American
Bankers Association
March 29, 2004
Public Information Room
Office of the Comptroller of the Currency
250 E Street, SW
Mail Stop 1-5
Washington, DC 20219
Attention: Docket No. 03-27
Becky Baker, Secretary of the Board
National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314-3428
Regulation Comments
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552
Attention: No. 2003-62
Federal Trade Commission
Office of the Secretary
Room 159-H
600 Pennsylvania Avenue, NW
Washington, DC 20580
Jennifer J. Johnson, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551
Re: Docket No. R-1173
Jean A. Webb, Secretary
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
Robert E. Feldman, Executive Secretary
Attention: Comments/Executive Secretary Section
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549-0609
Attention: File No. S7-30-03
Re: Office of the Comptroller of the Currency, Docket No. 03-27
Office of Thrift Supervision, No. 2003-62
Board of Governors of the Federal Reserve System, Docket No. R-1173
Federal Trade Commission, Project No. P034815
Securities and Exchange Commission, File No. S7-30-03
ANPR to Consider Alternative Forms of Privacy Notices Under the
Gramm-Leach-Bliley Act
Ladies and Gentlemen:
The American Bankers Association appreciates this opportunity to
respond to the December 30, 2003 Advance Notice of Proposed Rulemaking
(ANPR) on the interagency proposal to consider alternative forms
of privacy notices under the Gramm-Leach-Bliley Act (GLB). ABA
brings together all elements of the banking community to best represent
the interests of this rapidly changing industry. Its membership – which
includes community, regional, and money center banks and holding
companies, as well as savings institutions, trust companies, and
savings banks – makes ABA the largest banking trade association
in the country.
According to
the background information in the ANPR, the agencies will review
the information
collected through this comment process
and through independent research conducted by the agencies and determine “whether
to propose changes to the privacy rule and, if so will seek further
public comment on specific proposals.” As we will explain below,
the American Bankers Association believes that now is not the time
to create a new privacy notice requirement.
Reasons for the ANPR
In the ANPR,
the agencies are seeking comment on issues related to the format,
elements,
and language used in privacy notices that
would make the notices more “accessible, readable, and useful.” The
agencies are pursuing this goal, in part to “encourage and
facilitate the efforts already underway” by financial institutions
to improve privacy notices.
Specifically,
the agencies request comment on whether to pursue the development
of a short
privacy notice. There are, according to
the agencies, several ways to exercise their authority for developing
a short notice. The agencies could offer model forms or language;
provide sets of guidelines or best practices; or propose amendments
to the privacy rule. The agencies request comment on what approaches “would
be most useful to consumers while taking into consideration the burden
on financial institutions.”
The Agencies Should Delay Creation of a Government Privacy Notice
The ABA has reviewed the myriad of questions posed by the agencies
as they consider what steps to take to improve the GLB privacy notices
with many segments of our membership. Perhaps the following response
of a community banker best sums up the reaction of many of our members:
For most of us banks out here in the 'heartland', frankly, the current
privacy notice hasn't been a big concern for either banks or our
customers since the first year of enactment. We do our annual mailing
- - and hear nothing back. I think the consumer is beginning to treat
the mailing like junk mail since they now get them from every insurer
as well as financial institution. For the average family, I'm sure
they get a dozen or more per year.
Another institution pointed out:
The only time we have really had any comments [from customers] was
when the notice was first mailed out and that was mainly because
of all the news media on the issue. Once the topic died down, we
have really not had issues come up.
Other points of emphasis from the membership are the burden of the
mandatory annual privacy notice that is seen as nothing more than
a nuisance to most consumers, particularly since it must be sent
even if there have been no privacy policy changes at the bank. In
addition, a number of bankers have expressed concerns that an agency
short notice will simply be in addition to the longer notice. That
is an unacceptable approach. It should also be noted that the second
most costly regulation for compliance departments are the privacy
laws and regulations. Therefore, we strongly urge the agencies to
consider carefully the cost of developing, producing and distributing
a new privacy notice, no matter how short.
ABA supports clear and concise notices for bank customers and we
believe that the industry has already made the appropriate adjustments
to the original GLB notices. For the ANPR, the American Bankers Association
has five (5) recommendations.
Recommendation 1. If the agencies decide to issue formal guidance
or a rule regarding how to provide a short version of the notice,
it should either be in lieu of the longer form, or at the discretion
of the institution.
Recommendation
2. ABA opposes any new federal mandate in this area unless it includes
a preemption of state requirements on potentially
conflicting privacy notices. It is clear that preemption in this
area benefits consumers both by keeping compliance costs down and
enabling customers to understand an institution’s privacy notice
without having to learn 50 state variations.
ABA emphasizes that the industry appreciates the benefits of utilizing
a short form to explain the basics of privacy policies to bank customers.
If the agencies decide to require a short form notice, our members
need assurance that a bank could comply with its notice requirement
by posting a short form on their website, and make the longer form
available upon request.
Recommendation
3. The agencies should consider permitting financial institutions
to provide
the short form notice via the entity’s
website.
ABA would be remiss if we did not mention the obvious potential
confusion that customers may face with the various notices that will
be required under the Fair and Accurate Credit Transactions Act (FACT
Act) and possibly the CAN-SPAM Act of 2003. There is no question
that sending customers several different notices for different purposes
will cause even greater confusion than currently exists.
Therefore, it would appear to be prudent to delay implementation
of this effort until the industry and the government are made fully
aware of all of the new notice requirements.
Recommendation 4. ABA urges the agencies to refrain from issuing
a regulatory proposal for short notices until the FACT Act process
is completed.
Finally, faced with examiner scrutiny and, at times, a myriad of
interpretations of what constitutes compliance with regulations such
as the GLB privacy notices, the industry must have regulatory certainty.
Recommendation
5. If the agencies ultimately decide to issue a short form notice
as an option,
a regulatory “suggestion” (in
the form of a guidance), or as a new mandate, the industry must have
a “safe harbor” to ensure that use of the short form
constitutes complete compliance with the GLB privacy provisions.
Conclusion
The American Bankers Association offers to continue to work with
the agencies on these important issues. We might assist the agencies
in developing questions for consumer focus groups or surveying
our membership as to the acceptability of suggested approaches.
We urge the agencies to proceed carefully and deliberately taking
into account the benefits to customers, the cost and burdens to
the industry and the practicability of alternatives before proceeding
with a formal rulemaking process at this time.
If you have any questions or need additional information, please
contact me at 202-663-5029 or jbyrne@aba.com.
Sincerely,
John J. Byrne
Director, Center for Regulatory Compliance
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