Exempting Banks From Annual Privacy Policy Disclosures if it Hasn't Changed & is Publicly Available (H.R. 2396)

What is H.R. 2396?

(Updated August 17, 2018)

This bill would exempt financial institutions from the requirement to annually disclose their policies and practices regarding customers’ private personal information if they meet specific criteria. Specifically, a financial institution would be exempt if they: 1) Haven’t changed their policies since their most recent disclosure; 2) Make those policies available online and upon request through the mail or over the telephone; and 3) Periodically notify customers of the availability of information on those policies and practices.

Argument in favor

The cost of complying with regulations that mandate lenders send privacy notices to borrowers each year get passed onto consumers. Those notices are unnecessary if the policies haven’t changed since the last notice was sent and the policy is available online.

Argument opposed

This bill offers too big an exemption to the requirement that lenders notify customers each year about the policies regarding customers’ personal information. It should only apply to companies that share information with close, but unaffiliated third parties.

Impact

Borrowers and their lending financial institutions; and federal financial regulators.

Cost of H.R. 2396

The CBO estimates that enacting this bill would have a negligible impact on the federal budget.

Additional Info

In-Depth: Sponsoring Rep. David Trott (R-MI) introduced this bill to modernize the privacy notification process of lenders and increase access to lender privacy policies:

“This critical legislation finally allows auto lenders to modernize their privacy notification process, cutting down on the high compliance costs they’re forced to pass along to consumers while increasing consumer access to important privacy information. In Michigan, the heartland of our nation’s domestic auto industry, legislation that decreases the burden placed on auto manufacturers and provides greater access to information for automotive consumers is a win-win.”

Some House Democrats expressed opposition to this bill in its committee report:

“[The bill} would expand flexibility to comply w’ith, if not minimize, annual notice requirements under the GLBA to all financial institutions, including payday lenders, rent-to-own companies, and potentially bad actors. It would be prudent to narrow the scope of the bill to just financial institutions that obtain and share customer information only with close, but unaffiliated third parties.”

This legislation passed the House Financial Services Committee on a 40-20 vote and has the support of seven bipartisan cosponsors, including four Democrats and three Republicans.

Media:

• Sponsoring Rep. David Trott (R-MI) Press Release
  
• CBO Cost Estimate
  
• ACA International (In Favor)