Group Seeks FTC Investigation of Possible GLB Violations

Share this content:
An advocacy group's recent complaint to the Federal Trade Commission could prompt the agency's first investigation of financial institutions' privacy practices under the Gramm-Leach-Bliley Financial Modernization Act of 1999, which took effect July 1.


"It's the only complaint we know about," said Ari Schwartz, the complaint's author and associate director of the Center for Democracy and Technology, Washington.


In the Aug. 29 letter to the FTC, Schwartz requested that the commission investigate five online mortgage firms for noncompliance with GLB's notice requirement.


Under GLB, July 1 was the deadline by which banks and other financial institutions were required to provide clear disclosure of their privacy policies regarding the sharing of nonpublic personal information with both affiliates and third parties and to provide notice to consumers and an opportunity to opt out of sharing nonpublic personal information with nonaffiliated third parties.


The FTC and several other agencies are responsible for auditing financial institutions for GLB compliance.


The CDT complaint alleged that Advantage Mortgage, Ameriwest Mortgage, Central New England Mortgage, GM Mortgage and Online Mortgage Corp. "as of August 28, 2001 ... did not offer proper, clear and conspicuous initial notice to customers on their Web sites."


The complaint also said, "CDT has e-mailed each of these companies to inform them that they may be in breach of the law but has not received a response."


Though it is unclear how strict the FTC will be with firms deemed in violation of the provisions of GLB, the possible sanctions are severe. They include termination of FDIC insurance, cease-and-desist orders, removal of employees and monetary penalties up to $1 million for an individual or the lesser of $1 million or 1 percent of the total assets of the financial institution.


More than a week after sending the letters, CDT has received no response from the FTC or any of the mortgage firms, Schwartz said.


Requests for comment from the mortgage firms and FTC officials went unanswered.


The basis for CDT's complaint to the FTC was a privacy policy study it released Aug. 29. CDT examined the privacy policies of 100 financial institutions that allow consumers to do business online. The study was conducted July 1-22.


Though CDT found only five of the institutions to be in violation of GLB, it reported these other findings:


· Of the 100 Web sites studied, 34 confirmed third-party data sharing practices but had no online opt-out method. Most provided offline opt-out methods.


· Forty-four sites stated that information was not shared with outside parties, but 30 admitted to sharing data with marketing partners.


· Twenty-two institutions had an online opt-in policy or an easy opt-out mechanism.


Loading links....
close

Next Article in Data/Analytics

Sign up to our newsletters

Company of the Week

Since 1985, Melissa Data has helped thousands of companies clean, correct and complete contact data to better target and communicate with their customers. We offer a full spectrum of data quality solutions, including global address, phone, email, and name validation, identify verification - available for batch or real-time processes, in the Cloud or on-premise. Our service bureau provides dedupe, email/phone append and geographic/demographic append services for better targeting and insight. For direct mailers, Melissa Data offers easy-to-use address management/postal software, list hygiene services and 100s of specialty mailing lists - all with competitive pricing and excellent customer service.

Find out more here »

DMN's Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here