
possibilities. The laws governing the disclosure of consumers' personal
information are not easily translated into short, comprehensible
phrases that are also legally precise. Thus, the table in some cases
uses more easily understandable short-hand terms to describe sharing
practices required to be in the notice. For example, the table uses the
term ``everyday business purposes'' to describe the sharing
contemplated by the exceptions in sections --.14 and --.15 of the
privacy rule, which does not trigger opt-out rights. The research found
that consumers understood that ``everyday business purposes'' means
that companies must share in some basic ways in order to provide the
financial products or services that consumers request. The table also
speaks in terms of the institution's own ``marketing purposes'' to
capture the idea that nearly all, if not all, financial institutions
share information in connection with marketing their own products and
services to their customers (for example, with a service provider such
as a bulk mailer or data processor) in a manner that does not trigger
an opt-out right. With respect to the reasons for information sharing
among affiliated companies that track the FCRA provisions \31\ (the
sharing of ``transaction and experience information'' and the sharing
of ``other information''), the disclosure table uses ``Information
about your creditworthiness'' as a short-hand term for the statutory
term ``other information.''
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\31\ See section 603(d)(2)(A) of the FCRA.
---------------------------------------------------------------------------
The institution's contact information appears at the bottom of page
one in
[[Page 14953]]
response to consumers' preferences expressed during testing.
C. Page Two--Supplemental Information
The second page provides additional explanatory information that,
in combination with page one, ensures that the notice includes all
elements described in the GLB Act as implemented by the privacy rule.
There is supplemental information in the form of Frequently Asked
Questions (FAQs) \32\ at the top and definitions below.\33\ The
research showed that although consumers generally understood the
concepts of certain technical words, they found that the four
definitions on page two provided helpful additional information that
further clarified the nature and type of information sharing by a
financial institution. Some of the definitions include institution-
specific information required by the GLB Act. For example, an
institution that has affiliates must identify the categories of its
affiliates after the definition. Likewise, an institution that has no
affiliates can explain after the definition that it does not have
affiliates.
---------------------------------------------------------------------------
\32\ Note that financial institutions should insert their names
as indicated in the first three questions in this section.
\33\ The FAQ box regarding sources of information does not
permit a financial institution to customize the sources of
information it collects. As with the standardized terms describing
information the institution collects on page one, see supra note ,
the disclosure is intended to include the range of information
sources typically used by institutions subject to the GLB Act and
FCRA rather than the information sources used by each particular
institution. The SEC's model form reflects additional terms in this
box that are intended to include the range of sources of information
typically used by brokers, dealers, investment advisers registered
with the Commission, and investment companies.
---------------------------------------------------------------------------
Examples of institution-specific information are shown for the last
three definitions in the italicized print in both the Neptune and Mars
forms. Thus, Neptune has affiliates with which it shares certain
information and, under the definition of ``affiliates,'' Neptune
includes information in italics that describes the categories of its
affiliates. Since Mars has no affiliates, the Mars form states ``Mars
has no affiliates.''
D. Page Three--The Opt-Out Form
The third page provides an opt-out form, for use by those financial
institutions that share in a manner that triggers consumer opt-out
rights under the GLB Act or FCRA (see the proposed model privacy form
in Appendix A and the Neptune form). Institutions using the proposed
model form must include page three in their notices only if they (1)
share or use information in a manner that triggers an opt-out, or (2)
choose to provide opt-outs beyond what is required by law.
The opt-out page lists three common methods for opting out--by
telephone, on the Web, and by mail--and summarizes the opt-out choices
available to the consumer in a clear and easy-to-read format that the
research found consumers appreciated. Financial institutions that
provide opt-out forms are not required to provide all the opt-out
choices and methods described in the Neptune opt-out form. The Agencies
expect that institutions may need to tailor the opt-out page to reflect
accurately the institution's particular practices.\34\ The model form,
for example, includes information for the customer's account number as
a means of identifying both the customer and account to which the opt-
out should apply. Institutions requiring consumers with multiple
account numbers to list each account number to which the opt-out should
apply should modify that portion of the form. Institutions requiring
information other than an account number should modify that portion of
the form. Institutions that allow more than 30 days from issuing the
notice may insert that time period in place of the number ``30''. The
proposed rule accordingly provides instructions explaining permissible
variations to page three of the Neptune notice.
---------------------------------------------------------------------------
\34\ See note 29. For institutions that choose to consolidate
the 624 notice into the model form and offer this opt-out, the
italicized language accompanying the affiliate sharing opt-out
choice on page three of the proposed model form is required only if
an institution wants to limit the time of the opt-out period, with 5
years the minimum opt-out period required by the statute. Where an
institution elects to limit the time period for which the opt-out is
effective, it should look to the Agencies' affiliate marketing rule
for guidance on the manner and form in which to provide any
additional notice that would effectively permit a consumer to renew
or extend the opt-out period.
---------------------------------------------------------------------------
E. Additional Opt-Outs in the Model Form
The third column in the disclosure table in the proposed model form
is intended to provide flexibility for financial institutions to
include additional opt-out choices that are not required by Federal
law. For example, a financial institution may give its customers the
opportunity to limit sharing for joint marketing. In that case, the
financial institution would answer the question ``Can you limit this
sharing?'' in the far right column with ``Yes (Check your choices, p.
3)'' and would describe the additional opt-out choice on its opt-out
form, for example by stating, ``Do not share my personal information
with other financial institutions to jointly market to me.'' Likewise,
if a financial institution wanted to offer its customers the
opportunity to opt out of its own marketing, it could provide for that
option by answering ``Yes'' in the appropriate box of the disclosure
table and by describing the opt-out choice on the opt-out form, for
example by stating ``Do not share [or use] my personal information to
market to me.'' To obtain the safe harbor for use of the proposed model
form, an institution that uses the disclosure table to show any
additional opt-out choice must include the opt-out form on page three
to provide consumers with a method for opting out. The Agencies
specifically invite comment on other opt-outs that financial
institutions may provide, and on whether the Agencies should provide
model language based on the opt-out provisions provided in the proposed
model form.
F. Appearance of the Model Form
In addition to the requirements that the proposed model form be
comprehensible, clear and conspicuous, and allow for easy comparison of
privacy practices among financial institutions, the law requires that
the model form use an easily readable type font. The prototype notice
developed in the Agencies' phase one research and shown here as the
proposed model form, reflects consideration of a number of
typographical factors in the design.\35\ Type size, type style,
leading, x-height, serif versus sans serif,\36\ upper and lower case
type, along with the page layout--all play an important role in
designing a typeface that is highly readable. Consumers who saw the
prototype notice during the research process commented on how easy the
type was to see and read.\37\
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\35\ The prototype notice developed in the consumer research is
10 on 12 BK Avenir Book. The ``10 on 12'' means that the font size
is 10 points, and the leading (that is, the additional space between
the lines of type) is 2 points of spacing.
\36\ Serif typeface has small strokes at the ends of the lines
that form each letter. Sans serif typeface does not have those small
strokes.
\37\ Example 3 in this proposal illustrates the different font
sizes used in the prototype notice for the title, headings, and key
text. Thus, the word ``FACTS'' in the title is in 17-point type; the
remainder of the title is in 11-point; the Why, Why, How, and
Contact Us headings are in 14 point; the headings in the disclosure
table, the reasons in the left column of the disclosure table, and
the questions in the left column of the FAQs are in 10.5-point; and
the text in the body of the form is in 10-point. This information
shows the relative sizes of the various elements of the prototype
and is intended only as a guide (and not a requirement) to those
institutions that elect to use the proposed model form so that they
can design the key elements, such as the headings and title, larger
than the 10-point font size in the text.
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[[Page 14954]]
All of these factors together affect the readability of a document.
Therefore, in considering these various factors for the design of an
easily readable type font, the Agencies are proposing 10-point font as
the minimum type size and sufficient spacing between the lines of type
(leading). The Agencies are further providing general guidance on type
styles.
Type size: The readability of type size is highly dependent on the
selection of the type style. Some styles in 10-point font are more
readable than others in 12-point font and appear larger because of
their design. Accordingly, the Agencies are proposing 10-point type
size as the minimum size for use on the model form.
Leading: Leading is the spacing between lines of type, measured in
points. If the line spacing is too narrow, the type is hard to read. In
such a case, the ascenders (such as the upward line in the letter
``h'') and descenders (such as the downward line in a ``g'') may touch,
blending the lines of type and making it much harder to distinguish the
letters on the page. Research on the legibility of typography indicates
that people read faster when text is set with 1 to 4 points of
leading.\38\ The Agencies are proposing a requirement that the leading
used allow for sufficient spacing between the lines, but are not
mandating a specific amount. Nevertheless, the Agencies are providing
these general recommendations for use with the model form: 10- or 11-
point type should have between 1 and 3 points of leading. Twelve-point
type should have between 2 and 4 points of leading.\39\
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\38\ Karen A. Schriver, Dynamics In Document Design, 274 (1997).
\39\ Id. at 262; see also James Hartley, Designing Instructional
Text (1994); and Barbara Chaparro et al., Reading Online Text: A
Comparison of Four White Space Layouts, 6(2) (2004).
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Type style and ``x''-height: Experts differ on the question of the
most desirable type style. The model form uses both sans serif and
``monoweight'' type, and upper and lower case lettering in the body of
the form. While much of the printed material in the United States and
western Europe uses serif styles, Web designers are increasingly using
sans serif type, as they have found that serif type is harder to read
in this new medium. These changes in Web design are also beginning to
affect font styles in printed materials. Accordingly, some typography
designers are now using sans serif typefaces, as well as type with a
uniform thickness throughout the letter (monoweight typeface), finding
such typefaces easier to read than those with variable thickness. While
a variety of type styles would be suitable for the model notice, the
Agencies caution that institutions that use idiosyncratic fonts or
highly stylized typefaces will not meet the model form safe harbor
standard.
Larger x-height \40\ makes a font appear larger and thus more
readable, and fonts with larger x-heights are better for smaller text.
Research shows that our eyes ``scan the top of the letters'' x-heights
during the normal reading process, so that is where the primary
identification of each letter takes place.'' \41\ Generally, a font
with an x-height ratio of around .66 is easier to read.\42\
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\40\ The ``x-height'' is the height of the lower-case ``x'' in
relation to full height letters, such as a capital G. X-height is
critical to type legibility.
\41\ Erik Spiekermann & E.M. Ginger, Stop Stealing Sheep & Find
Out How Type Works, 93 (1993).
\42\ See, e.g., Hewlett-Packard Corporation, Panose
Classification Metrics Guide (2006), available at http://www.monotypeimaging.com/productsservices/pan2.aspx
.
---------------------------------------------------------------------------
The Agencies are not mandating a particular type style or x-height
in order for a financial institution to obtain a safe harbor.
Nevertheless, based on the research, the Agencies are providing these
general guidelines for type style in the model form: For typefaces with
a smaller x-height, 11- or 12-point font should be used; for typefaces
with a larger x-height, a 10-point font would be sufficient.\43\ Fonts
that satisfy the type style and x-height guidelines for the proposed
model form include sans serif fonts such as Tahoma, Century Gothic,
Myriad, Avant Garde, Bk Avenir Book, ITS Franklin Gothic, Arial, and
Gill Sans, and serif fonts such as the Chaparral Pro Family, Minion
Pro, Garamond, Monotype Bodoni, and Monotype Century.\44\
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\43\ See Schriver, supra note at 264; see also pp. 258-59.
\44\ A number of these font styles, including Arial, Tahoma,
Century Gothic, Garamond, and Bodoni, are preloaded on commonly used
operating systems with most new personal computers. The other font
styles are commercially available as well.
---------------------------------------------------------------------------
For ease of reference, the following table summarizes the
recommendations discussed here for institutions that choose to use the
model form and obtain the safe harbor.
----------------------------------------------------------------------------------------------------------------
If Then use And use And use font with
----------------------------------------------------------------------------------------------------------------
Font is 10-point................. 1-3 points leading............... Monoweight Large x-height sans
typeface. serif (around .66
ratio).
Font is 11-point................. 1-3 points leading............... Monoweight Smaller x-height is
typeface. acceptable; either
serif or sans serif
(less than .66 ratio
is acceptable).
Font is 12-point................. 2-4 points leading............... Monoweight or Smaller x-height is
variable typeface. acceptable; either
serif or sans serif
(less than .66 ratio
is acceptable).
----------------------------------------------------------------------------------------------------------------
G. Printing, Logos, and Color
The Agencies recognize that financial institutions have a strong
interest in ensuring that documents they provide to the public have a
distinctive look that may be readily recognized by consumers. Thus, a
financial institution that uses the proposed model form may include its
corporate logo on any of the pages, so long as the logo design does not
interfere with the readability of the model form or space constraints
of each page.
The model form used in the consumer testing was printed on 8.5 by
11 inch non-glossy paper, using varying shades of black ink to achieve
the black and gray tones in the published prototype. The Agencies
propose printing each page of the model form on one side of an 8.5 by
11 inch piece of paper so that each page of the model form can be
viewed simultaneously. The Agencies seek comment on other formats that
may achieve the readability and ease of use preferred by consumers.
The Agencies propose that institutions using the model form use
white or light color paper (such as cream) with black or suitable
contrasting color ink. Spot color is permitted to achieve visual
interest to the model form, so long as the color contrast is
distinctive and the color does not detract from the form's readability.
The Agencies seek comment on whether, how, and to what extent
institutions that elect to use the model form will use logos and/or
color.
[[Page 14955]]
III. The Sample Clauses
The proposed model form is a standardized notice that would replace
the Sample Clauses currently found in Appendix A of the privacy rule.
It could be used by a financial institution at its option to comply
with requirements for a clear and conspicuous privacy notice that meets
the content requirements in sections --.6 and --.7 of the privacy
rule.\45\ Research to date indicates that the language in the Sample
Clauses is confusing, and accordingly, the Agencies propose to
eliminate the Sample Clauses from the privacy rule.
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\45\ The Agencies are also proposing conforming amendments to
sections --.2, --.6, and --.7 of the privacy rule and to the
Appendix.
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However, to ease the compliance burden for those institutions that
currently have privacy notices based on the Sample Clauses, the
Agencies are proposing a transition period of one year after which
financial institutions would no longer obtain a safe harbor by using
the sample clauses. Privacy notices using the Sample Clauses that are
delivered to consumers (either in paper form or by electronic delivery
such as email) or, alternatively, are posted electronically to meet the
annual notice requirement of section --.9(c), would have a safe harbor
for one year. Privacy notices using the Sample Clauses that are
delivered or posted electronically after the one-year transition period
would no longer obtain the safe harbor. Since institutions are required
to send notices annually to their customers, annual notices that are
delivered to consumers (either in paper form or by electronic delivery
such as email) within the transition period would continue to get the
safe harbor until the next annual privacy notice is due one year
later.\46\ The Sample Clauses would be rescinded one year after the
transition period ends.
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\46\ For example, if an institution provides a notice using the
Sample Clauses on day 361 after the effective date of the rule, it
would continue to have the safe harbor for one year until its next
annual notice is due. If an institution provides a notice using the
Sample Clauses on day 369 after the effective date of the rule, it
would not obtain the safe harbor. Privacy notices using the Sample
Clauses posted on an institution's Web site to meet the annual
notice requirements of section --.9(c) would no longer get the safe
harbor beginning one year after the final rule becomes effective.
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The Agencies note that the SEC's privacy rule does not provide a
safe harbor for financial institutions that use the Sample Clauses.
Rather, the Sample Clauses provide guidance concerning the SEC privacy
rule's application in ordinary circumstances.\47\ Consistent with this
proposal, the SEC proposes that one year after the end of the
transition period, the Sample Clauses would be rescinded and no longer
provide guidance regarding the rule's application to financial
institutions subject to the SEC's privacy rule.
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\47\ See SEC privacy rule, section 248.2(a). The facts and
circumstances of each individual situation determine whether use of
the Sample Clauses constitutes compliance with the SEC's privacy
rule.
---------------------------------------------------------------------------
IV. Proposed Effective Dates
The provisions of the final rule will be effective [DATE OF
PUBLICATION OF THE FINAL RULE], with the following exceptions:
Sec. --.6, paragraph (g) will be effective [DATE OF PUBLICATION OF
THE FINAL RULE] until [DATE 2 YEARS AFTER PUBLICATION OF THE FINAL
RULE].
Newly redesignated Appendix B will be effective [DATE OF
PUBLICATION OF THE FINAL RULE] until [DATE 2 YEARS AFTER PUBLICATION OF
THE FINAL RULE].
V. Request for Comments
The Agencies seek comment on all aspects of the proposed model
form. The Agencies also invite commenters to submit any additional
consumer research that may inform the statutory requirements.
Commenters proposing alternative model notices or elements of a notice
should submit any available supporting consumer research and
documentation demonstrating that these alternatives meet the statutory
requirements. The Agencies expect to do additional testing before
finalizing a model form. We solicit comment on particular approaches to
consumer testing for the Agencies to consider.
The Agencies particularly seek comment on the following issues:
A. Content of the Model Form
1. Whether a commenter believes particular aspects of the form are
not clear and conspicuous or comprehensible; and, if so, identify those
aspects and explain in detail the basis for that conclusion.
2. Whether financial institutions can accurately disclose their
information sharing practices by using the standardized provisions and
vocabulary in the proposed model form, including whether the proposed
disclosure table provides a financial institution with sufficient
flexibility to disclose its sharing practices, or any additional opt-
outs it offers, including a detailed explanation of why or why not.
3. The extent to which modifications to the opt-out form are
necessary for a financial institution to describe its information
practices accurately, facilitate consumer use of the opt-out form, or
offer additional opt-outs, including an explanation of the
modifications that could be made to page one and/or page three in
accordance with legal requirements and the intent to keep the table on
the first page of the form.
4. The extent to which financial institutions intend to incorporate
the FCRA section 624 disclosure and opt-out for affiliate marketing in
the model form, with an explanation of why or why not, and the time
period they may offer to consumers for the opt-out period.
5. Whether financial institutions should be required to alert
consumers to changes in an institution's privacy practices as part of
the model form.
B. Format of the Model Form
1. Whether each page of the proposed model form should be required
to be on a separate piece of paper or whether another format could also
allow consumers to readily see all the information in the model form at
the same time.
2. Whether the guidance on easily readable type font in the
instructions is helpful and/or sufficient for institutions that use the
proposed model form.
3. What size paper would be appropriate for the model form while
conforming to the guidance for easily readable type font and layout.
4. Whether financial institutions want to use color and/or logos on
the proposed model form, and the manner and extent to which they would
use them without conflicting with readability of the form and space
requirements.
C. Additional Information
1. The extent to which financial institutions subject to the GLB
Act are likely to use the proposed model form, including a detailed
explanation of why the commenter does or does not expect financial
institutions to use the form.
2. Particular approaches to additional consumer testing of the
model form that the Agencies should consider.
3. The proposal to replace the Sample Clauses with the proposed
model form, including--(1) the transition period after which use of
these clauses no longer qualifies for a safe harbor, or, for
institutions subject to the SEC's privacy rule, guidance concerning the
rule's application and (2) whether the Agencies should retain Sample
Clauses A-1, A-3, and A-7, or develop model clauses to replace those
sample clauses, for use as a safe harbor only by those institutions
that provide the simplified notice described in section --.6(c)(5)
(NCUA 716.6(e)(5)) of the privacy rule.
4. Whether the Agencies should develop a Web-based design for those
[[Page 14956]]
financial institutions that would like to use an electronic version of
the proposed model form, and if so, whether institutions have
suggestions for particular design and/or technical considerations.
5. Whether the Agencies should develop and make available on their
Web sites a readily accessible and downloadable model form with
``fillable'' fields for institutions that wish to use the model form to
create their own privacy notices; if so, whether institutions would use
this downloadable model form; and whether it would be useful,
particularly for smaller institutions that want to obtain the safe
harbor.
6. Whether an SEC-regulated entity and an affiliated institution
regulated by another Agency that intend to provide a joint privacy
notice should be able to choose to rely on either the SEC model privacy
form or the model privacy form proposed by the other Agency.\48\
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\48\ As noted above, see supra notes 26, 33, the SEC model
privacy form provides slightly modified terms on pages one and two
of the model form, which include the range of information typically
collected by brokers, dealers, investment advisers registered with
the SEC, and investment companies.
---------------------------------------------------------------------------
7. The Agencies are aware that many institutions, but not all,
currently request the customer to provide his or her account number or
Social Security number (or other personal information, separately or in
conjunction with such information) in order to opt out, whether by
toll-free telephone, by electronic means such as e-mail, or by regular
mail. Do institutions need that information in order to process opt-out
requests, or would the customer's name and address alone, or the
customer's name, address, and a truncated account number for a single
account, be sufficient to process opt-out requests, including for
customers with multiple accounts at the same institution? Should the
Agencies consider omitting a line for such information on the opt-out
page for the model privacy form in order to better protect customers
and make it easier to opt out? Alternatively, should the opt-out page
on the model form contain a line for a truncated account number or
other identifying information?
The SEC specifically requests the following additional comment from
its regulated entities:
1. Whether the standardized provisions and vocabulary in the
proposed model form for SEC-regulated financial institutions are
sufficient to allow these financial institutions accurately to disclose
their information sharing practices, and specifically on the terms used
in: (a) the description of the types of personal information that may
be collected (in the key frame on page one), and (b) the examples of
sources of information collection (in the FAQ on sharing practices on
page two). The SEC requests that commenters who believe the proposed
terms are not sufficient suggest alternative or additional terms that
would be more accurate and explain why those terms would more
accurately reflect typical information collection and sharing practices
for brokers, dealers, investment advisers registered with the SEC, and
investment companies.
2. Whether institutions should be able to omit certain terms that
may not apply to their information collection practices or their
sources of information.
VI. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612,
requires an agency to provide an Initial Regulatory Flexibility
Analysis (``IRFA'') with a proposed rule and a Final Regulatory
Flexibility Analysis (``FRFA'') with the final rule, if any, unless the
agency certifies that the rule would not have a significant economic
impact on a substantial number of small entities. See 5 U.S.C. 603-605.
Because the use of the model form issued in this proposal is optional,
the Agencies do not expect that the rule will have a significant
economic impact on a substantial number of small entities. However,
because the statute creates a new safe harbor for institutions by
replacing the Sample Clauses in the current rule, with a model form, we
have determined that it is appropriate to publish the following IRFA in
order to inquire into the impact of the proposed rule on small
entities.
A. Reasons for the Proposed Action
The Agencies are issuing this proposed rule for comment because the
Regulatory Relief Act specifically requires them, no later than April
11, 2007, to publish for comment a model form that financial
institutions may use as a safe harbor to satisfy their notice
requirements under the Agencies' existing privacy rule.
B. Objectives of, and Legal Basis for, the Proposed Action
The goal of the proposed amendments is to satisfy the requirements
of section 728 of the Regulatory Relief Act, which requires that the
Agencies propose a model form that is comprehensible, clear and
conspicuous, and succinct. The final model form that the Agencies adopt
after reviewing comments would, if properly used, serve as a safe
harbor for satisfying the privacy rule's requirements regarding content
of privacy notices. The Act also requires that the proposed model form
enable consumers easily to identify a financial institution's sharing
practices and compare it with others.
As indicated in Section I of this release, the amendments to
Appendix A of the Agencies' privacy rule are proposed pursuant to the
authority set forth in Sec. 503 (as amended by section 728 of the
Regulatory Relief Act) and Sec. 504 of the GLB Act.\49\
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\49\ The SEC also is proposing the amendments under section 504
of the GLB Act [15 U.S.C. 6804], section 23 of the Securities
Exchange Act of 1934 [15 U.S.C. 78w], section 38(a) of the
Investment Company Act of 1940 [15 U.S.C. 80a-37(a)], and section
211 of the Investment Advisers Act of 1940 [15 U.S.C. 80b-11].
The CFTC also is proposing the amendments under Section 504 of
the GLB Act [15 U.S.C. 6804], and Sections 5g and 8a(5) of the
Commodity Exchange Act [7 U.S.C. 7b-2, 12a(5)].
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C. Small Entities Subject to the Proposed Rule Amendments
The proposed amendments to Appendix A and conforming amendments to
sections --.2, --.6, and --.7 of the Agencies' privacy rules could
potentially affect financial institutions, including financial
institutions that are small businesses or small organizations, that
choose to rely on the proposed model privacy form as a safe harbor.
1. OCC. The OCC estimates that 1,050 insured national banks,
uninsured national banks and trust companies, and foreign branches and
agencies are small entities for purpose of the Regulatory Flexibility
Act.
2. Board. The Board estimates that 473 state member banks are small
entities for purposes of the Regulatory Flexibility Act.
3. FDIC. The FDIC estimates that 3,302 state nonmember banks are
small entities for purposes of the Regulatory Flexibility Act.
4. OTS. The OTS estimates that 429 small savings associations are
small entities for purposes of the Regulatory Flexibility Act.
5. NCUA. The Regulatory Flexibility Act requires NCUA to prepare an
analysis to describe any significant economic impact a regulation may
have on a substantial number of small credit unions (primarily those
under $10 million in assets). The NCUA estimates that 3,805 credit
unions are small entities for purposes of the Regulatory Flexibility
Act.
6. FTC. Determining a precise estimate of the number of small
entities that are financial institutions within the meaning of the
proposed rule is not readily feasible. The GLB Act does not identify
for purposes of the Commission's jurisdiction any specific
[[Page 14957]]
category of financial institution. In the absence of such information,
there is no way to estimate precisely the number of affected entities
that share nonpublic personal information with nonaffiliated third
parties or that establish customer relationships with consumers and
therefore assume greater disclosure obligations.
7. CFTC. The CFTC is unable to determine a precise estimate of its
registrants that are small entities, or that would be using the model
form.
8. SEC. The SEC estimates that 911 broker-dealers, 210 investment
companies registered with the Commission, and 710 investment advisers
registered with the Commission are small entities for purposes of the
Regulatory Flexibility Act.\50\
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\50\ For purposes of the Regulatory Flexibility Act, under the
Securities Exchange Act of 1934 a small entity is a broker or dealer
that (i) had total capital of less than $500,000 on the date in its
prior fiscal year as of which its audited financial statements were
prepared or, if not required to file audited financial statements,
on the last business day of its prior fiscal year, and (ii) is not
affiliated with any person that is not a small entity and is not
affiliated with any person that is not a small entity. 17 CFR 240.0-
1. Under the Investment Company Act of 1940, a ``small entity'' is
an investment company that, together with other investment companies
in the same group of related investment companies, has net assets of
$50 million or less as of the end of its most recent fiscal year. 17
CFR 270.0-10. Under the Investment Advisers Act of 1940, a small
entity is an investment adviser that ``(i) manages less than $25
million in assets, (ii) has total assets of less than $5 million on
the last day of its most recent fiscal year, and (iii) does not
control, is not controlled by, and is not under common control with
another investment adviser that manages $25 million or more in
assets, or any person that had total assets of $5 million or more on
the last day of the most recent fiscal year.'' 17 CFR 275.0-7.
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Because use of the model privacy form would be entirely voluntary,
the Agencies have no way to estimate how many small financial
institutions would use it.\51\ The Agencies expect, however, that small
financial institutions, particularly those that do not have permanent
staff available to address compliance matters associated with the
privacy rule, would be relatively more likely to rely on the model
privacy form than larger institutions. We believe that most financial
institutions currently have legal counsel review their privacy notices
for compliance with the GLB Act, the FCRA, and the privacy rule. We
believe that a financial institution that uses the model form for its
privacy notice would need little, if any, review by legal counsel
because the proposed regulation does not permit institutions to vary
the form to obtain the benefit of a safe harbor, except as necessary to
identify their sharing and opt-out policies.
---------------------------------------------------------------------------
\51\ The Agencies have requested comment on the likelihood that
financial institutions would use the model privacy form. See supra
section V.
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D. Reporting, Recordkeeping, and Other Compliance Requirements
The proposed rule does not itself impose any additional
recordkeeping, reporting, disclosure, or compliance requirements.
Financial institutions, including small entities, have been required to
provide notice to consumers about the institution's privacy policies
and practices since July 1, 2001 (or March 31, 2002 in the case of the
CFTC). The proposed amendments would not affect these requirements and
financial institutions would be under no obligation to modify their
current privacy notices as a result of the proposed amendments.
Instead, the amendments propose a specific model privacy form that a
financial institution may use to comply with notice requirements under
the GLB Act, the FCRA (as amended by the FACT Act), and the privacy
rule. Nonetheless, if the proposed amendments are adopted, some of the
financial institutions that rely on the Sample Clauses in the current
privacy rules' appendixes may wish to transition to the proposed model
form and may incur some small, incremental costs in making this
transition.\52\ The Agencies expect, however, that the availability of
a standardized model form would offset these costs because the form's
standardized formatting and language would make it easier for
institutions to prepare and revise their privacy policies.
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\52\ We believe that institutions review their privacy policies
annually, and the costs associated with this annual review,
including professional costs, for compliance are likely to be the
same as the costs to complete the proposed model form.
---------------------------------------------------------------------------
E. Duplicative, Overlapping, or Conflicting Federal Rules
We believe there are no federal rules that duplicate, overlap, or
conflict with the proposed amendments. In fact, the Agencies have
designed the model form so that a financial institution may use it to
satisfy disclosure requirements for both the GLB Act and the FCRA (as
amended by the FACT Act).
F. Significant Alternatives
The RFA directs the Agencies to consider significant alternatives
that would accomplish the stated objectives, while minimizing any
significant adverse impact on small entities. In connection with the
proposed amendments, we considered the following alternatives:
1. Different reporting or compliance standards. As noted above, the
Regulatory Relief Act requires the Agencies to publish ``a'' model form
that, among other things, will facilitate comparison of the information
sharing practices of different financial institutions. In light of
these statutory requirements, the Agencies are proposing only one model
form, which includes alternative language in some places that allows a
financial institution to accurately describe its particular information
sharing practices. The specific model form that the Agencies are
proposing was developed as part of a careful and thorough consumer
testing process designed to produce a clear, comprehensible, and
comparable notice. The proposed model form emerged as the most
effective of several notice formats considered as part of this testing.
Although the Agencies know of no other model privacy notice that has
been developed in this manner, we are specifically inviting comments
about alternative model notices or elements of notices, along with
supporting research and documentation. The Agencies will carefully
consider any such submissions before adopting a final model form.
2. Clarification, consolidation, or simplification of reporting and
compliance requirements. The Agencies believe that the proposed model
form would simplify the reporting requirements for all entities,
including small entities, that choose to use the model form. We
anticipate that financial institutions that choose to use the proposed
model form would spend less time preparing notices than if they had to
draft one on their own. Because the model form was developed as part of
a consumer testing process, it is difficult for the Agencies to further
clarify, consolidate, or simplify the model notice without compromising
the research findings.
3. Performance rather than design standards. Section 728 of the
Regulatory Relief Act specifically requires that the Agencies propose a
model form. The model form is an alternative means of providing a
privacy notice that institutions may choose to use. The privacy rule
does not mandate the format of privacy notices; thus neither the rule
nor the proposed amendment would impose a design standard.
4. Exempting small entities. We believe that an exemption for small
entities would not be appropriate or desirable. The Agencies note that
the model form is available for use at the discretion of all financial
institutions, including small institutions. Moreover, two key
objectives of the proposed model form are that (1) consumers can
understand an institution's information sharing practices and (2) they
may more
[[Page 14958]]
easily compare financial institutions' sharing practices and policies
across privacy notices. An exemption for small entities would directly
conflict with both of these key objectives, particularly enabling
comparison across notices.
G. Solicitation of Comments
We encourage the submission of comments with respect to any aspect
of this IRFA. In particular, we request comments regarding: (i) The
number of small entities that would be affected by the proposed
amendments; (ii) the existence or nature of the potential impact of the
proposed amendments on small entities discussed in the analysis; (iii)
how to quantify the impact of the proposed amendments; and (iv) the
consideration of alternatives. Commenters are asked to describe the
nature of any impact and provide empirical data supporting the extent
of the impact. As noted above in Section V, the Agencies specifically
request comment on whether a downloadable version of the proposed model
form would be useful for financial institutions, and particularly small
entities that would like to take advantage of the safe harbor. All
comments on this IRFA will be considered in the preparation of the
Final Regulatory Flexibility Analysis, if the proposed amendments are
adopted.
VII. Paperwork Reduction Act
The final rules governing the privacy of consumer financial
information contain disclosures that are considered collections of
information under the Paperwork Reduction Act (PRA, 44 U.S.C. 3501 et
seq.). Before the Agencies issued their privacy rules, they obtained
approval from OMB for the collections. OMB control numbers for the
collections appear below. These proposed rules do not introduce any new
collections of information into the Agencies' privacy rules, nor do
they amend the rules in a way that substantively modifies the
collections of information that OMB has approved. Therefore, no PRA
submissions to OMB are required.
OCC: Control number 1557-0216.
Board: Control number 7100-0294.
FDIC: Control number 3064-0136.
OTS: Control number 1550-0103.
NCUA: Control number 3133-0163 (NCUA in separate submissions to OMB
is currently in the process of requesting reinstatement, with revisions
due to the decrease in the number of respondent credit unions, to this
number.)
FTC: Control number 3084-0121.
SEC: Control number 3235-0537.
CFTC: Control number 3038-0055.
OCC and OTS Executive Order 12866 Determination
The OCC and OTS each has determined that its portion of the
proposed rulemaking is not a significant regulatory action under
Executive Order 12866.
OCC and OTS Executive Order 13132 Determination
The OCC and OTS each has determined that its portion of the
proposed rulemaking does not have any federalism implications, as
required by Executive Order 13132.
NCUA Executive Order 13132 Determination
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on State and local interests. In
adherence to fundamental federalism principles, the NCUA, an
independent regulatory agency as defined in 44 U.S.C. 3502(5)
voluntarily complies with the Executive Order. The proposed rule would
not have substantial direct effects on the States, on the connection
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government.
The NCUA has determined that this proposed rule does not constitute a
policy that has federalism implications for purposes of the Executive
Order.
OCC and OTS Unfunded Mandates Reform Act of 1995 Determination
Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law
104-4 (Unfunded Mandates Act) requires that an agency prepare a
budgetary impact statement before promulgating a rule that includes a
Federal mandate that may result in expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year. If a budgetary impact statement is
required, section 205 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. However, the Unfunded Mandates
Act provisions do not apply to regulations that incorporate
requirements specifically set forth in law. Because this notice of
proposed rulemaking is issued pursuant to section 728 of the Regulatory
Relief Act, the OTS and OCC are not required to conduct an Unfunded
Mandates Analysis for this rulemaking. Nevertheless, the OCC and OTS
each has determined that this proposed rule will not result in
expenditures by State, local, and tribal governments, or by the private
sector, of $100 million or more. Accordingly, neither the OCC nor the
OTS has prepared a budgetary impact statement or specifically addressed
the regulatory alternatives considered.
SEC Cost Benefit Analysis
The SEC is sensitive to the costs and benefits imposed by its
rules. As discussed above, the amendments the Agencies are proposing
today would replace the sample clauses included in Regulation S-P's
Appendix A (17 CFR part 248, appendix A) with a model privacy form that
financial institutions could choose to provide to consumers. The
proposed amendments are designed to implement section 728 of the
Regulatory Relief Act. This Act directs the Agencies to ``jointly
develop a model form which may be used, at the option of the financial
institution, for the provision of disclosures under [section 503 of the
GLB Act].'' Use of the model form would be voluntary so a financial
institution could itself determine the benefits and costs in deciding
whether using the model form would be suitable for its business and
customers. Moreover, a financial institution that elected to use the
model privacy form would benefit from the safe harbor it provides for
disclosures required under the GLB Act. There would be no incremental
costs of the information requirements for the proposed model privacy
form because the disclosures are already required under Regulation S-P.
However, financial institutions could incur some personnel costs in
implementing the proposed model form. We expect these would be minimal
because the language and format in the form are standardized and
particularly if the form could be downloaded from a Web site.\53\
Financial institutions can only customize very limited sections of the
model privacy form. Insofar as the Sample Clauses in current Regulation
S-P may have some value to some financial institutions, their phase-out
under the proposed amendments to the rule could create some costs to
those institutions. If financial institutions, including SEC-regulated
institutions, make widespread use of the model privacy form, we
anticipate that consumers will benefit from notices that are more
comprehensible and easier to compare and use.
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\53\ We have asked for comment in section V on whether a
downloadable version of the model form would be useful.
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[[Page 14959]]
A. Benefits
We anticipate that brokers, dealers, investment advisers registered
with the SEC, and investment companies would benefit from the proposed
model privacy form's standardized formatting and language. The notice
requirements of Regulation S-P have been effective since July 1, 2001,
and would not be altered by the proposed amendments, but new brokers,
dealers, investment companies, and registered investment advisers would
be able to use the model privacy form without investing the time and
resources previously necessary to develop their own notices. We believe
that institutions currently review their Regulation S-P privacy
policies annually. To the extent that these institutions are required
to change their policies to reflect changes in their privacy practices,
they may find it easier to use the proposed model privacy form as a
revised or annual privacy notice rather than to revise their existing
notices. In addition, the SEC expects that revisions to an
institution's privacy policies would be easier to record in the model
form's standardized format. The SEC also anticipates that a financial
institution that chooses to use the model notice would need little, if
any, ongoing review by legal counsel because an institution cannot vary
the form except as necessary to identify certain specific sharing and
opt-out policies.
Appendix A of Regulation S-P currently contains sample clauses that
the SEC has said provide guidance in ordinary circumstances. The SEC
has said, however, that the ``facts and circumstances of each
individual situation'' will determine whether ``use of a sample
clause'' constitutes compliance.\54\ In contrast, if the proposed
amendments are adopted, SEC-regulated institutions would benefit from
the certainty that proper use of the model notice entitles them to a
safe harbor for disclosures required under the GLB Act and FCRA.
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\54\ See 17 CFR 248.2(a).
---------------------------------------------------------------------------
Finally, as discussed more fully in section I.B above, the proposed
model form was developed in an extensive consumer research testing
process that evaluated consumers' ability to comprehend, use, and
compare privacy notices. The SEC anticipates therefore that if
financial institutions choose to use the proposed model form,
consumers' comprehension and their ability to use and compare privacy
policies would be enhanced. Institutions also might benefit from
consumers' enhanced ability to understand and use the notices to the
extent that consumers have more trust and confidence in an
institution's privacy policies because the consumers understand those
policies.
B. Costs
While the proposed amendments would not affect Regulation S-P's
substantive requirements, and financial institutions would be under no
obligation to modify their current privacy notices, we believe that
financial institutions that elect to use the model privacy form could
incur some small, incremental costs in making the transition from their
current notices to the proposed model form. These costs could include
staff time to review the model form and its instructions and complete
the proposed form. As noted above, we anticipate there would be minimal
computer costs associated with using the form, particularly if the form
could be downloaded from a Web site. We also believe that a financial
institution that would use the model privacy form would need little, if
any, review by legal counsel because almost all the disclosures in the
form are mandated. Institution-specific information consists of contact
information, ``yes'' or ``no'' answers and brief descriptions, as
necessary, of the types of entities with which they share information.
Moreover, we believe that financial institutions currently review their
privacy polices annually, and we anticipate that the costs associated
with this annual review would likely be the same as the costs of
completing the model form. Although there may be some costs to firms
that currently rely on the sample clauses for guidance in preparing
their privacy notices, we expect those costs to be minimal. As noted
above, we believe that financial institutions take approximately the
same time to prepare a notice using the proposed form as they currently
take to review annual notices. Moreover, the Agencies are proposing to
give financial institutions one year in which they can continue to rely
on the Sample Clauses as guidance, which should allow time to minimize
the costs of transition for institutions that would transition to the
model privacy form. The SEC requests commenters to provide data on
these and any other costs of transition or implementation, and to
specify the type of financial institution (broker, dealer, investment
adviser registered with the Commission, or investment company) that
would incur the estimated costs.
As discussed above, we cannot estimate the number of institutions
that would take advantage of the safe harbor. Accordingly, we cannot
estimate the overall costs to broker-dealers, investment advisers
registered with the Commission, and investment companies that may use
the proposed model form.
C. Request for Comments
The SEC requests comment on the potential costs and benefits of the
proposed amendments to Appendix A of Regulation S-P. The SEC
specifically requests comment on the costs of each item discussed above
that institutions could incur in using the model form and whether any
of those costs would differ if the form were downloadable from a Web
site. Commenters should specify the type of institution associated with
estimates of cost and benefits. The SEC encourages commenters to
identify, discuss, analyze, and supply relevant data regarding any
additional costs and benefits. For purposes of the Small Business
Regulatory Enforcement Fairness Act of 1996,\55\ the SEC also requests
information regarding the potential impact of the proposals on the U.S.
economy on an annual basis.
---------------------------------------------------------------------------
\55\ Pub. L. 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------
SEC Consideration of Burden on Competition
Securities Exchange Act Section 23(a)(2) requires the SEC, in
adopting rules under that Act, to consider the impact that any such
rule would have on competition.\56\ Section 23(a)(2) also prohibits the
SEC from adopting any rule that would impose a burden on competition
not necessary or appropriate in furtherance of the purposes of the
Securities Exchange Act.
---------------------------------------------------------------------------
\56\ See 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------
As discussed above, the proposed amendments to Regulation S-P,
including the proposed model form, are designed to comply with section
728 of the Regulatory Relief Act, mandating that the Agencies propose a
model form that is comprehensible, clear and conspicuous, and succinct.
If adopted, SEC-regulated institutions would be able to use the model
form in order to comply with the notice requirements under the GLB Act,
the FCRA, and Regulation S-P.
The SEC does not expect the proposed amendments to have a
significant impact on competition, and believes that any effect on
competition would be favorable. Use of the proposed model form would be
voluntary, permitting a financial institution to determine whether
using the model form would enhance its competitive position. All
brokers and dealers, investment companies, and registered investment
advisers would be able to use the model form and take advantage of the
safe
[[Page 14960]]
harbor. Other financial institutions would be able to use the form and
take advantage of the safe harbor under comparable rules proposed by
the other Agencies. Under the Regulatory Relief Act, the Agencies have
worked in consultation in order to ensure the consistency and
comparability of the proposed amendments. Therefore, all financial
institutions would have the same opportunity to use the model form and
rely on the safe harbor.
Further, if financial institutions choose to use the proposed model
form, the proposed amendments could promote competition by enabling
consumers more easily to understand and compare competing institutions'
privacy policies. The SEC also anticipates that the proposed model
form's standardized formatting would reduce the relative burden of
compliance on smaller financial institutions, allowing them to compete
more effectively with larger institutions that are more likely to have
a dedicated compliance staff. As such, the SEC expects any small impact
on competition caused by the proposed amendments would be beneficial.
We request comment on whether the proposal, if adopted, would have an
impact or burden on competition. Commenters are requested to provide
empirical data and other factual support for their views if possible.
NCUA: The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this proposed rule would not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat.
2681 (1998).
CFTC Cost-Benefit Analysis
Section 15 of the Commodity Exchange Act requires the CFTC to
consider the costs and benefits of its action before issuing a new
regulation under the Act. The CFTC understands that, by its terms,
section 15 does not require the CFTC to quantify the costs and benefits
of a new regulation or to determine whether the benefits of the
proposed regulation outweigh its costs. Nor does it require that each
proposed rule be analyzed piecemeal or in isolation when that rule is a
component of a larger package of rules or rule revisions. Rather,
section 15 simply requires the CFTC to ``consider the costs and
benefits'' of its action.
Section 15 further specifies that costs and benefits shall be
evaluated in light of five broad areas of market and public concern:
Protection of market participants and the public; efficiency,
competitiveness, and financial integrity of futures markets; price
discovery; sound risk management practices; and other public interest
considerations. Accordingly, the CFTC could in its discretion give
greater weight to any one of the five enumerated areas of concern and
could in its discretion determine that, notwithstanding its costs, a
particular rule was necessary or appropriate to protect the public
interest or to effectuate any of the provisions or to accomplish any of
the purposes of the Act.
The CFTC has considered the costs and benefits of the proposed
model form as a totality. The form provides a voluntary alternative
means of complying with existing requirements of the privacy provisions
of the GLB Act and section 5g of the CEA, and thus imposes no mandatory
new costs. The CFTC solicits comment on the transitional costs that may
be incurred by institutions electing to use the model form, including
costs in addition to those already imposed. The CFTC believes that the
model form should benefit futures industry consumer customers in better
understanding a financial institution's privacy policies, and may
facilitate customers in comparing the privacy policies of financial
institutions. The Commission invites public comment on its application
of the cost-benefit provision. Commenters also are invited to submit
any data that they may have quantifying the costs and benefits of the
proposed rules with their comment letters.
List of Subjects
12 CFR Part 40
Banks, banking, Consumer protection, National banks, Privacy,
Reporting and recordkeeping requirements.
12 CFR Part 216
Banks, banking, Consumer protection, Foreign banking, Holding
companies, Privacy, Reporting and recordkeeping requirements.
12 CFR Part 332
Banks, banking, Consumer protection, Foreign banking, Privacy,
Reporting and recordkeeping requirements.
12 CFR Part 573
Consumer protection, Privacy, Reporting and recordkeeping
requirements, Savings associations.
12 CFR Part 716
Consumer protection, Credit unions, Privacy, Reporting and
recordkeeping requirements.
16 CFR Part 313
Consumer protection, Credit, Privacy, Reporting and recordkeeping
requirements, Trade practices.
17 CFR Part 160
Brokers, Consumer protection, Privacy, Reporting and recordkeeping
requirements.
17 CFR Part 248
Brokers, Consumer protection, Investment companies, Privacy,
Reporting and recordkeeping requirements, Securities.
Office of the Comptroller of the Currency
12 CFR Chapter I
Authority and Issuance
For the reasons set forth in the joint preamble, part 40 of chapter
I of title 12 of the Code of Federal Regulations is proposed to be
revised as follows:
PART 40--PRIVACY OF CONSUMER FINANCIAL INFORMATION
1. The authority citation for part 40 continues to read as follows:
Authority: 12 U.S.C. 93a; 15 U.S.C. 6801 et seq.
2. Revise Sec. 40.2 to read as follows:
Sec. 40.2 Model privacy form and examples.
(a) Model privacy form. Use of the model privacy form in Appendix A
of this part, consistent with the instructions in Appendix A,
constitutes compliance with the notice content requirements of
Sec. Sec. 40.6 and 40.7 of this part, although use of the model
privacy form is not required.
(b) Examples. The examples in this part are not exclusive.
Compliance with an example, to the extent applicable, constitutes
compliance with this part.
3. In Sec. 40.6, revise paragraph (f) and add paragraph (g) to
read as follows:
Sec. 40.6 Information to be included in privacy notices.
* * * * *
(f) Model privacy form. Pursuant to Sec. 40.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
(g) Sample clauses. Sample clauses illustrating some of the notice
content required by this section are included in Appendix B of this
part. Use of a sample clause in a privacy notice provided on or before
[DATE ONE YEAR FOLLOWING THE DATE OF PUBLICATION OF THE FINAL RULE], to
the extent applicable, constitutes compliance with this part.
[[Page 14961]]
4. In Sec. 40.7, add paragraph (i) to read as follows:
Sec. 40.7 Form of opt-out notice to consumers; opt-out methods.
* * * * *
(i) Model privacy form. Pursuant to Sec. 40.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
Appendix A [Redesignated as Appendix B]
5. Redesignate Appendix A as Appendix B.
6. Add new Appendix A to read as follows:
Appendix A to Part 40--Model Privacy Form
A. The Model Privacy Form
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[GRAPHIC] [TIFF OMITTED] TP29MR07.008
B. General Instructions
1. How the Model Privacy Form Is Used
The model form may be used, at the option of a financial
institution, including a group of financial holding company
affiliates that use a common privacy notice, to meet the content
requirements of the privacy notice and opt-out notice set forth in
sections 40.6 and 40.7 of this part.
(Note that disclosure of certain information, such as assets,
income, and information from a consumer reporting agency, may give
rise to obligations under the Fair Credit Reporting Act [15 U.S.C.
1681-1681x] (FCRA), such as a requirement to permit a consumer to
opt out of disclosures to affiliates or designation as a consumer
reporting agency if disclosures are made to nonaffiliated third
parties.)
2. The Contents of the Model Privacy Form
The model form consists of two or three pages, depending on
whether a financial institution shares in a manner that requires it
to provide a third page with opt-out information.
(a) Page One. The first page consists of the following
components:
(1) The title.
(2) The key frame (Why?, What?, How?).
(3) The disclosure table (``Reasons we can share your personal
information'').
(4) Contact information.
(b) Page Two. The second page consists of the following
components:
(1) The title.
(2) The Frequently Asked Questions on sharing practices.
(3) The definitions.
(c) Page Three. The third page consists of a financial
institution's opt-out form.
3. The Format of the Model Privacy Form
The model form is a standardized form, including page layout,
page content, format, style, pagination, and shading. No other
information may be included in the model form, and the model form
may be modified only as described below.
(a) Easily readable type font. Financial institutions that use
the model form must use an easily readable type font. Easily
readable type font includes a minimum of 10-point font and
sufficient spacing between the lines of type.
(b) Logo. A financial institution may include a corporate logo
on any page of the notice, so long as it does not interfere with the
readability of the model form or the space constraints of each page.
(c) Page size and orientation. Each page of the model form must
be printed on one side of an 8.5 by 11 inch paper in portrait
orientation.
(d) Color. The model form may be printed on white or light color
paper (such as cream) with black or suitable contrasting color ink.
Spot color may be used to achieve visual interest, so long as the
color contrast is distinctive and the color does not detract from
the readability of the model form.
[[Page 14964]]
C. Information Required in the Model Privacy Form
The model form is a standardized form, and institutions seeking
to obtain the safe harbor through use of the model form may modify
the form only as described below:
1. Name of the Institution or Group of Affiliated Institutions
Providing the Notice
Include the name of the financial institution or group of
affiliated institutions providing the notice on the form wherever
[name of financial institution] appears. Contact information, such
as the institution's toll-free telephone number, Web address, or
mailing address, or other contact information, should be inserted as
appropriate, wherever [toll-free telephone] or [web address] or
[mailing address] appear.
2. Page One
(a) General instructions for the disclosure table. There are
reasons for sharing or using personal information listed in the left
column of the disclosure table. Each of these reasons correlates to
certain legal provisions described below. In the middle column, each
institution must provide a ``Yes'' or ``No'' response in each box
that accurately reflects its information sharing policies and
practices with respect to the reason listed on the left. Each
institution also must complete each box in the right column as to
whether a consumer can limit such sharing. If an institution answers
``No'' to sharing for a particular reason in the middle column, it
must answer ``We don't share'' in the corresponding right column. If
an institution answers ``Yes'' to sharing for a particular reason in
the middle column, it must, in the right column, answer either
``No'' if it does not offer an opt-out or ``Yes (Check your choices,
p.3)'' if it does offer an opt-out. Except for the sixth row (``For
our affiliates to market to you''), an institution must list all
reasons for sharing, and complete the middle and right columns of
the disclosure table.
(b) Specific disclosures and corresponding legal provisions.
(1) For our everyday business purposes. Because all financial
institutions share information for everyday business purposes, as
contemplated by sections 40.14 and 40.15 of this part, the financial
institution must answer ``Yes'' to the sharing of such information
and ``No'' to the availability of an opt-out.
(2) For our marketing purposes. The financial institution must
answer ``Yes'' or ``No'' in the middle column. An institution that
does not share for this reason must answer ``We don't share'' in the
right column. An institution that shares for this reason may or may
not elect to provide an opt-out and must provide the corresponding
answer in the right column as described in paragraph C.2.(a) of this
Instruction. This provision includes service providers contemplated
by section 40.13 of this part.
(3) For joint marketing with other financial companies. As
contemplated by section 40.13 of this part, the financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that shares for
this reason may or may not elect to provide an opt-out and must
provide the corresponding answer in the right column as described in
paragraph C.2.(a) of this Instruction.
(4) For our affiliates' everyday business purposes--information
about transactions and experiences. This provision applies to
sharing of certain information with an institution's affiliates, as
contemplated by sections 603(d)(2)(A)(i) and (ii) of the FCRA. The
financial institution must answer ``Yes'' or ``No'' in the middle
column. An institution that does not share for this reason must
answer ``We don't share'' in the right column. An institution that
does not have any affiliates will also use this answer. Institutions
that share for this reason may or may not elect to provide an opt-
out and must provide the corresponding answer in the right column as
described in paragraph C.2.(a) of this Instruction.
(5) For our affiliates' everyday business purposes--information
about creditworthiness. This provision applies to the sharing of
certain information with an institution's affiliates, as
contemplated by section 603(d)(2)(A)(iii) of the FCRA. The financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that does not have
any affiliates will also use this answer. Institutions that share
for this reason must provide an opt-out and must provide the
appropriate answer in the right column as described in paragraph
C.2.(a) of this Instruction.
(6) For our affiliates to market to you. This provision applies
to information shared among affiliates that is used by those
affiliates for marketing, as contemplated by section 624 of the
FCRA. Following the effective date of the rules implementing section
624, institutions that elect to incorporate this provision into the
model form to satisfy their obligations under this part must include
this reason for sharing as set forth in the model form in order to
obtain the benefit of the safe harbor. Institutions whose affiliates
receive such information and use it for marketing must answer
``Yes'' in the middle column, and ``Yes (Check your choices, p.3)''
in the right column corresponding to the availability of an opt-out.
Institutions whose affiliates receive such information and do not
use it for marketing may elect to include this provision in the
model form and answer ``No'' in the middle column and ``We don't
share'' in the right column; however, institutions whose affiliates
receive such information and do not use it for marketing are not
required to use this provision. Institutions that do not have
affiliates and elect to include this provision in their notice will
answer ``No'' in the middle column and ``We don't share'' in the
right column.
(7) For nonaffiliates to market to you. This provision applies
to sharing under sections 40.7 and 40.10(a) of this part. Financial
institutions that do not share for this reason must answer ``No'' in
the middle column and ``We don't share'' in the right column.
Financial institutions that do share for this reason must answer
``Yes'' in the middle column and ``Yes (check your choices, p. 3)''
corresponding to the availability of an opt-out.
(8) Additional opt-outs. A financial institution may customize
the model form to offer opt-outs beyond those required under Federal
law, so long as the additional information falls within the space
constraints of the model form. If the institution chooses to offer
its customers an opt-out for its own marketing or for joint
marketing, for example, it can provide for that option by stating:
``Yes (Check your choices, p.3)'' as to the availability of the opt-
out.
3. Page Two
(a) General instructions for the Definitions. The financial
institution must customize the space below the last three
definitions in this section (affiliates, nonafffiliates, and joint
marketing). This specific information must be in italicized
lettering to set off the information from the standardized
definitions.
(b) Affiliates. As required by section 40.6(a)(3) of this part,
the financial institution must identify the categories of its
affiliates or state ``[name of financial institution] has no
affiliates'' in italicized lettering where [affiliate information]
appears. A financial institution that shares with affiliates must
use, as applicable, the following format: ``Our affiliates include
companies with a [name of financial institution] name; financial
companies such as [list companies]; and nonfinancial companies, such
as [list companies].''
(c) Nonaffiliates. If the financial institution shares with
nonaffiliated third parties outside the exceptions in sections 40.14
and 40.15 of this part, the institution must identify the types of
nonaffiliated third parties with which it shares or state ``[name of
financial institution] does not share with nonaffiliates so they can
market to you.'' in italicized lettering where [nonaffiliate
information] appears. A financial institution that shares with
nonaffiliated third parties as described here must use, as
applicable, the following format: ``Nonaffiliates we share with can
include [list categories of companies such as mortgage companies,
insurance companies, direct marketing companies, and nonprofit
organizations].''
(d) Joint Marketing. As required by section 40.13 of this part,
the financial institution must identify the types of financial
institutions with which it engages in joint marketing or state
``[name of financial institution] doesn't jointly market.'' in
italicized lettering where [joint marketing] appears. A financial
institution that shares with joint marketing partners must use, as
applicable, the following format: ``Our joint marketing partners
include [list categories of companies such as credit card
companies].''
4. Page Three
Opt-out form. Financial institutions must use page three only if
they: (1) share or use information in a manner that triggers an opt-
out; or (2) choose to provide an opt-out (as disclosed in the table
on page 1) in addition to what is required by law. The model opt-out
form must be provided on a separate page of the model form.
[[Page 14965]]
(a) Contact us. The section describes three common methods by
which a consumer exercises an opt-out--by telephone, on the Web, and
by mail. Financial institutions may customize this section to
provide for the particular opt-out methods and options the
institution provides. For example, if an institution offers opting
out by telephone and the Web but not by mail, it would provide only
telephone and Web information as shown in the model form in the
``Contact Us'' box. Only institutions that allow more than 30 days
after providing the notice before sharing information may change the
number of days in the lower right hand section of the box.
(b) Check your choices. Institutions must display the applicable
opt-out options in the ``Check your choices'' box shown on this
page. If an institution chooses not to offer an opt-out by mail, it
must delete the boxes for name, address, account number, and mailing
directions in the lower right-hand corner of the model form.
Financial institutions that only offer one or two of the opt-out
options listed on the model form must list only those options from
the model form that apply to their practices and correspond
accurately to the disclosures on page one. Thus, if an institution
does not share in a manner that requires an opt-out for sharing with
nonaffiliates, it must not include that opt-out option on page three
of the model form. Institutions requiring information from consumers
on the opt-out form other than an account number should modify that
designation in the ``Check your choices'' box. Institutions that
require customers with multiple accounts to identify each account to
which the opt-out should apply should modify that portion of the
model form.
(c) Section 624 opt-out. If the financial institution's
affiliates use information for marketing pursuant to section 624 of
the FCRA, and the institution elects to consolidate that opt-out
notice in the model form, it must include that disclosure and opt-
out election as shown in the model form. Institutions that elect to
limit the time for the affiliate marketing opt-out, consistent with
the requirements of section 624, must adhere to the requirements of
that section and the Agencies' implementing rule with respect to any
subsequent notice and opt-out. Institutions that elect to limit the
opt-out period must include a statement in italics, as shown on the
model form, that states the period of time for which the opt-out
applies.
(d) Additional opt-outs. A financial institution that uses the
disclosure table to indicate any opt-out choices available to
consumers beyond those required by Federal law must include those
opt-outs on page three of the model form. For example, if the
financial institution discloses in the table that it offers an opt-
out for joint marketing, the institution must revise the opt-out
form on page three to reflect the availability of an opt-out, such
as by adding a check-off box with the words ``Do not share my
personal information with other financial institutions to jointly
market to me.'' Likewise, if a financial institution chooses to
offer its customers an opt-out for its marketing, it can provide for
that option in the disclosure table and on the opt-out form by
adding a check-off box with the words ``Do not share [or use] my
personal information to market to me.''
7. Amend newly redesignated Appendix B by adding a new sentence
immediately after the heading:
Appendix B to Part 40--Sample Clauses
This Appendix only applies to privacy notices provided until the
date that is on or before one year following the date of final
publication of this rule. * * *
* * * * *
Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the joint preamble, the Board proposes
to amend part 216 of chapter II of title 12 of the Code of Federal
Regulations as follows:
PART 216--PRIVACY OF CONSUMER FINANCIAL INFORMATION (REGULATION P)
1. The authority citation for part 216 continues to read as
follows:
Authority: 15 U.S.C. 6801 et seq.
2. Revise Sec. 216.2 to read as follows:
Sec. 216.2 Model privacy form and examples.
(a) Model privacy form. Use of the model privacy form in Appendix A
of this part, consistent with the instructions in Appendix A,
constitutes compliance with the notice content requirements of
Sec. Sec. 216.6 and 216.7 of this part, although use of the model
privacy form is not required.
(b) Examples. The examples in this part are not exclusive.
Compliance with an example, to the extent applicable, constitutes
compliance with this part.
3. In Sec. 216.6, revise paragraph (f) and add paragraph (g) to
read as follows:
Sec. 216.6 Information to be included in privacy notices.
* * * * *
(f) Model privacy form. Pursuant to Sec. 216.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
(g) Sample clauses. Sample clauses illustrating some of the notice
content required by this section are included in Appendix B of this
part. Use of a sample clause in a privacy notice provided on or before
[DATE ONE YEAR FOLLOWING THE DATE OF PUBLICATION OF THE FINAL RULE], to
the extent applicable, constitutes compliance with this part.
4. In Sec. 216.7, add paragraph (i) to read as follows:
Sec. 216.7 Form of opt-out notice to consumers; opt-out methods.
* * * * *
(i) Model privacy form. Pursuant to Sec. 216.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
Appendix A [Redesignated as Appendix B]
5. Redesignate Appendix A as Appendix B.
6. Add new Appendix A to read as follows:
Appendix A to Part 216--Model Privacy Form
A. The Model Privacy Form
[[Page 14966]]
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[[Page 14968]]
[GRAPHIC] [TIFF OMITTED] TP29MR07.011
B. General Instructions
1. How the Model Privacy Form Is Used
The model form may be used, at the option of a financial
institution, including a group of financial holding company
affiliates that use a common privacy notice, to meet the content
requirements of the privacy notice and opt-out notice set forth in
sections 216.6 and 216.7 of this part.
(Note that disclosure of certain information, such as assets,
income, and information from a consumer reporting agency, may give
rise to obligations under the Fair Credit Reporting Act [15 U.S.C.
1681-1681x] (FCRA), such as a requirement to permit a consumer to
opt out of disclosures to affiliates or designation as a consumer
reporting agency if disclosures are made to nonaffiliated third
parties.)
2. The Contents of the Model Privacy Form
The model form consists of two or three pages, depending on
whether a financial institution shares in a manner that requires it
to provide a third page with opt-out information.
(a) Page One. The first page consists of the following
components:
(1) The title.
(2) The key frame (Why?, What?, How?).
(3) The disclosure table (``Reasons we can share your personal
information'').
(4) Contact information.
(b) Page Two. The second page consists of the following
components:
(1) The title.
(2) The Frequently Asked Questions on sharing practices.
(3) The definitions.
(c) Page Three. The third page consists of a financial
institution's opt-out form.
3. The Format of the Model Privacy Form
The model form is a standardized form, including page layout,
page content, format, style, pagination, and shading. No other
information may be included in the model form, and the model form
may be modified only as described below.
(a) Easily readable type font. Financial institutions that use
the model form must use an easily readable type font. Easily
readable type font includes a minimum of 10-point font and
sufficient spacing between the lines of type.
(b) Logo. A financial institution may include a corporate logo
on any page of the notice, so long as it does not interfere with the
readability of the model form or the space constraints of each page.
(c) Page size and orientation. Each page of the model form must
be printed on one side of an 8.5 by 11 inch paper in portrait
orientation.
(d) Color. The model form may be printed on white or light color
paper (such as cream) with black or suitable contrasting color ink.
Spot color may be used to achieve visual interest, so long as the
color contrast is distinctive and the color does not detract from
the readability of the model form.
[[Page 14969]]
C. Information Required in the Model Privacy Form
The model form is a standardized form, and institutions seeking
to obtain the safe harbor through use of the model form may modify
the form only as described below:
1. Name of the Institution or Group of Affiliated Institutions
Providing the Notice
Include the name of the financial institution or group of
affiliated institutions providing the notice on the form wherever
[name of financial institution] appears. Contact information, such
as the institution's toll-free telephone number, Web address, or
mailing address, or other contact information, should be inserted as
appropriate, wherever [toll-free telephone] or [web address] or
[mailing address] appear.
2. Page One
(a) General instructions for the disclosure table. There are
reasons for sharing or using personal information listed in the left
column of the disclosure table. Each of these reasons correlates to
certain legal provisions described below. In the middle column, each
institution must provide a ``Yes'' or ``No'' response in each box
that accurately reflects its information sharing policies and
practices with respect to the reason listed on the left. Each
institution also must complete each box in the right column as to
whether a consumer can limit such sharing. If an institution answers
``No'' to sharing for a particular reason in the middle column, it
must answer ``We don't share'' in the corresponding right column. If
an institution answers ``Yes'' to sharing for a particular reason in
the middle column, it must, in the right column, answer either
``No'' if it does not offer an opt-out or ``Yes (Check your choices,
p. 3)'' if it does offer an opt-out. Except for the sixth row (``For
our affiliates to market to you''), an institution must list all
reasons for sharing, and complete the middle and right columns of
the disclosure table.
(b) Specific disclosures and corresponding legal provisions.
(1) For our everyday business purposes. Because all financial
institutions share information for everyday business purposes, as
contemplated by sections 216.14 and 216.15 of this part, the
financial institution must answer ``Yes'' to the sharing of such
information and ``No'' to the availability of an opt-out.
(2) For our marketing purposes. The financial institution must
answer ``Yes'' or ``No'' in the middle column. An institution that
does not share for this reason must answer ``We don't share'' in the
right column. An institution that shares for this reason may or may
not elect to provide an opt-out and must provide the corresponding
answer in the right column as described in paragraph C.2.(a) of this
Instruction. This provision includes service providers contemplated
by section 216.13 of this part.
(3) For joint marketing with other financial companies. As
contemplated by section 216.13 of this part, the financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that shares for
this reason may or may not elect to provide an opt-out and must
provide the corresponding answer in the right column as described in
paragraph C.2.(a) of this Instruction.
(4) For our affiliates' everyday business purposes--information
about transactions and experiences. This provision applies to
sharing of certain information with an institution's affiliates, as
contemplated by sections 603(d)(2)(A)(i) and (ii) of the FCRA. The
financial institution must answer ``Yes'' or ``No'' in the middle
column. An institution that does not share for this reason must
answer ``We don't share'' in the right column. An institution that
does not have any affiliates will also use this answer. Institutions
that share for this reason may or may not elect to provide an opt-
out and must provide the corresponding answer in the right column as
described in paragraph C.2.(a) of this Instruction.
(5) For our affiliates' everyday business purposes--information
about creditworthiness. This provision applies to the sharing of
certain information with an institution's affiliates, as
contemplated by section 603(d)(2)(A)(iii) of the FCRA. The financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that does not have
any affiliates will also use this answer. Institutions that share
for this reason must provide an opt-out and must provide the
appropriate answer in the right column as described in paragraph
C.2.(a) of this Instruction.
(6) For our affiliates to market to you. This provision applies
to information shared among affiliates that is used by those
affiliates for marketing, as contemplated by section 624 of the
FCRA. Following the effective date of the rules implementing section
624, institutions that elect to incorporate this provision into the
model form to satisfy their obligations under this part must include
this reason for sharing as set forth in the model form in order to
obtain the benefit of the safe harbor. Institutions whose affiliates
receive such information and use it for marketing must answer
``Yes'' in the middle column, and ``Yes (Check your choices, p. 3)''
in the right column corresponding to the availability of an opt-out.
Institutions whose affiliates receive such information and do not
use it for marketing may elect to include this provision in the
model form and answer ``No'' in the middle column and ``We don't
share'' in the right column; however, institutions whose affiliates
receive such information and do not use it for marketing are not
required to use this provision. Institutions that do not have
affiliates and elect to include this provision in their notice will
answer ``No'' in the middle column and ``We don't share'' in the
right column.
(7) For nonaffiliates to market to you. This provision applies
to sharing under sections 216.7 and 216.10(a) of this part.
Financial institutions that do not share for this reason must answer
``No'' in the middle column and ``We don't share'' in the right
column. Financial institutions that do share for this reason must
answer ``Yes'' in the middle column and ``Yes (check your choices,
p. 3)'' corresponding to the availability of an opt-out.
(8) Additional opt-outs. A financial institution may customize
the model form to offer opt-outs beyond those required under Federal
law, so long as the additional information falls within the space
constraints of the model form. If the institution chooses to offer
its customers an opt-out for its own marketing or for joint
marketing, for example, it can provide for that option by stating:
``Yes (Check your choices, p. 3)'' as to the availability of the
opt-out.
3. Page Two
(a) General instructions for the Definitions.
The financial institution must customize the space below the
last three definitions in this section (affiliates, nonafffiliates,
and joint marketing). This specific information must be in
italicized lettering to set off the information from the
standardized definitions.
(b) Affiliates. As required by section 216.6(a)(3) of this part,
the financial institution must identify the categories of its
affiliates or state ``[name of financial institution] has no
affiliates'' in italicized lettering where [affiliate information]
appears. A financial institution that shares with affiliates must
use, as applicable, the following format: ``Our affiliates include
companies with a [name of financial institution] name; financial
companies such as [list companies]; and nonfinancial companies, such
as [list companies].''
(c) Nonaffiliates. If the financial institution shares with
nonaffiliated third parties outside the exceptions in sections
216.14 and 216.15 of this part, the institution must identify the
types of nonaffiliated third parties with which it shares or state
``[name of financial institution] does not share with nonaffiliates
so they can market to you.'' in italicized lettering where
[nonaffiliate information] appears. A financial institution that
shares with nonaffiliated third parties as described here must use,
as applicable, the following format: ``Nonaffiliates we share with
can include [list categories of companies such as mortgage
companies, insurance companies, direct marketing companies, and
nonprofit organizations].''
(d) Joint Marketing. As required by section 216.13 of this part,
the financial institution must identify the types of financial
institutions with which it engages in joint marketing or state
``[name of financial institution] doesn't jointly market.'' in
italicized lettering where [joint marketing] appears. A financial
institution that shares with joint marketing partners must use, as
applicable, the following format: ``Our joint marketing partners
include [list categories of companies such as credit card
companies].''
4. Page Three
Opt-out form. Financial institutions must use page three only if
they: (1) share or use information in a manner that triggers an opt-
out; or (2) choose to provide an opt-out (as disclosed in the table
on page 1) in addition to what is required by law. The model opt-out
form must be provided on a separate page of the model form.
[[Page 14970]]
(a) Contact us. The section describes three common methods by
which a consumer exercises an opt-out--by telephone, on the Web, and
by mail. Financial institutions may customize this section to
provide for the particular opt-out methods and options the
institution provides. For example, if an institution offers opting
out by telephone and the Web but not by mail, it would provide only
telephone and Web information as shown in the model form in the
``Contact Us'' box. Only institutions that allow more than 30 days
after providing the notice before sharing information may change the
number of days in the lower right hand section of the box.
(b) Check your choices. Institutions must display the applicable
opt-out options in the ``Check your choices'' box shown on this
page. If an institution chooses not to offer an opt-out by mail, it
must delete the boxes for name, address, account number, and mailing
directions in the lower right-hand corner of the model form.
Financial institutions that only offer one or two of the opt-out
options listed on the model form must list only those options from
the model form that apply to their practices and correspond
accurately to the disclosures on page one. Thus, if an institution
does not share in a manner that requires an opt-out for sharing with
nonaffiliates, it must not include that opt-out option on page three
of the model form. Institutions requiring information from consumers
on the opt-out form other than an account number should modify that
designation in the ``Check your choices'' box. Institutions that
require customers with multiple accounts to identify each account to
which the opt-out should apply should modify that portion of the
model form.
(c) Section 624 opt-out. If the financial institution's
affiliates use information for marketing pursuant to section 624 of
the FCRA, and the institution elects to consolidate that opt-out
notice in the model form, it must include that disclosure and opt-
out election as shown in the model form. Institutions that elect to
limit the time for the affiliate marketing opt-out, consistent with
the requirements of section 624, must adhere to the requirements of
that section and the Agencies' implementing rule with respect to any
subsequent notice and opt-out. Institutions that elect to limit the
opt-out period must include a statement in italics, as shown on the
model form, that states the period of time for which the opt-out
applies.
(d) Additional opt-outs. A financial institution that uses the
disclosure table to indicate any opt-out choices available to
consumers beyond those required by Federal law must include those
opt-outs on page three of the model form. For example, if the
financial institution discloses in the table that it offers an opt-
out for joint marketing, the institution must revise the opt-out
form on page three to reflect the availability of an opt-out, such
as by adding a check-off box with the words ``Do not share my
personal information with other financial institutions to jointly
market to me.'' Likewise, if a financial institution chooses to
offer its customers an opt-out for its marketing, it can provide for
that option in the disclosure table and on the opt-out form by
adding a check-off box with the words ``Do not share [or use] my
personal information to market to me.''
7. Amend newly redesignated Appendix B by adding a new sentence
immediately after the heading:
Appendix B to Part 216--Sample Clauses
This Appendix only applies to privacy notices provided until the
date that is on or before one year following the date of final
publication of this rule. * * *
* * * * *
Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the joint preamble, the Federal
Deposit Insurance Corporation proposes to amend part 332 of chapter III
of title 12 of the Code of Federal Regulations as follows:
PART 332--PRIVACY OF CONSUMER FINANCIAL INFORMATION
1. The authority citation for part 332 continues to read as
follows:
Authority: 12 U.S.C. 1819 (Seventh and Tenth); 15 U.S.C. 6801 et
seq.
2. Revise Sec. 332.2 to read as follows:
Sec. 332.2 Model privacy form and examples.
(a) Model privacy form. Use of the model privacy form in Appendix A
of this part, consistent with the instructions in Appendix A,
constitutes compliance with the notice content requirements of
Sec. Sec. 332.6 and 332.7 of this part, although use of the model
privacy form is not required.
(b) Examples. The examples in this part are not exclusive.
Compliance with an example, to the extent applicable, constitutes
compliance with this part.
3. In Sec. 332.6, revise paragraph (f) and add paragraph (g) to
read as follows:
Sec. 332.6 Information to be included in privacy notices.
* * * * *
(f) Model privacy form. Pursuant to Sec. 332.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
(g) Sample clauses. Sample clauses illustrating some of the notice
content required by this section are included in Appendix B of this
part. Use of a sample clause in a privacy notice provided on or before
[DATE ONE YEAR FOLLOWING THE DATE OF PUBLICATION OF THE FINAL RULE], to
the extent applicable, constitutes compliance with this part.
4. In Sec. 332.7 add paragraph (i) to read as follows:
Sec. 332.7 Form of opt-out notice to consumers; opt-out methods.
* * * * *
(i) Model privacy form. Pursuant to Sec. 332.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
Appendix A [Redesignated as Appendix B]
5. Redesignate Appendix A as Appendix B.
6. Add new Appendix A to read as follows:
Appendix A to Part 332--Model Privacy Form
A. The Model Privacy Form
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B. General Instructions
1. How the Model Privacy Form Is Used
The model form may be used, at the option of a financial
institution, including a group of financial holding company
affiliates that use a common privacy notice, to meet the content
requirements of the privacy notice and opt-out notice set forth in
sections 332.6 and 332.7 of this part.
(Note that disclosure of certain information, such as assets,
income, and information from a consumer reporting agency, may give
rise to obligations under the Fair Credit Reporting Act [15 U.S.C.
1681-1681x] (FCRA), such as a requirement to permit a consumer to
opt out of disclosures to affiliates or designation as a consumer
reporting agency if disclosures are made to nonaffiliated third
parties.)
2. The Contents of the Model Privacy Form
The model form consists of two or three pages, depending on
whether a financial institution shares in a manner that requires it
to provide a third page with opt-out information.
(a) Page One. The first page consists of the following
components:
(1) The title.
(2) The key frame (Why?, What?, How?).
(3) The disclosure table (``Reasons we can share your personal
information'').
(4) Contact information.
(b) Page Two. The second page consists of the following
components:
(1) The title.
(2) The Frequently Asked Questions on sharing practices.
(3) The definitions.
(c) Page Three. The third page consists of a financial
institution's opt-out form.
3. The Format of the Model Privacy Form
The model form is a standardized form, including page layout,
page content, format, style, pagination, and shading. No other
information may be included in the model form, and the model form
may be modified only as described below.
(a) Easily readable type font. Financial institutions that use
the model form must use an easily readable type font. Easily
readable type font includes a minimum of 10-point font and
sufficient spacing between the lines of type.
(b) Logo. A financial institution may include a corporate logo
on any page of the notice, so long as it does not interfere with the
readability of the model form or the space constraints of each page.
(c) Page size and orientation. Each page of the model form must
be printed on one side of an 8.5 by 11 inch paper in portrait
orientation.
(d) Color. The model form may be printed on white or light color
paper (such as cream) with black or suitable contrasting color ink.
Spot color may be used to achieve visual interest, so long as the
color contrast is distinctive and the color does not detract from
the readability of the model form.
[[Page 14974]]
C. Information Required in the Model Privacy Form
The model form is a standardized form, and institutions seeking
to obtain the safe harbor through use of the model form may modify
the form only as described below:
1. Name of the Institution or Group of Affiliated Institutions
Providing the Notice
Include the name of the financial institution or group of
affiliated institutions providing the notice on the form wherever
[name of financial institution] appears. Contact information, such
as the institution's toll-free telephone number, Web address, or
mailing address, or other contact information, should be inserted as
appropriate, wherever [toll-free telephone] or [web address] or
[mailing address] appear.
2. Page One
(a) General instructions for the disclosure table. There are
reasons for sharing or using personal information listed in the left
column of the disclosure table. Each of these reasons correlates to
certain legal provisions described below. In the middle column, each
institution must provide a ``Yes'' or ``No'' response in each box
that accurately reflects its information sharing policies and
practices with respect to the reason listed on the left. Each
institution also must complete each box in the right column as to
whether a consumer can limit such sharing. If an institution answers
``No'' to sharing for a particular reason in the middle column, it
must answer ``We don't share'' in the corresponding right column. If
an institution answers ``Yes'' to sharing for a particular reason in
the middle column, it must, in the right column, answer either
``No'' if it does not offer an opt-out or ``Yes (Check your choices,
p. 3)'' if it does offer an opt-out. Except for the sixth row (``For
our affiliates to market to you''), an institution must list all
reasons for sharing, and complete the middle and right columns of
the disclosure table.
(b) Specific disclosures and corresponding legal provisions.
(1) For our everyday business purposes. Because all financial
institutions share information for everyday business purposes, as
contemplated by sections 332.14 and 332.15 of this part, the
financial institution must answer ``Yes'' to the sharing of such
information and ``No'' to the availability of an opt-out.
(2) For our marketing purposes. The financial institution must
answer ``Yes'' or ``No'' in the middle column. An institution that
does not share for this reason must answer ``We don't share'' in the
right column. An institution that shares for this reason may or may
not elect to provide an opt-out and must provide the corresponding
answer in the right column as described in paragraph C.2.(a) of this
Instruction. This provision includes service providers contemplated
by section 332.13 of this part.
(3) For joint marketing with other financial companies. As
contemplated by section 332.13 of this part, the financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that shares for
this reason may or may not elect to provide an opt-out and must
provide the corresponding answer in the right column as described in
paragraph C.2.(a) of this Instruction.
(4) For our affiliates' everyday business purposes--information
about transactions and experiences. This provision applies to
sharing of certain information with an institution's affiliates, as
contemplated by sections 603(d)(2)(A)(i) and (ii) of the FCRA. The
financial institution must answer ``Yes'' or ``No'' in the middle
column. An institution that does not share for this reason must
answer ``We don't share'' in the right column. An institution that
does not have any affiliates will also use this answer. Institutions
that share for this reason may or may not elect to provide an opt-
out and must provide the corresponding answer in the right column as
described in paragraph C.2.(a) of this Instruction.
(5) For our affiliates' everyday business purposes--information
about creditworthiness. This provision applies to the sharing of
certain information with an institution's affiliates, as
contemplated by section 603(d)(2)(A)(iii) of the FCRA. The financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that does not have
any affiliates will also use this answer. Institutions that share
for this reason must provide an opt-out and must provide the
appropriate answer in the right column as described in paragraph
C.2.(a) of this Instruction.
(6) For our affiliates to market to you. This provision applies
to information shared among affiliates that is used by those
affiliates for marketing, as contemplated by section 624 of the
FCRA. Following the effective date of the rules implementing section
624, institutions that elect to incorporate this provision into the
model form to satisfy their obligations under this part must include
this reason for sharing as set forth in the model form in order to
obtain the benefit of the safe harbor. Institutions whose affiliates
receive such information and use it for marketing must answer
``Yes'' in the middle column, and ``Yes (Check your choices, p. 3)''
in the right column corresponding to the availability of an opt-out.
Institutions whose affiliates receive such information and do not
use it for marketing may elect to include this provision in the
model form and answer ``No'' in the middle column and ``We don't
share'' in the right column; however, institutions whose affiliates
receive such information and do not use it for marketing are not
required to use this provision. Institutions that do not have
affiliates and elect to include this provision in their notice will
answer ``No'' in the middle column and ``We don't share'' in the
right column.
(7) For nonaffiliates to market to you. This provision applies
to sharing under sections 332.7 and 332.10(a) of this part.
Financial institutions that do not share for this reason must answer
``No'' in the middle column and ``We don't share'' in the right
column. Financial institutions that do share for this reason must
answer ``Yes'' in the middle column and ``Yes (check your choices,
p. 3)'' corresponding to the availability of an opt-out.
(8) Additional opt-outs. A financial institution may customize
the model form to offer opt-outs beyond those required under Federal
law, so long as the additional information falls within the space
constraints of the model form. If the institution chooses to offer
its customers an opt-out for its own marketing or for joint
marketing, for example, it can provide for that option by stating:
``Yes (Check your choices, p. 3)'' as to the availability of the
opt-out.
3. Page Two
(a) General instructions for the Definitions.
The financial institution must customize the space below the
last three definitions in this section (affiliates, nonaffiliates,
and joint marketing). This specific information must be in
italicized lettering to set off the information from the
standardized definitions.
(b) Affiliates. As required by section 332.6(a)(3) of this part,
the financial institution must identify the categories of its
affiliates or state ``[name of financial institution] has no
affiliates'' in italicized lettering where [affiliate information]
appears. A financial institution that shares with affiliates must
use, as applicable, the following format: ``Our affiliates include
companies with a [name of financial institution] name; financial
companies such as [list companies]; and nonfinancial companies, such
as [list companies].''
(c) Nonaffiliates. If the financial institution shares with
nonaffiliated third parties outside the exceptions in sections
332.14 and 332.15 of this part, the institution must identify the
types of nonaffiliated third parties with which it shares or state
``[name of financial institution] does not share with nonaffiliates
so they can market to you.'' in italicized lettering where
[nonaffiliate information] appears. A financial institution that
shares with nonaffiliated third parties as described here must use,
as applicable, the following format: ``Nonaffiliates we share with
can include [list categories of companies such as mortgage
companies, insurance companies, direct marketing companies, and
nonprofit organizations].''
(d) Joint Marketing. As required by section 332.13 of this part,
the financial institution must identify the types of financial
institutions with which it engages in joint marketing or state
``[name of financial institution] doesn't jointly market.'' in
italicized lettering where [joint marketing] appears. A financial
institution that shares with joint marketing partners must use, as
applicable, the following format: ``Our joint marketing partners
include [list categories of companies such as credit card
companies].''
4. Page Three
Opt-out form. Financial institutions must use page three only if
they: (1) share or use information in a manner that triggers an opt-
out; or (2) choose to provide an opt-out (as disclosed in the table
on page 1) in addition to what is required by law. The model opt-out
form must be provided on a separate page of the model form.
[[Page 14975]]
(a) Contact us. The section describes three common methods by
which a consumer exercises an opt-out--by telephone, on the Web, and
by mail. Financial institutions may customize this section to
provide for the particular opt-out methods and options the
institution provides. For example, if an institution offers opting
out by telephone and the Web but not by mail, it would provide only
telephone and Web information as shown in the model form in the
``Contact Us'' box. Only institutions that allow more than 30 days
after providing the notice before sharing information may change the
number of days in the lower right hand section of the box.
(b) Check your choices. Institutions must display the applicable
opt-out options in the ``Check your choices'' box shown on this
page. If an institution chooses not to offer an opt-out by mail, it
must delete the boxes for name, address, account number, and mailing
directions in the lower right-hand corner of the model form.
Financial institutions that only offer one or two of the opt-out
options listed on the model form must list only those options from
the model form that apply to their practices and correspond
accurately to the disclosures on page one. Thus, if an institution
does not share in a manner that requires an opt-out for sharing with
nonaffiliates, it must not include that opt-out option on page three
of the model form. Institutions requiring information from consumers
on the opt-out form other than an account number should modify that
designation in the ``Check your choices'' box. Institutions that
require customers with multiple accounts to identify each account to
which the opt-out should apply should modify that portion of the
model form.
(c) Section 624 opt-out. If the financial institution's
affiliates use information for marketing pursuant to section 624 of
the FCRA, and the institution elects to consolidate that opt-out
notice in the model form, it must include that disclosure and opt-
out election as shown in the model form. Institutions that elect to
limit the time for the affiliate marketing opt-out, consistent with
the requirements of section 624, must adhere to the requirements of
that section and the Agencies' implementing rule with respect to any
subsequent notice and opt-out. Institutions that elect to limit the
opt-out period must include a statement in italics, as shown on the
model form, that states the period of time for which the opt-out
applies.
(d) Additional opt-outs. A financial institution that uses the
disclosure table to indicate any opt-out choices available to
consumers beyond those required by Federal law must include those
opt-outs on page three of the model form. For example, if the
financial institution discloses in the table that it offers an opt-
out for joint marketing, the institution must revise the opt-out
form on page three to reflect the availability of an opt-out, such
as by adding a check-off box with the words ``Do not share my
personal information with other financial institutions to jointly
market to me.'' Likewise, if a financial institution chooses to
offer its customers an opt-out for its marketing, it can provide for
that option in the disclosure table and on the opt-out form by
adding a check-off box with the words ``Do not share [or use] my
personal information to market to me.''
7. Amend newly redesignated Appendix B by adding a new sentence
immediately after the heading:
Appendix B to Part 332--Sample Clauses
This Appendix only applies to privacy notices provided until the
date that is on or before one year following the date of final
publication of this rule. * * *
* * * * *
Office of Thrift Supervision
12 CFR Chapter V
Authority and Issuance
For the reasons set forth in the joint preamble, the Office of
Thrift Supervision proposes to amend part 573 of Chapter V of title 12
of the Code of Federal Regulations as follows:
PART 573--PRIVACY OF CONSUMER FINANCIAL INFORMATION
1. The authority citation for part 573 continues to read as
follows:
Authority: 12 U.S.C. 1462a; 1463, 1464, 1828; 15 U.S.C. 6801 et
seq.
2. Revise Sec. 573.2 to read as follows:
Sec. 573.2 Model privacy form and examples.
(a) Model privacy form. Use of the model privacy form in Appendix A
of this part, consistent with the instructions in Appendix A,
constitutes compliance with the notice content requirements of
Sec. Sec. 573.6 and 573.7 of this part, although use of the model
privacy form is not required.
(b) Examples. The examples in this part are not exclusive.
Compliance with an example, to the extent applicable, constitutes
compliance with this part.
3. In Sec. 573.6, revise paragraph (f) and add paragraph (g) to
read as follows:
Sec. 573.6 Information to be included in privacy notices.
* * * * *
(f) Model privacy form. Pursuant to Sec. 573.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
(g) Sample clauses. Sample clauses illustrating some of the notice
content required by this section are included in Appendix B of this
part. Use of a sample clause in a privacy notice provided on or before
[DATE ONE YEAR FOLLOWING THE DATE OF PUBLICATION OF THE FINAL RULE], to
the extent applicable, constitutes compliance with this part.
4. In Sec. 573.7, add paragraph (i) to read as follows:
Sec. 573.7 Form of opt-out notice to consumers; opt-out methods.
* * * * *
(i) Model privacy form. Pursuant to Sec. 573.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
Appendix A [Redesignated as Appendix B]
5. Redesignate Appendix A as Appendix B.
6. Add new Appendix A to read as follows:
Appendix A to Part 573--Model Privacy Form
A. The Model Privacy Form
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B. General Instructions
1. How the Model Privacy Form Is Used
The model form may be used, at the option of a financial
institution, including a group of financial holding company
affiliates that use a common privacy notice, to meet the content
requirements of the privacy notice and opt-out notice set forth in
sections 573.6 and 573.7 of this part.
(Note that disclosure of certain information, such as assets,
income, and information from a consumer reporting agency, may give
rise to obligations under the Fair Credit Reporting Act [15 U.S.C.
1681-1681x] (FCRA), such as a requirement to permit a consumer to
opt out of disclosures to affiliates or designation as a consumer
reporting agency if disclosures are made to nonaffiliated third
parties.)
2. The Contents of the Model Privacy Form
The model form consists of two or three pages, depending on
whether a financial institution shares in a manner that requires it
to provide a third page with opt-out information.
(a) Page One. The first page consists of the following
components:
(1) The title.
(2) The key frame (Why?, What?, How?).
(3) The disclosure table (``Reasons we can share your personal
information'').
(4) Contact information.
(b) Page Two. The second page consists of the following
components:
(1) The title.
(2) The Frequently Asked Questions on sharing practices.
(3) The definitions.
(c) Page Three. The third page consists of a financial
institution's opt-out form.
3. The Format of the Model Privacy Form
The model form is a standardized form, including page layout,
page content, format, style, pagination, and shading. No other
information may be included in the model form, and the model form
may be modified only as described below.
(a) Easily readable type font. Financial institutions that use
the model form must use an easily readable type font. Easily
readable type font includes a minimum of 10-point font and
sufficient spacing between the lines of type.
(b) Logo. A financial institution may include a corporate logo
on any page of the notice, so long as it does not interfere with the
readability of the model form or the space constraints of each page.
(c) Page size and orientation. Each page of the model form must
be printed on one side of an 8.5 by 11 inch paper in portrait
orientation.
(d) Color. The model form may be printed on white or light color
paper (such as cream) with black or suitable contrasting color ink.
Spot color may be used to achieve visual interest, so long as the
color contrast is distinctive and the color does not detract from
the readability of the model form.
[[Page 14979]]
C. Information Required in the Model Privacy Form
The model form is a standardized form, and institutions seeking
to obtain the safe harbor through use of the model form may modify
the form only as described below:
1. Name of the Institution or Group of Affiliated Institutions
Providing the Notice
Include the name of the financial institution or group of
affiliated institutions providing the notice on the form wherever
[name of financial institution] appears. Contact information, such
as the institution's toll-free telephone number, Web address, or
mailing address, or other contact information, should be inserted as
appropriate, wherever [toll-free telephone] or [web address] or
[mailing address] appear.
2. Page One
(a) General instructions for the disclosure table. There are
reasons for sharing or using personal information listed in the left
column of the disclosure table. Each of these reasons correlates to
certain legal provisions described below. In the middle column, each
institution must provide a ``Yes'' or ``No'' response in each box
that accurately reflects its information sharing policies and
practices with respect to the reason listed on the left. Each
institution also must complete each box in the right column as to
whether a consumer can limit such sharing. If an institution answers
``No'' to sharing for a particular reason in the middle column, it
must answer ``We don't share'' in the corresponding right column. If
an institution answers ``Yes'' to sharing for a particular reason in
the middle column, it must, in the right column, answer either
``No'' if it does not offer an opt-out or ``Yes (Check your choices,
p. 3)'' if it does offer an opt-out. Except for the sixth row (``For
our affiliates to market to you''), an institution must list all
reasons for sharing, and complete the middle and right columns of
the disclosure table.
(b) Specific disclosures and corresponding legal provisions.
(1) For our everyday business purposes. Because all financial
institutions share information for everyday business purposes, as
contemplated by sections 573.14 and 573.15 of this part, the
financial institution must answer ``Yes'' to the sharing of such
information and ``No'' to the availability of an opt-out.
(2) For our marketing purposes. The financial institution must
answer ``Yes'' or ``No'' in the middle column. An institution that
does not share for this reason must answer ``We don't share'' in the
right column. An institution that shares for this reason may or may
not elect to provide an opt-out and must provide the corresponding
answer in the right column as described in paragraph C.2.(a) of this
Instruction. This provision includes service providers contemplated
by section 573.13 of this part.
(3) For joint marketing with other financial companies. As
contemplated by section 573.13 of this part, the financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that shares for
this reason may or may not elect to provide an opt-out and must
provide the corresponding answer in the right column as described in
paragraph C.2.(a) of this Instruction.
(4) For our affiliates' everyday business purposes--information
about transactions and experiences. This provision applies to
sharing of certain information with an institution's affiliates, as
contemplated by sections 603(d)(2)(A)(i) and (ii) of the FCRA. The
financial institution must answer ``Yes'' or ``No'' in the middle
column. An institution that does not share for this reason must
answer ``We don't share'' in the right column. An institution that
does not have any affiliates will also use this answer. Institutions
that share for this reason may or may not elect to provide an opt-
out and must provide the corresponding answer in the right column as
described in paragraph C.2.(a) of this Instruction.
(5) For our affiliates' everyday business purposes--information
about creditworthiness. This provision applies to the sharing of
certain information with an institution's affiliates, as
contemplated by section 603(d)(2)(A)(iii) of the FCRA. The financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that does not have
any affiliates will also use this answer. Institutions that share
for this reason must provide an opt-out and must provide the
appropriate answer in the right column as described in paragraph
C.2.(a) of this Instruction.
(6) For our affiliates to market to you. This provision applies
to information shared among affiliates that is used by those
affiliates for marketing, as contemplated by section 624 of the
FCRA. Following the effective date of the rules implementing section
624, institutions that elect to incorporate this provision into the
model form to satisfy their obligations under this part must include
this reason for sharing as set forth in the model form in order to
obtain the benefit of the safe harbor. Institutions whose affiliates
receive such information and use it for marketing must answer
``Yes'' in the middle column, and ``Yes (Check your choices, p. 3)''
in the right column corresponding to the availability of an opt-out.
Institutions whose affiliates receive such information and do not
use it for marketing may elect to include this provision in the
model form and answer ``No'' in the middle column and ``We don't
share'' in the right column; however, institutions whose affiliates
receive such information and do not use it for marketing are not
required to use this provision. Institutions that do not have
affiliates and elect to include this provision in their notice will
answer ``No'' in the middle column and ``We don't share'' in the
right column.
(7) For nonaffiliates to market to you. This provision applies
to sharing under sections 573.7 and 573.10(a) of this part.
Financial institutions that do not share for this reason must answer
``No'' in the middle column and ``We don't share'' in the right
column. Financial institutions that do share for this reason must
answer ``Yes'' in the middle column and ``Yes (check your choices,
p. 3)'' corresponding to the availability of an opt-out.
(8) Additional opt-outs. A financial institution may customize
the model form to offer opt-outs beyond those required under Federal
law, so long as the additional information falls within the space
constraints of the model form. If the institution chooses to offer
its customers an opt-out for its own marketing or for joint
marketing, for example, it can provide for that option by stating:
``Yes (Check your choices, p. 3)'' as to the availability of the
opt-out.
3. Page Two
(a) General instructions for the Definitions.
The financial institution must customize the space below the
last three definitions in this section (affiliates, nonafffiliates,
and joint marketing). This specific information must be in
italicized lettering to set off the information from the
standardized definitions.
(b) Affiliates. As required by section 573.6(a)(3) of this part,
the financial institution must identify the categories of its
affiliates or state ``[name of financial institution] has no
affiliates'' in italicized lettering where [affiliate information]
appears. A financial institution that shares with affiliates must
use, as applicable, the following format: ``Our affiliates include
companies with a [name of financial institution] name; financial
companies such as [list companies]; and nonfinancial companies, such
as [list companies].''
(c) Nonaffiliates. If the financial institution shares with
nonaffiliated third parties outside the exceptions in sections
573.14 and 573.15 of this part, the institution must identify the
types of nonaffiliated third parties with which it shares or state
``[name of financial institution] does not share with nonaffiliates
so they can market to you.'' in italicized lettering where
[nonaffiliate information] appears. A financial institution that
shares with nonaffiliated third parties as described here must use,
as applicable, the following format: ``Nonaffiliates we share with
can include [list categories of companies such as mortgage
companies, insurance companies, direct marketing companies, and
nonprofit organizations].''
(d) Joint Marketing. As required by section 573.13 of this part,
the financial institution must identify the types of financial
institutions with which it engages in joint marketing or state
``[name of financial institution] doesn't jointly market.'' in
italicized lettering where [joint marketing] appears. A financial
institution that shares with joint marketing partners must use, as
applicable, the following format: ``Our joint marketing partners
include [list categories of companies such as credit card
companies].''
4. Page Three
Opt-out form. Financial institutions must use page three only if
they: (1) share or use information in a manner that triggers an opt-
out; or (2) choose to provide an opt-out (as disclosed in the table
on page 1) in addition to what is required by law. The model opt-out
form must be provided on a separate page of the model form.
[[Page 14980]]
(a) Contact us. The section describes three common methods by
which a consumer exercises an opt-out `` by telephone, on the Web,
and by mail. Financial institutions may customize this section to
provide for the particular opt-out methods and options the
institution provides. For example, if an institution offers opting
out by telephone and the Web but not by mail, it would provide only
telephone and Web information as shown in the model form in the
``Contact Us'' box. Only institutions that allow more than 30 days
after providing the notice before sharing information may change the
number of days in the lower right hand section of the box.
(b) Check your choices. Institutions must display the applicable
opt-out options in the ``Check your choices'' box shown on this
page. If an institution chooses not to offer an opt-out by mail, it
must delete the boxes for name, address, account number, and mailing
directions in the lower right-hand corner of the model form.
Financial institutions that only offer one or two of the opt-out
options listed on the model form must list only those options from
the model form that apply to their practices and correspond
accurately to the disclosures on page one. Thus, if an institution
does not share in a manner that requires an opt-out for sharing with
nonaffiliates, it must not include that opt-out option on page three
of the model form. Institutions requiring information from consumers
on the opt-out form other than an account number should modify that
designation in the ``Check your choices'' box. Institutions that
require customers with multiple accounts to identify each account to
which the opt-out should apply should modify that portion of the
model form.
(c) Section 624 opt-out. If the financial institution's
affiliates use information for marketing pursuant to section 624 of
the FCRA, and the institution elects to consolidate that opt-out
notice in the model form, it must include that disclosure and opt-
out election as shown in the model form. Institutions that elect to
limit the time for the affiliate marketing opt-out, consistent with
the requirements of section 624, must adhere to the requirements of
that section and the Agencies' implementing rule with respect to any
subsequent notice and opt-out. Institutions that elect to limit the
opt-out period must include a statement in italic, as shown on the
model form, that states the period of time for which the opt-out
applies.
(d) Additional opt-outs. A financial institution that uses the
disclosure table to indicate any opt-out choices available to
consumers beyond those required by Federal law must include those
opt-outs on page three of the model form. For example, if the
financial institution discloses in the table that it offers an opt-
out for joint marketing, the institution must revise the opt-out
form on page three to reflect the availability of an opt-out, such
as by adding a check-off box with the words ``Do not share my
personal information with other financial institutions to jointly
market to me.'' Likewise, if a financial institution chooses to
offer its customers an opt-out for its marketing, it can provide for
that option in the disclosure table and on the opt-out form by
adding a check-off box with the words ``Do not share [or use] my
personal information to market to me.''
7. Amend newly redesignated Appendix B by adding a new sentence
immediately after the heading:
Appendix B to Part 573--Sample Clauses
This Appendix only applies to privacy notices provided until the
date that is on or before one year following the date of final
publication of this rule. * * *
* * * * *
National Credit Union Administration
12 CFR Chapter V
Authority and Issuance
For the reasons set forth in the joint preamble, the National
Credit Union Administration proposes to amend part 716 of Chapter V of
title 12 of the Code of Federal Regulations as follows:
PART 716--PRIVACY OF CONSUMER FINANCIAL INFORMATION
1. The authority citation for part 716 continues to read as
follows:
Authority: 12 U.S.C. 1751 et seq.; 15 U.S.C. 6801 et seq.
2. Revise Sec. 716.2 to read as follows:
Sec. 716.2 Model privacy form and examples.
(a) Model privacy form. Use of the model privacy form in Appendix A
of this part, consistent with the instructions in Appendix A,
constitutes compliance with the notice content requirements of
Sec. Sec. 716.6 and 716.7 of this part, although use of the model
privacy form is not required.
(b) Examples. The examples in this part are not exclusive.
Compliance with an example, to the extent applicable, constitutes
compliance with this part.
3. In Sec. 716.6, add paragraphs (f) and (g) to read as follows:
Sec. 716.6 Information to be included in privacy notices.
* * * * *
(f) Model privacy form. Pursuant to Sec. 716.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
(g) Sample clauses. Sample clauses illustrating some of the notice
content required by this section are included in Appendix B of this
part. Use of a sample clause in a privacy notice provided on or before
[DATE ONE YEAR FOLLOWING THE DATE OF PUBLICATION OF THE FINAL RULE], to
the extent applicable, constitutes compliance with this part.
4. In Sec. 716.7 add paragraph (i) to read as follows:
Sec. 716.7 Form of opt-out notice to consumers; opt-out methods.
* * * * *
(i) Model privacy form. Pursuant to Sec. 716.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
Appendix A [Redesignated as Appendix B]
5. Redesignate Appendix A as Appendix B.
6. Add new Appendix A to read as follows:
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Appendix A to Part 716--Model Privacy Form
A. The Model Privacy Form
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B. General Instructions
1. How the Model Privacy Form Is Used
The model form may be used, at the option of a financial
institution, including a group of affiliates that use a common
privacy notice, to meet the content requirements of the privacy
notice and opt-out notice set forth in sections 716.6 and 716.7 of
this part.
(Note that disclosure of certain information, such as assets,
income, and information from a consumer reporting agency, may give
rise to obligations under the Fair Credit Reporting Act [15 U.S.C.
1681-1681x] (FCRA), such as a requirement to permit a consumer to
opt out of disclosures to affiliates or designation as a consumer
reporting agency if disclosures are made to nonaffiliated third
parties.)
2. The Contents of the Model Privacy Form
The model form consists of two or three pages, depending on
whether a financial institution shares in a manner that requires it
to provide a third page with opt-out information.
(a) Page One. The first page consists of the following
components:
(1) The title.
(2) The key frame (Why?, What?, How?).
(3) The disclosure table (``Reasons we can share your personal
information'').
(4) Contact information.
(b) Page Two. The second page consists of the following
components:
(1) The title.
(2) The Frequently Asked Questions on sharing practices.
(3) The definitions.
(c) Page Three. The third page consists of a financial
institution's opt-out form.
3. The Format of the Model Privacy Form
The model form is a standardized form, including page layout,
page content, format, style, pagination, and shading. No other
information may be included in the model form, and the model form
may be modified only as described below.
(a) Easily readable type font. Financial institutions that use
the model form must use an easily readable type font. Easily
readable type font includes a minimum of 10-point font and
sufficient spacing between the lines of type.
(b) Logo. A financial institution may include a corporate logo
on any page of the notice, so long as it does not interfere with the
readability of the model form or the space constraints of each page.
(c) Page size and orientation. Each page of the model form must
be printed on one side of an 8.5 by 11 inch paper in portrait
orientation.
(d) Color. The model form may be printed on white or light color
paper (such as cream) with black or suitable contrasting color ink.
Spot color may be used to achieve visual interest, so long as the
color contrast is distinctive and the color does not detract from
the readability of the model form.
[[Page 14984]]
C. Information Required in the Model Privacy Form
The model form is a standardized form, and institutions seeking
to obtain the safe harbor through use of the model form may modify
the form only as described below:
1. Name of the Institution or Group of Affiliated Institutions
Providing the Notice
Include the name of the financial institution or group of
affiliated institutions providing the notice on the form wherever
[name of financial institution] appears. Contact information, such
as the institution's toll-free telephone number, Web address, or
mailing address, or other contact information, should be inserted as
appropriate, wherever [toll-free telephone] or [web address] or
[mailing address] appear.
2. Page One
(a) General instructions for the disclosure table. There are
reasons for sharing or using personal information listed in the left
column of the disclosure table. Each of these reasons correlates to
certain legal provisions described below. In the middle column, each
institution must provide a ``Yes'' or ``No'' response in each box
that accurately reflects its information sharing policies and
practices with respect to the reason listed on the left. Each
institution also must complete each box in the right column as to
whether a consumer can limit such sharing. If an institution answers
``No'' to sharing for a particular reason in the middle column, it
must answer ``We don't share'' in the corresponding right column. If
an institution answers ``Yes'' to sharing for a particular reason in
the middle column, it must, in the right column, answer either
``No'' if it does not offer an opt-out or ``Yes (Check your choices,
p. 3)'' if it does offer an opt-out. Except for the sixth row (``For
our affiliates to market to you''), an institution must list all
reasons for sharing, and complete the middle and right columns of
the disclosure table.
(b) Specific disclosures and corresponding legal provisions.
(1) For our everyday business purposes. Because all financial
institutions share information for everyday business purposes, as
contemplated by sections 716.14 and 716.15 of this part, the
financial institution must answer ``Yes'' to the sharing of such
information and ``No'' to the availability of an opt-out.
(2) For our marketing purposes. The financial institution must
answer ``Yes'' or ``No'' in the middle column. An institution that
does not share for this reason must answer ``We don't share'' in the
right column. An institution that shares for this reason may or may
not elect to provide an opt-out and must provide the corresponding
answer in the right column as described in paragraph C.2.(a) of this
Instruction. This provision includes service providers contemplated
by section 716.13 of this part.
(3) For joint marketing with other financial companies. As
contemplated by section 716.13 of this part, the financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that shares for
this reason may or may not elect to provide an opt-out and must
provide the corresponding answer in the right column as described in
paragraph C.2.(a) of this Instruction.
(4) For our affiliates' everyday business purposes--information
about transactions and experiences. This provision applies to
sharing of certain information with an institution's affiliates, as
contemplated by sections 603(d)(2)(A)(i) and (ii) of the FCRA. The
financial institution must answer ``Yes'' or ``No'' in the middle
column. An institution that does not share for this reason must
answer ``We don't share'' in the right column. An institution that
does not have any affiliates will also use this answer. Institutions
that share for this reason may or may not elect to provide an opt-
out and must provide the corresponding answer in the right column as
described in paragraph C.2.(a) of this Instruction.
(5) For our affiliates' everyday business purposes--information
about creditworthiness. This provision applies to the sharing of
certain information with an institution's affiliates, as
contemplated by section 603(d)(2)(A)(iii) of the FCRA. The financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that does not have
any affiliates will also use this answer. Institutions that share
for this reason must provide an opt-out and must provide the
appropriate answer in the right column as described in paragraph
C.2.(a) of this Instruction.
(6) For our affiliates to market to you. This provision applies
to information shared among affiliates that is used by those
affiliates for marketing, as contemplated by section 624 of the
FCRA. Following the effective date of the rules implementing section
624, institutions that elect to incorporate this provision into the
model form to satisfy their obligations under this part must include
this reason for sharing as set forth in the model form in order to
obtain the benefit of the safe harbor. Institutions whose affiliates
receive such information and use it for marketing must answer
``Yes'' in the middle column, and ``Yes (Check your choices, p. 3)''
in the right column corresponding to the availability of an opt-out.
Institutions whose affiliates receive such information and do not
use it for marketing may elect to include this provision in the
model form and answer ``No'' in the middle column and ``We don't
share'' in the right column; however, institutions whose affiliates
receive such information and do not use it for marketing are not
required to use this provision. Institutions that do not have
affiliates and elect to include this provision in their notice will
answer ``No'' in the middle column and ``We don't share'' in the
right column.
(7) For nonaffiliates to market to you. This provision applies
to sharing under sections 716.7 and 716.10(a) of this part.
Financial institutions that do not share for this reason must answer
``No'' in the middle column and ``We don't share'' in the right
column. Financial institutions that do share for this reason must
answer ``Yes'' in the middle column and ``Yes (check your choices,
p. 3)'' corresponding to the availability of an opt-out.
(8) Additional opt-outs. A financial institution may customize
the model form to offer opt-outs beyond those required under Federal
law, so long as the additional information falls within the space
constraints of the model form. If the institution chooses to offer
its customers an opt-out for its own marketing or for joint
marketing, for example, it can provide for that option by stating:
``Yes (Check your choices, p.3)'' as to the availability of the opt-
out.
3. Page Two
(a) General instructions for the definitions.
The financial institution must customize the space below the
last three definitions in this section (affiliates, nonaffiliates,
and joint marketing). This specific information must be in
italicized lettering to set off the information from the
standardized definitions.
(b) Affiliates. As required by section 716.6(a)(3) of this part,
the financial institution must identify the categories of its
affiliates or state ``[name of financial institution] has no
affiliates'' in italicized lettering where [affiliate information]
appears. A financial institution that shares with affiliates must
use, as applicable, the following format: ``Our affiliates include
companies with a [name of financial institution] name; financial
companies such as [list companies]; and nonfinancial companies, such
as [list companies].''
(c) Nonaffiliates. If the financial institution shares with
nonaffiliated third parties outside the exceptions in sections
716.14 and 716.15 of this part, the institution must identify the
types of nonaffiliated third parties with which it shares or state
``[name of financial institution] does not share with nonaffiliates
so they can market to you.'' in italicized lettering where
[nonaffiliate information] appears. A financial institution that
shares with nonaffiliated third parties as described here must use,
as applicable, the following format: ``Nonaffiliates we share with
can include [list categories of companies such as mortgage
companies, insurance companies, direct marketing companies, and
nonprofit organizations].''
(d) Joint Marketing. As required by section 716.13 of this part,
the financial institution must identify the types of financial
institutions with which it engages in joint marketing or state
``[name of financial institution] doesn't jointly market.'' in
italicized lettering where [joint marketing] appears. A financial
institution that shares with joint marketing partners must use, as
applicable, the following format: ``Our joint marketing partners
include [list categories of companies such as credit card
companies].''
4. Page Three
Opt-out form. Financial institutions must use page three only if
they: (1) Share or use information in a manner that triggers an opt-
out; or (2) choose to provide an opt-out (as disclosed in the table
on page 1) in addition to what is required by law. The model opt-
[[Page 14985]]
out form must be provided on a separate page of the model form.
(a) Contact us. The section describes three common methods by
which a consumer exercises an opt-out--by telephone, on the Web, and
by mail. Financial institutions may customize this section to
provide for the particular opt-out methods and options the
institution provides. For example, if an institution offers opting
out by telephone and the Web but not by mail, it would provide only
telephone and Web information as shown in the model form in the
``Contact Us'' box. Only institutions that allow more than 30 days
after providing the notice before sharing information may change the
number of days in the lower right hand section of the box.
(b) Check your choices. Institutions must display the applicable
opt-out options in the ``Check your choices'' box shown on this
page. If an institution chooses not to offer an opt-out by mail, it
must delete the boxes for name, address, account number, and mailing
directions in the lower right-hand corner of the model form.
Financial institutions that only offer one or two of the opt-out
options listed on the model form must list only those options from
the model form that apply to their practices and correspond
accurately to the disclosures on page one. Thus, if an institution
does not share in a manner that requires an opt-out for sharing with
nonaffiliates, it must not include that opt-out option on page three
of the model form. Institutions requiring information from consumers
on the opt-out form other than an account number should modify that
designation in the ``Check your choices'' box. Institutions that
require customers with multiple accounts to identify each account to
which the opt-out should apply should modify that portion of the
model form.
(c) Section 624 opt-out. If the financial institution's
affiliates use information for marketing pursuant to section 624 of
the FCRA, and the institution elects to consolidate that opt-out
notice in the model form, it must include that disclosure and opt-
out election as shown in the model form. Institutions that elect to
limit the time for the affiliate marketing opt-out, consistent with
the requirements of section 624, must adhere to the requirements of
that section and the Agencies' implementing rule with respect to any
subsequent notice and opt-out. Institutions that elect to limit the
opt-out period must include a statement in italics, as shown on the
model form, that states the period of time for which the opt-out
applies.
(d) Additional opt-outs. A financial institution that uses the
disclosure table to indicate any opt-out choices available to
consumers beyond those required by Federal law must include those
opt-outs on page three of the model form. For example, if the
financial institution discloses in the table that it offers an opt-
out for joint marketing, the institution must revise the opt-out
form on page three to reflect the availability of an opt-out, such
as by adding a check-off box with the words ``Do not share my
personal information with other financial institutions to jointly
market to me.'' Likewise, if a financial institution chooses to
offer its customers an opt-out for its marketing, it can provide for
that option in the disclosure table and on the opt-out form by
adding a check-off box with the words ``Do not share [or use] my
personal information to market to me.''
7. Amend newly redesignated Appendix B by adding a new sentence
immediately after the heading:
Appendix B to Part 716--Sample Clauses
This Appendix only applies to privacy notices provided until the
date that is on or before one year following the date of final
publication of this rule. * * *
* * * * *
Federal Trade Commission
16 CFR Chapter I
Authority and Issuance
For the reasons set forth in the joint preamble, the Federal Trade
Commission proposes to amend part 313 of chapter I of title 16 of the
Code of Federal Regulations as follows:
PART 313--PRIVACY OF CONSUMER FINANCIAL INFORMATION
1. The authority citation for part 313 continues to read as
follows:
Authority: 15 U.S.C. 6801 et seq.
2. Revise Sec. 313.2 to read as follows:
Sec. 313.2 Model privacy form and rules of construction.
(a) Model privacy form. Use of the model privacy form in Appendix A
of this part, consistent with the instructions in Appendix A,
constitutes compliance with the notice content requirements of
Sec. Sec. 313.6 and 313.7 of this part, although use of the model
privacy form is not required.
(b) Examples. The examples in this part are not exclusive.
Compliance with an example, to the extent applicable, constitutes
compliance with this part.
(c) Compliance. For non-federally insured credit unions, compliance
with an example contained in 12 CFR part 716, to the extent applicable,
constitutes compliance with this part. For intrastate securities
broker-dealers and investment advisors not registered with the
Securities and Exchange Commission, compliance with an example
contained in 17 CFR part 248, to the extent applicable, constitutes
compliance with this part.
3. In Sec. 313.6, revise paragraph (f) and add paragraph (g) to
read as follows:
Sec. 313.6 Information to be included in privacy notices.
* * * * *
(f) Model privacy form. Pursuant to Sec. 313.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
(g) Sample clauses. Sample clauses illustrating some of the notice
content required by this section are included in Appendix B of this
part. Use of a sample clause in a privacy notice provided on or before
[DATE ONE YEAR FOLLOWING THE DATE OF PUBLICATION OF THE FINAL RULE], to
the extent applicable, constitutes compliance with this part.
4. In Sec. 313.7 add paragraph (i) to read as follows:
Sec. 313.7 Form of opt-out notice to consumers; opt-out methods.
* * * * *
(i) Model privacy form. Pursuant to Sec. 313.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
Appendix A [Redesignated as Appendix B]
5. Redesignate Appendix A as Appendix B.
6. Add new Appendix A to read as follows:
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Appendix A to Part 313--Model Privacy Form
A. The Model Privacy Form
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B. General Instructions
1. How the model privacy form is used.
The model form may be used, at the option of a financial
institution, including a group of financial holding company
affiliates that use a common privacy notice, to meet the content
requirements of the privacy notice and opt-out notice set forth in
sections 313.6 and 313.7 of this part.
(Note that disclosure of certain information, such as assets,
income, and information from a consumer reporting agency, may give
rise to obligations under the Fair Credit Reporting Act [15 U.S.C.
1681-1681x] (FCRA), such as a requirement to permit a consumer to
opt out of disclosures to affiliates or designation as a consumer
reporting agency if disclosures are made to nonaffiliated third
parties.)
2. The Contents of the Model Privacy Form
The model form consists of two or three pages, depending on
whether a financial institution shares in a manner that requires it
to provide a third page with opt-out information.
(a) Page One. The first page consists of the following
components:
(1) The title.
(2) The key frame (Why?, What?, How?).
(3) The disclosure table (``Reasons we can share your personal
information'').
(4) Contact information.
(b) Page Two. The second page consists of the following
components:
(1) The title.
(2) The Frequently Asked Questions on sharing practices.
(3) The definitions.
(c) Page Three. The third page consists of a financial
institution's opt-out form.
3. The Format of the Model Privacy Form
The model form is a standardized form, including page layout,
page content, format, style, pagination, and shading. No other
information may be included in the model form, and the model form
may be modified only as described below.
(a) Easily readable type font. Financial institutions that use
the model form must use an easily readable type font. Easily
readable type font includes a minimum of 10-point font and
sufficient spacing between the lines of type.
(b) Logo. A financial institution may include a corporate logo
on any page of the notice, so long as it does not interfere with the
readability of the model form or the space constraints of each page.
(c) Page size and orientation. Each page of the model form must
be printed on one side of an 8.5 by 11 inch paper in portrait
orientation.
(d) Color. The model form may be printed on white or light color
paper (such as cream) with black or suitable contrasting color ink.
Spot color may be used to achieve visual interest, so long as the
color contrast is distinctive and the color does not detract from
the readability of the model form.
[[Page 14989]]
C. Information Required in the Model Privacy Form
The model form is a standardized form, and institutions seeking
to obtain the safe harbor through use of the model form may modify
the form only as described below:
1. Name of the Institution or Group of Affiliated Institutions
Providing the Notice
Include the name of the financial institution or group of
affiliated institutions providing the notice on the form wherever
[name of financial institution] appears. Contact information, such
as the institution's toll-free telephone number, Web address, or
mailing address, or other contact information, should be inserted as
appropriate, wherever [toll-free telephone] or [web address] or
[mailing address] appear.
2. Page One
(a) General instructions for the disclosure table. There are
reasons for sharing or using personal information listed in the left
column of the disclosure table. Each of these reasons correlates to
certain legal provisions described below. In the middle column, each
institution must provide a ``Yes'' or ``No'' response in each box
that accurately reflects its information sharing policies and
practices with respect to the reason listed on the left. Each
institution also must complete each box in the right column as to
whether a consumer can limit such sharing. If an institution answers
``No'' to sharing for a particular reason in the middle column, it
must answer ``We don't share'' in the corresponding right column. If
an institution answers ``Yes'' to sharing for a particular reason in
the middle column, it must, in the right column, answer either
``No'' if it does not offer an opt-out or ``Yes (Check your choices,
p. 3)'' if it does offer an opt-out. Except for the sixth row (``For
our affiliates to market to you''), an institution must list all
reasons for sharing, and complete the middle and right columns of
the disclosure table.
(b) Specific disclosures and corresponding legal provisions.
(1) For our everyday business purposes. Because all financial
institutions share information for everyday business purposes, as
contemplated by sections 313.14 and 313.15 of this part, the
financial institution must answer ``Yes'' to the sharing of such
information and ``No'' to the availability of an opt-out.
(2) For our marketing purposes. The financial institution must
answer ``Yes'' or ``No'' in the middle column. An institution that
does not share for this reason must answer ``We don't share'' in the
right column. An institution that shares for this reason may or may
not elect to provide an opt-out and must provide the corresponding
answer in the right column as described in paragraph C.2.(a) of this
Instruction. This provision includes service providers contemplated
by section 313.13 of this part.
(3) For joint marketing with other financial companies. As
contemplated by section 313.13 of this part, the financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that shares for
this reason may or may not elect to provide an opt-out and must
provide the corresponding answer in the right column as described in
paragraph C.2.(a) of this Instruction.
(4) For our affiliates' everyday business purposes--information
about transactions and experiences. This provision applies to
sharing of certain information with an institution's affiliates, as
contemplated by sections 603(d)(2)(A)(i) and (ii) of the FCRA. The
financial institution must answer ``Yes'' or ``No'' in the middle
column. An institution that does not share for this reason must
answer ``We don't share'' in the right column. An institution that
does not have any affiliates will also use this answer. Institutions
that share for this reason may or may not elect to provide an opt-
out and must provide the corresponding answer in the right column as
described in paragraph C.2.(a) of this Instruction.
(5) For our affiliates' everyday business purposes--information
about creditworthiness. This provision applies to the sharing of
certain information with an institution's affiliates, as
contemplated by section 603(d)(2)(A)(iii) of the FCRA. The financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that does not have
any affiliates will also use this answer. Institutions that share
for this reason must provide an opt-out and must provide the
appropriate answer in the right column as described in paragraph
C.2.(a) of this Instruction.
(6) For our affiliates to market to you. This provision applies
to information shared among affiliates that is used by those
affiliates for marketing, as contemplated by section 624 of the
FCRA. Following the effective date of the rules implementing section
624, institutions that elect to incorporate this provision into the
model form to satisfy their obligations under this part must include
this reason for sharing as set forth in the model form in order to
obtain the benefit of the safe harbor. Institutions whose affiliates
receive such information and use it for marketing must answer
``Yes'' in the middle column, and ``Yes (Check your choices, p. 3)''
in the right column corresponding to the availability of an opt-out.
Institutions whose affiliates receive such information and do not
use it for marketing may elect to include this provision in the
model form and answer ``No'' in the middle column and ``We don't
share'' in the right column; however, institutions whose affiliates
receive such information and do not use it for marketing are not
required to use this provision. Institutions that do not have
affiliates and elect to include this provision in their notice will
answer ``No'' in the middle column and ``We don't share'' in the
right column.
(7) For nonaffiliates to market to you. This provision applies
to sharing under sections 313.7 and 313.10(a) of this part.
Financial institutions that do not share for this reason must answer
``No'' in the middle column and ``We don't share'' in the right
column. Financial institutions that do share for this reason must
answer ``Yes'' in the middle column and ``Yes (check your choices,
p. 3)'' corresponding to the availability of an opt-out.
(8) Additional opt-outs. A financial institution may customize
the model form to offer opt-outs beyond those required under Federal
law, so long as the additional information falls within the space
constraints of the model form. If the institution chooses to offer
its customers an opt-out for its own marketing or for joint
marketing, for example, it can provide for that option by stating:
``Yes (Check your choices, p. 3)'' as to the availability of the
opt-out.
3. Page Two
(a) General instructions for the Definitions.
The financial institution must customize the space below the
last three definitions in this section (affiliates, nonafffiliates,
and joint marketing). This specific information must be in
italicized lettering to set off the information from the
standardized definitions.
(b) Affiliates. As required by section 313.6(a)(3) of this part,
the financial institution must identify the categories of its
affiliates or state ``[name of financial institution] has no
affiliates'' in italicized lettering where [affiliate information]
appears. A financial institution that shares with affiliates must
use, as applicable, the following format: ``Our affiliates include
companies with a [name of financial institution] name; financial
companies such as [list companies]; and nonfinancial companies, such
as [list companies].''
(c) Nonaffiliates. If the financial institution shares with
nonaffiliated third parties outside the exceptions in sections
313.14 and 313.15 of this part, the institution must identify the
types of nonaffiliated third parties with which it shares or state
``[name of financial institution] does not share with nonaffiliates
so they can market to you.'' in italicized lettering where
[nonaffiliate information] appears. A financial institution that
shares with nonaffiliated third parties as described here must use,
as applicable, the following format: ``Nonaffiliates we share with
can include [list categories of companies such as mortgage
companies, insurance companies, direct marketing companies, and
nonprofit organizations].''
(d) Joint Marketing. As required by section 313.13 of this part,
the financial institution must identify the types of financial
institutions with which it engages in joint marketing or state
``[name of financial institution] doesn't jointly market.'' in
italicized lettering where [joint marketing] appears. A financial
institution that shares with joint marketing partners must use, as
applicable, the following format: ``Our joint marketing partners
include [list categories of companies such as credit card
companies].''
4. Page Three
Opt-out form. Financial institutions must use page three only if
they: (1) share or use information in a manner that triggers an opt-
out; or (2) choose to provide an opt-out (as disclosed in the table
on page 1) in addition to what is required by law. The model opt-out
form must be provided on a separate page of the model form.
[[Page 14990]]
(a) Contact us. The section describes three common methods by
which a consumer exercises an opt-out--by telephone, on the Web, and
by mail. Financial institutions may customize this section to
provide for the particular opt-out methods and options the
institution provides. For example, if an institution offers opting
out by telephone and the Web but not by mail, it would provide only
telephone and Web information as shown in the model form in the
``Contact Us'' box. Only institutions that allow more than 30 days
after providing the notice before sharing information may change the
number of days in the lower right hand section of the box.
(b) Check your choices. Institutions must display the applicable
opt-out options in the ``Check your choices'' box shown on this
page. If an institution chooses not to offer an opt-out by mail, it
must delete the boxes for name, address, account number, and mailing
directions in the lower right-hand corner of the model form.
Financial institutions that only offer one or two of the opt-out
options listed on the model form must list only those options from
the model form that apply to their practices and correspond
accurately to the disclosures on page one. Thus, if an institution
does not share in a manner that requires an opt-out for sharing with
nonaffiliates, it must not include that opt-out option on page three
of the model form. Institutions requiring information from consumers
on the opt-out form other than an account number should modify that
designation in the ``Check your choices'' box. Institutions that
require customers with multiple accounts to identify each account to
which the opt-out should apply should modify that portion of the
model form.
(c) Section 624 opt-out. If the financial institution's
affiliates use information for marketing pursuant to section 624 of
the FCRA, and the institution elects to consolidate that opt-out
notice in the model form, it must include that disclosure and opt-
out election as shown in the model form. Institutions that elect to
limit the time for the affiliate marketing opt-out, consistent with
the requirements of section 624, must adhere to the requirements of
that section and the Agencies' implementing rule with respect to any
subsequent notice and opt-out. Institutions that elect to limit the
opt-out period must include a statement in italics, as shown on the
model form, that states the period of time for which the opt-out
applies.
(d) Additional opt-outs. A financial institution that uses the
disclosure table to indicate any opt-out choices available to
consumers beyond those required by Federal law must include those
opt-outs on page three of the model form. For example, if the
financial institution discloses in the table that it offers an opt-
out for joint marketing, the institution must revise the opt-out
form on page three to reflect the availability of an opt-out, such
as by adding a check-off box with the words ``Do not share my
personal information with other financial institutions to jointly
market to me.'' Likewise, if a financial institution chooses to
offer its customers an opt-out for its marketing, it can provide for
that option in the disclosure table and on the opt-out form by
adding a check-off box with the words ``Do not share [or use] my
personal information to market to me.''
7. Amend newly redesignated Appendix B by adding a new sentence
immediately after the heading:
Appendix B to Part 313-Sample Clauses
This Appendix only applies to privacy notices provided until the
date that is on or before one year following the date of final
publication of this rule. * * *
* * * * *
Commodity Futures Trading Commission
17 CFR Chapter I
Authority and Issuance
For the reasons set forth in the joint preamble, the Commodity
Futures Trading Commission proposes to amend part 160 of chapter I of
title 17 of the Code of Federal Regulations as follows:
PART 160--PRIVACY OF CONSUMER FINANCIAL INFORMATION
1. The authority citation for part 160 continues to read as
follows:
Authority: 7 U.S.C. 7b-2 and 12a(5); 15 U.S.C. 6801 et seq.
2. Revise Sec. 160.2 to read as follows:
Sec. 160.2 Model privacy form and rules of construction.
(a) Model privacy form. Use of the model privacy form in Appendix A
of this part, consistent with the instructions in Appendix A,
constitutes compliance with the notice content requirements of
Sec. Sec. 160.6 and 160.7 of this part, although use of the model
privacy form is not required.
(b) Examples. The examples in this part are not exclusive.
Compliance with an example, to the extent applicable, constitutes
compliance with this part.
(c) Substituted compliance.
(1) Any person or entity otherwise subject to this part that is
subject to and in compliance with the Securities and Exchange
Commission Regulation S-P, 17 CFR part 248, will be deemed to be in
compliance with this part.
(2) Any commodity trading advisor otherwise subject to this part
that is registered or required to be registered as an investment
adviser in the state in which it maintains its principal office and
place of business as defined in Sec. 275.203A-3 of this title, and
that is subject to and in compliance with 16 CFR part 313, will be
deemed to be in compliance with this part.
3. In Sec. 160.6, revise paragraph (f) and add paragraph (g) to
read as follows:
Sec. 160.6 Information to be included in privacy notices.
* * * * *
(f) Model privacy form. Pursuant to Sec. 160.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
(g) Sample clauses. Sample clauses illustrating some of the notice
content required by this section are included in Appendix B of this
part. Use of a sample clause in a privacy notice provided on or before
[DATE ONE YEAR FOLLOWING THE DATE OF PUBLICATION OF THE FINAL RULE], to
the extent applicable, constitutes compliance with this part.
4. In Sec. 160.7 add paragraph (i) to read as follows:
Sec. 160.7 Form of opt-out notice to consumers; opt-out methods.
* * * * *
(i) Model privacy form. Pursuant to Sec. 160.2(a) of this part, a
model privacy form that meets the notice content requirements of this
section is included in Appendix A of this part.
Appendix A [Redesignated as Appendix B]
5. Redesignate Appendix A as Appendix B.
6. Add new Appendix A to read as follows:
Appendix A to Part 160--Model Privacy Form
A. The Model Privacy Form
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B. General Instructions
1. How the Model Privacy Form Is Used
The model form may be used, at the option of a financial
institution, including a group of financial holding company
affiliates that use a common privacy notice, to meet the content
requirements of the privacy notice and opt-out notice set forth in
sections 160.6 and 160.7 of this part.
(Note that disclosure of certain information, such as assets,
income, and information from a consumer reporting agency, may give
rise to obligations under the Fair Credit Reporting Act [15 U.S.C.
1681-1681x] (FCRA), such as a requirement to permit a consumer to
opt out of disclosures to affiliates or designation as a consumer
reporting agency if disclosures are made to nonaffiliated third
parties.)
2. The Contents of the Model Privacy Form
The model form consists of two or three pages, depending on
whether a financial institution shares in a manner that requires it
to provide a third page with opt-out information.
(a) Page One. The first page consists of the following
components:
(1) The title.
(2) The key frame (Why?, What?, How?).
(3) The disclosure table (``Reasons we can share your personal
information'').
(4) Contact information.
(b) Page Two. The second page consists of the following
components:
(1) The title.
(2) The Frequently Asked Questions on sharing practices.
(3) The definitions.
(c) Page Three. The third page consists of a financial
institution's opt-out form.
3. The Format of the Model Privacy Form
The model form is a standardized form, including page layout,
page content, format, style, pagination, and shading. No other
information may be included in the model form, and the model form
may be modified only as described below.
(a) Easily readable type font. Financial institutions that use
the model form must use an easily readable type font. Easily
readable type font includes a minimum of 10-point font and
sufficient spacing between the lines of type.
(b) Logo. A financial institution may include a corporate logo
on any page of the notice, so long as it does not interfere with the
readability of the model form or the space constraints of each page.
(c) Page size and orientation. Each page of the model form must
be printed on one side of an 8.5 by 11 inch paper in portrait
orientation.
(d) Color. The model form may be printed on white or light color
paper (such as cream) with black or suitable contrasting color ink.
Spot color may be used to achieve visual interest, so long as the
color contrast is distinctive and the color does not detract from
the readability of the model form.
[[Page 14994]]
C. Information Required in the Model Privacy Form
The model form is a standardized form, and institutions seeking
to obtain the safe harbor through use of the model form may modify
the form only as described below:
1. Name of the Institution or Group of Affiliated Institutions
Providing the Notice
Include the name of the financial institution or group of
affiliated institutions providing the notice on the form wherever
[name of financial institution] appears. Contact information, such
as the institution's toll-free telephone number, Web address, or
mailing address, or other contact information, should be inserted as
appropriate, wherever [toll-free telephone] or [web address] or
[mailing address] appear.
2. Page One
(a) General instructions for the disclosure table. There are
reasons for sharing or using personal information listed in the left
column of the disclosure table. Each of these reasons correlates to
certain legal provisions described below. In the middle column, each
institution must provide a ``Yes'' or ``No'' response in each box
that accurately reflects its information sharing policies and
practices with respect to the reason listed on the left. Each
institution also must complete each box in the right column as to
whether a consumer can limit such sharing. If an institution answers
``No'' to sharing for a particular reason in the middle column, it
must answer ``We don't share'' in the corresponding right column. If
an institution answers ``Yes'' to sharing for a particular reason in
the middle column, it must, in the right column, answer either
``No'' if it does not offer an opt-out or ``Yes (Check your choices,
p.3)'' if it does offer an opt-out. Except for the sixth row (``For
our affiliates to market to you''), an institution must list all
reasons for sharing, and complete the middle and right columns of
the disclosure table.
(b) Specific disclosures and corresponding legal provisions.
(1) For our everyday business purposes. Because all financial
institutions share information for everyday business purposes, as
contemplated by sections 160.14 and 160.15 of this part, the
financial institution must answer ``Yes'' to the sharing of such
information and ``No'' to the availability of an opt-out.
(2) For our marketing purposes. The financial institution must
answer ``Yes'' or ``No'' in the middle column. An institution that
does not share for this reason must answer ``We don't share'' in the
right column. An institution that shares for this reason may or may
not elect to provide an opt-out and must provide the corresponding
answer in the right column as described in paragraph C.2.(a) of this
Instruction. This provision includes service providers contemplated
by section 160.13 of this part.
(3) For joint marketing with other financial companies. As
contemplated by section 160.13 of this part, the financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that shares for
this reason may or may not elect to provide an opt-out and must
provide the corresponding answer in the right column as described in
paragraph C.2.(a) of this Instruction.
(4) For our affiliates' everyday business purposes ``
information about transactions and experiences. This provision
applies to sharing of certain information with an institution's
affiliates, as contemplated by sections 603(d)(2)(A) (i) and (ii) of
the FCRA. The financial institution must answer ``Yes'' or ``No'' in
the middle column. An institution that does not share for this
reason must answer ``We don't share'' in the right column. An
institution that does not have any affiliates will also use this
answer. Institutions that share for this reason may or may not elect
to provide an opt-out and must provide the corresponding answer in
the right column as described in paragraph C.2.(a) of this
Instruction.
(5) For our affiliates' everyday business purposes ``
information about creditworthiness. This provision applies to the
sharing of certain information with an institution's affiliates, as
contemplated by section 603(d)(2)(A)(iii) of the FCRA. The financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that does not have
any affiliates will also use this answer. Institutions that share
for this reason must provide an opt-out and must provide the
appropriate answer in the right column as described in paragraph
C.2.(a) of this Instruction.
(6) For our affiliates to market to you. This provision applies
to information shared among affiliates that is used by those
affiliates for marketing, as contemplated by section 624 of the
FCRA. Following the effective date of the rules implementing section
624, institutions that elect to incorporate this provision into the
model form to satisfy their obligations under this part must include
this reason for sharing as set forth in the model form in order to
obtain the benefit of the safe harbor. Institutions whose affiliates
receive such information and use it for marketing must answer
``Yes'' in the middle column, and ``Yes (Check your choices, p.3)''
in the right column corresponding to the availability of an opt-out.
Institutions whose affiliates receive such information and do not
use it for marketing may elect to include this provision in the
model form and answer ``No'' in the middle column and ``We don't
share'' in the right column; however, institutions whose affiliates
receive such information and do not use it for marketing are not
required to use this provision. Institutions that do not have
affiliates and elect to include this provision in their notice will
answer ``No'' in the middle column and ``We don't share'' in the
right column.
(7) For nonaffiliates to market to you. This provision applies
to sharing under sections 160.7 and 160.10(a) of this part.
Financial institutions that do not share for this reason must answer
``No'' in the middle column and ``We don't share'' in the right
column. Financial institutions that do share for this reason must
answer ``Yes'' in the middle column and ``Yes (check your choices,
p. 3)'' corresponding to the availability of an opt-out.
(8) Additional opt-outs. A financial institution may customize
the model form to offer opt-outs beyond those required under Federal
law, so long as the additional information falls within the space
constraints of the model form. If the institution chooses to offer
its customers an opt-out for its own marketing or for joint
marketing, for example, it can provide for that option by stating:
``Yes (Check your choices, p.3)'' as to the availability of the opt-
out.
3. Page Two
(a) General instructions for the Definitions.
The financial institution must customize the space below the
last three definitions in this section (affiliates, nonafffiliates,
and joint marketing). This specific information must be in
italicized lettering to set off the information from the
standardized definitions.
(b) Affiliates. As required by section 160.6(a)(3) of this part,
the financial institution must identify the categories of its
affiliates or state ``[name of financial institution] has no
affiliates'' in italicized lettering where [affiliate information]
appears. A financial institution that shares with affiliates must
use, as applicable, the following format: ``Our affiliates include
companies with a [name of financial institution] name; financial
companies such as [list companies]; and nonfinancial companies, such
as [list companies].''
(c) Nonaffiliates. If the financial institution shares with
nonaffiliated third parties outside the exceptions in sections
160.14 and 160.15 of this part, the institution must identify the
types of nonaffiliated third parties with which it shares or state
``[name of financial institution] does not share with nonaffiliates
so they can market to you.'' in italicized lettering where
[nonaffiliate information] appears. A financial institution that
shares with nonaffiliated third parties as described here must use,
as applicable, the following format: ``Nonaffiliates we share with
can include [list categories of companies such as mortgage
companies, insurance companies, direct marketing companies, and
nonprofit organizations].''
(d) Joint Marketing. As required by section 160.13 of this part,
the financial institution must identify the types of financial
institutions with which it engages in joint marketing or state
``[name of financial institution] doesn't jointly market.'' in
italicized lettering where [joint marketing] appears. A financial
institution that shares with joint marketing partners must use, as
applicable, the following format: ``Our joint marketing partners
include [list categories of companies such as credit card
companies].''
4. Page Three
Opt-out form. Financial institutions must use page three only if
they: (1) Share or use information in a manner that triggers an opt-
out; or (2) choose to provide an opt-out (as disclosed in the table
on page 1) in addition to what is required by law. The model opt-out
form must be provided on a separate page of the model form.
[[Page 14995]]
(a) Contact us. The section describes three common methods by
which a consumer exercises an opt-out--by telephone, on the Web, and
by mail. Financial institutions may customize this section to
provide for the particular opt-out methods and options the
institution provides. For example, if an institution offers opting
out by telephone and the Web but not by mail, it would provide only
telephone and Web information as shown in the model form in the
``Contact Us'' box. Only institutions that allow more than 30 days
after providing the notice before sharing information may change the
number of days in the lower right hand section of the box.
(b) Check your choices. Institutions must display the applicable
opt-out options in the ``Check your choices'' box shown on this
page. If an institution chooses not to offer an opt-out by mail, it
must delete the boxes for name, address, account number, and mailing
directions in the lower right-hand corner of the model form.
Financial institutions that only offer one or two of the opt-out
options listed on the model form must list only those options from
the model form that apply to their practices and correspond
accurately to the disclosures on page one. Thus, if an institution
does not share in a manner that requires an opt-out for sharing with
nonaffiliates, it must not include that opt-out option on page three
of the model form. Institutions requiring information from consumers
on the opt-out form other than an account number should modify that
designation in the ``Check your choices'' box. Institutions that
require customers with multiple accounts to identify each account to
which the opt-out should apply should modify that portion of the
model form.
(c) Section 624 opt-out. If the financial institution's
affiliates use information for marketing pursuant to section 624 of
the FCRA, and the institution elects to consolidate that opt-out
notice in the model form, it must include that disclosure and opt-
out election as shown in the model form. Institutions that elect to
limit the time for the affiliate marketing opt-out, consistent with
the requirements of section 624, must adhere to the requirements of
that section and the Agencies' implementing rule with respect to any
subsequent notice and opt-out. Institutions that elect to limit the
opt-out period must include a statement in italics, as shown on the
model form, that states the period of time for which the opt-out
applies.
(d) Additional opt-outs. A financial institution that uses the
disclosure table to indicate any opt-out choices available to
consumers beyond those required by Federal law must include those
opt-outs on page three of the model form. For example, if the
financial institution discloses in the table that it offers an opt-
out for joint marketing, the institution must revise the opt-out
form on page three to reflect the availability of an opt-out, such
as by adding a check-off box with the words ``Do not share my
personal information with other financial institutions to jointly
market to me.'' Likewise, if a financial institution chooses to
offer its customers an opt-out for its marketing, it can provide for
that option in the disclosure table and on the opt-out form by
adding a check-off box with the words ``Do not share [or use] my
personal information to market to me.''
7. Amend newly redesignated Appendix B by adding a new sentence
immediately after the heading:
Appendix B to Part 160--Sample Clauses
This Appendix only applies to privacy notices provided until the
date that is on or before one year following the date of final
publication of this rule. * * *
* * * * *
Securities and Exchange Commission
Statutory Authority
The Commission is proposing to amend Regulation S-P pursuant to
authority set forth in section 728 of the Regulatory Relief Act [Pub.
L. 109-351], section 504 of the GLB Act [15 U.S.C. 6804], section 23 of
the Securities Exchange Act [15 U.S.C. 78w], section 38(a) of the
Investment Company Act [15 U.S.C. 80a-37(a)], and section 211 of the
Investment Advisers Act [15 U.S.C. 80b-11].
Text of Proposed Amendments
For the reasons set forth in the preamble, the Commission proposes
to amend Title 17, Chapter II of the Code of Federal Regulations as
follows:
PART 248--REGULATION S-P: PRIVACY OF CONSUMER FINANCIAL INFORMATION
1. Revise the authority citation for part 248 to read as follows:
Authority: 15 U.S.C. 78q; 78w; 78mm; 80a-30(a); 80a-37; 80b-4;
80b-11; 1681w; and 6801-6809.
2. Revise Sec. 248.2 to read as follows:
Sec. 248.2 Model privacy form; rule of construction.
(a) Model privacy form. Use of Form S-P (see Appendix A of this
part), consistent with the instructions to the form, constitutes
compliance with the notice content requirements of Sec. Sec. 248.6 and
248.7 of this part, although use of Form S-P is not required.
(b) Examples. The examples in this part provide guidance concerning
the rule's application in ordinary circumstances. The facts and
circumstances of each individual situation, however, will determine
whether compliance with an example, to the extent practicable,
constitutes compliance with this part.
(c) Substituted compliance with CFTC financial privacy rules by
futures commission merchants and introducing brokers. Except with
respect to Sec. 248.30(b), any futures commission merchant or
introducing broker (as those terms are defined in the Commodity
Exchange Act (7 U.S.C. 1, et seq.)) registered by notice with the
Commission for the purpose of conducting business in security futures
products pursuant to section 15(b)(11)(A) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o(b)(11)(A)) that is subject to and in
compliance with the financial privacy rules of the Commodity Futures
Trading Commission (17 CFR part 160) will be deemed to be in compliance
with this part.
* * * * *
3. Amend Sec. 248.6 by revising paragraph (f) and adding paragraph
(g) to read as follows:
Sec. 248.6 Information to be included in privacy notices.
* * * * *
(f) Model Form S-P. Pursuant to Sec. 248.2(a) and Appendix A of
this part, Form S-P meets the notice content requirements of this
section.
(g) Sample clauses. Sample clauses illustrating some of the notice
content required by this section are included in Appendix B of this
part. The sample clauses in Appendix B of this part provide guidance
concerning the rule's application in ordinary circumstances in a
privacy notice provided on or before [ONE YEAR FOLLOWING THE DATE OF
PUBLICATION OF THE FINAL RULE]. The facts and circumstances of each
individual situation, however, will determine whether compliance with a
sample clause constitutes compliance with this part.
4. Amend Sec. 248.7 by adding paragraph (i) to read as follows:
Sec. 248.7 Form of opt-out notice to consumers; opt-out methods.
* * * * *
(i) Model Form S-P. Pursuant to Sec. 248.2(a) and Appendix A of
this part, Form S-P meets the notice content requirements of this
section.
Appendix A [Redesignated as Appendix B]
5. Redesignate Appendix A to Part 248 as Appendix B.
6. Add new Appendix A to read as follows:
Appendix A to Part 248--Form S-P
(1) Any person may obtain a copy of Form S-P prescribed for use
in this part by written request to the Securities and Exchange
Commission, 100 F Street, NE., Washington, DC 20549. Any person also
may view this form at: [Web site URL].
(2) Use of Form S-P by brokers, dealers, and investment
companies, and investment
[[Page 14996]]
advisers registered with the Commission constitutes compliance with
the notice content requirements of Sec. Sec. 248.6 and 248.7 of
this part.
7. Form S-P (referenced in Appendix A of this part) is added to
read as follows:
Note: The text of Form S-P does not, and this amendment will
not, appear in the Code of Federal Regulations.
Securities and Exchange Commission--Form S-P
A. Model Privacy Form
[GRAPHIC] [TIFF OMITTED] TP29MR07.027
[[Page 14997]]
[GRAPHIC] [TIFF OMITTED] TP29MR07.028
[[Page 14998]]
[GRAPHIC] [TIFF OMITTED] TP29MR07.029
B. General Instructions
1. How the Model Privacy Form is Used
The model form may be used, at the option of a financial
institution, including a group of financial holding company
affiliates that use a common privacy notice, to meet the content
requirements of the privacy notice and opt-out notice set forth in
sections 248.6 and 248.7 of this part.
(Note that disclosure of certain information, such as assets,
income, and information from a consumer reporting agency, may give
rise to obligations under the Fair Credit Reporting Act [15 U.S.C.
1681--1681x] (FCRA), such as a requirement to permit a consumer to
opt out of disclosures to affiliates or designation as a consumer
reporting agency if disclosures are made to nonaffiliated third
parties.)
2. The contents of the model privacy form
The model form consists of two or three pages, depending on
whether a financial institution shares in a manner that requires it
to provide a third page with opt-out information.
(a) Page One. The first page consists of the following
components:
(1) The title.
(2) The key frame (Why?, What?, How?).
(3) The disclosure table (``Reasons we can share your personal
information'').
(4) Contact information.
(b) Page Two. The second page consists of the following
components:
(1) The title.
(2) The Frequently Asked Questions on sharing practices.
(3) The definitions.
(c) Page Three. The third page consists of a financial
institution's opt-out form.
3. The Format of the Model Privacy Form
The model form is a standardized form, including page layout,
page content, format, style, pagination, and shading. No other
information may be included in the model form, and the model form
may be modified only as described below.
(a) Easily readable type font. Financial institutions that use
the model form must use an easily readable type font. Easily
readable type font includes a minimum of 10-point font and
sufficient spacing between the lines of type.
(b) Logo. A financial institution may include a corporate logo
on any page of the notice, so long as it does not interfere with the
readability of the model form or the space constraints of each page.
[[Page 14999]]
(c) Page size and orientation. Each page of the model form must
be printed on one side of an 8.5 by 11 inch paper in portrait
orientation.
(d) Color. The model form may be printed on white or light color
paper (such as cream) with black or suitable contrasting color ink.
Spot color may be used to achieve visual interest, so long as the
color contrast is distinctive and the color does not detract from
the readability of the model form.
C. Information Required in the Model Privacy Form
The model form is a standardized form, and institutions seeking
to obtain the safe harbor through use of the model form may modify
the form only as described below:
1. Name of the Institution or Group of Affiliated Institutions
Providing the Notice
Include the name of the financial institution or group of
affiliated institutions providing the notice on the form wherever
[name of financial institution] appears. Contact information, such
as the institution's toll-free telephone number, Web address, or
mailing address, or other contact information, should be inserted as
appropriate, wherever [toll-free telephone] or [web address] or
[mailing address] appear.
2. Page One
(a) General instructions for the disclosure table. There are
reasons for sharing or using personal information listed in the left
column of the disclosure table. Each of these reasons correlates to
certain legal provisions described below. In the middle column, each
institution must provide a ``Yes'' or ``No'' response in each box
that accurately reflects its information sharing policies and
practices with respect to the reason listed on the left. Each
institution also must complete each box in the right column as to
whether a consumer can limit such sharing. If an institution answers
``No'' to sharing for a particular reason in the middle column, it
must answer ``We don't share'' in the corresponding right column. If
an institution answers ``Yes'' to sharing for a particular reason in
the middle column, it must, in the right column, answer either
``No'' if it does not offer an opt-out or ``Yes (Check your choices,
p.3)'' if it does offer an opt-out. Except for the sixth row (``For
our affiliates to market to you''), an institution must list all
reasons for sharing, and complete the middle and right columns of
the disclosure table.
(b) Specific disclosures and corresponding legal provisions.
(1) For our everyday business purposes. Because all financial
institutions share information for everyday business purposes, as
contemplated by sections 248.14 and 248.15 of this part, the
financial institution must answer ``Yes'' to the sharing of such
information and ``No'' to the availability of an opt-out.
(2) For our marketing purposes. The financial institution must
answer ``Yes'' or ``No'' in the middle column. An institution that
does not share for this reason must answer ``We don't share'' in the
right column. An institution that shares for this reason may or may
not elect to provide an opt-out and must provide the corresponding
answer in the right column as described in paragraph C.2.(a) of this
Instruction. This provision includes service providers contemplated
by section 248.13 of this part.
(3) For joint marketing with other financial companies. As
contemplated by section 248.13 of this part, the financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that shares for
this reason may or may not elect to provide an opt-out and must
provide the corresponding answer in the right column as described in
paragraph C.2.(a) of this Instruction.
(4) For our affiliates' everyday business purposes--information
about transactions and experiences. This provision applies to
sharing of certain information with an institution's affiliates, as
contemplated by sections 603(d)(2)(A)(i) and (ii) of the FCRA. The
financial institution must answer ``Yes'' or ``No'' in the middle
column. An institution that does not share for this reason must
answer ``We don't share'' in the right column. An institution that
does not have any affiliates will also use this answer. Institutions
that share for this reason may or may not elect to provide an opt-
out and must provide the corresponding answer in the right column as
described in paragraph C.2.(a) of this Instruction.
(5) For our affiliates' everyday business purposes--information
about creditworthiness. This provision applies to the sharing of
certain information with an institution's affiliates, as
contemplated by section 603(d)(2)(A)(iii) of the FCRA. The financial
institution must answer ``Yes'' or ``No'' in the middle column. An
institution that does not share for this reason must answer ``We
don't share'' in the right column. An institution that does not have
any affiliates will also use this answer. Institutions that share
for this reason must provide an opt-out and must provide the
appropriate answer in the right column as described in paragraph
C.2.(a) of this Instruction.
(6) For our affiliates to market to you. This provision applies
to information shared among affiliates that is used by those
affiliates for marketing, as contemplated by section 624 of the
FCRA. Following the effective date of the rules implementing section
624, institutions that elect to incorporate this provision into the
notice required under this part must include this reason for sharing
as set forth in the model form. Institutions whose affiliates
receive such information and use it for marketing must answer
``Yes'' in the middle column, and ``Yes (Check your choices, p.3)''
in the right column corresponding to the availability of an opt-out.
Institutions whose affiliates receive such information and do not
use it for marketing may elect to include this provision in the
model form and answer ``No'' in the middle column and ``We don't
share'' in the right column; however, institutions whose affiliates
receive such information and do not use it for marketing are not
required to use this provision. Institutions that do not have
affiliates and elect to include this provision in their notice will
answer ``No'' in the middle column and ``We don't share'' in the
right column.
(7) For nonaffiliates to market to you. This provision applies
to sharing under sections 248.7 and 248.10(a) of this part.
Financial institutions that do not share for this reason must answer
``No'' in the middle column and ``We don't share'' in the right
column. Financial institutions that do share for this reason must
answer ``Yes'' in the middle column and ``Yes (check your choices,
p. 3)'' corresponding to the availability of an opt-out.
(8) Additional opt-outs. A financial institution may customize
the model form to offer opt-outs beyond those required under Federal
law, so long as the additional information falls within the space
constraints of the model form. If the institution chooses to offer
its customers an opt-out for its own marketing or for joint
marketing, for example, it can provide for that option by stating:
``Yes (Check your choices, p.3)'' as to the availability of the opt-
out.
3. Page Two
(a) General instructions for the Definitions.
The financial institution must customize the space below the
last three definitions in this section (affiliates, nonafffiliates,
and joint marketing).
This specific information must be in italicized lettering to set
off the information from the standardized definitions.
(b) Affiliates. As required by section 248.6(a)(3) of this part,
the financial institution must identify the categories of its
affiliates or state ``[name of financial institution] has no
affiliates'' in italicized lettering where [affiliate information]
appears. A financial institution that shares with affiliates must
use, as applicable, the following format: ``Our affiliates include
companies with a [name of financial institution] name; financial
companies such as [list companies]; and nonfinancial companies, such
as [list companies].''
(c) Nonaffiliates. If the financial institution shares with
nonaffiliated third parties outside the exceptions in sections
248.14 and 248.15 of this part, the institution must identify the
types of nonaffiliated third parties with which it shares or state
``[name of financial institution] does not share with nonaffiliates
so they can market to you.'' in italicized lettering where
[nonaffiliate information] appears. A financial institution that
shares with nonaffiliated third parties as described here must use,
as applicable, the following format: ``Nonaffiliates we share with
can include [list categories of companies such as mortgage
companies, insurance companies, direct marketing companies, and
nonprofit organizations].''
(d) Joint Marketing. As required by section 248.13 of this part,
the financial institution must identify the types of financial
institutions with which it engages in joint marketing or state
``[name of financial institution] doesn't jointly market.'' in
italicized lettering where [joint marketing] appears. A financial
institution that shares with joint marketing partners must use, as
applicable, the following format: ``Our joint marketing partners
include [list categories of companies such as credit card
companies].''
[[Page 15000]]
4. Page Three
Opt-out form. Financial institutions must use page three only if
they: (1) Share or use information in a manner that triggers an opt-
out; or (2) choose to provide an opt-out (as disclosed in the table
on page 1) in addition to what is required by law. The model opt-out
form must be provided on a separate page of the model form.
(a) Contact us. The section describes three common methods by
which a consumer exercises an opt-out--by telephone, on the Web, and
by mail. Financial institutions may customize this section to
provide for the particular opt-out methods and options the
institution provides. For example, if an institution offers opting
out by telephone and the Web but not by mail, it would provide only
telephone and Web information as shown in the model form in the
``Contact Us'' box. Only institutions that allow more than 30 days
after providing the notice before sharing information may change the
number of days in the lower right hand section of the box.
(b) Check your choices. Institutions must display the applicable
opt-out options in the ``Check your choices'' box shown on this
page. If an institution chooses not to offer an opt-out by mail, it
must delete the boxes for name, address, account number, and mailing
directions in the lower right-hand corner of the model form.
Financial institutions that only offer one or two of the opt-out
options listed on the model form must list only those options from
the model form that apply to their practices and correspond
accurately to the disclosures on page one. Thus, if an institution
does not share in a manner that requires an opt-out for sharing with
nonaffiliates, it must not include that opt-out option on page three
of the model form. Institutions requiring information from consumers
on the opt-out form other than an account number should modify that
designation in the ``Check your choices'' box. Institutions that
require customers with multiple accounts to identify each account to
which the opt-out should apply should modify that portion of the
model form.
(c) Section 624 opt-out. If the financial institution's
affiliates use information for marketing pursuant to section 624 of
the FCRA, and the institution elects to consolidate that opt-out
notice in the model form, it must include that disclosure and opt-
out election as shown in the model form. Institutions that elect to
limit the time for the affiliate marketing opt-out, consistent with
the requirements of section 624, must adhere to the requirements of
that section and the Agencies' implementing rule with respect to any
subsequent notice and opt-out. Institutions that elect to limit the
opt-out period must include a statement in italics, as shown on the
model form, that states the period of time for which the opt-out
applies.
(d) Additional opt-outs. A financial institution that uses the
disclosure table to indicate any opt-out choices available to
consumers beyond those required by Federal law must include those
opt-outs on page three of the model form. For example, if the
financial institution discloses in the table that it offers an opt-
out for joint marketing, the institution must revise the opt-out
form on page three to reflect the availability of an opt-out, such
as by adding a check-off box with the words ``Do not share my
personal information with other financial institutions to jointly
market to me.'' Likewise, if a financial institution chooses to
offer its customers an opt-out for its marketing, it can provide for
that option in the disclosure table and on the opt-out form by
adding a check-off box with the words ``Do not share [or use] my
personal information to market to me.''
8. Amend newly designated Appendix B by adding a new sentence
immediately after the heading to read as follows:
Appendix B to Part 248--Sample Clauses
This appendix provides guidance only for privacy notices provided
on or before [ONE YEAR AFTER THE PUBLICATION DATE OF THE FINAL RULE]. *
* *
* * * * *
Dated: March 9, 2007.
John C. Dugan,
Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, March 16, 2007.
Jennifer J. Johnson,
Secretary of the Board.
By order of the Board of Directors.
Dated at Washington, DC, this 20th day of March, 2007.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
Dated: March 19, 2007.
By the Office of Thrift Supervision.
John M. Reich,
Director.
By the National Credit Union Administration Board on March 15,
2007.
Mary Rupp,
Secretary of the Board.
The Federal Trade Commission.
Dated: March 20, 2007.
By direction of the Commission.
Donald S. Clark,
Secretary.
Dated: March 20, 2007.
Eileen A. Donovan,
Acting Secretary of the Commodity Futures Trading Commission.
By the Securities and Exchange Commission.
Dated: March 20, 2007.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 07-1476 Filed 3-28-07; 8:45 am]
BILLING CODE 4810-33-P