Sharing Affiliate Information
Lucy Griffin, BOL Guru
Editor, Compliance Action
The FACT Act contained a provision to restrict the use of customer information by sharing that information with affiliates for marketing purposes. The regulation implementing that provision for banks is now final.
The rule covers solicitations - the marketing of a product or service based on eligibility information about the consumer that the product marketer obtained from an affiliate. Any form of solicitation, from direct mail to phone and e-mail contact, is covered.
Eligibility information means the information that, if shared with an unaffiliated third party, would be considered a consumer credit report. Information about your own experiences with the customer may still be shared with affiliates even though sharing that information with third parties must be subject to the G-L-B opt-out. However, this sharing may not be used for marketing purposes unless the notice and opt-out procedures are followed.
A consumer is someone who has a current account or loan, had an account or loan within the past eighteen months or has inquired about products within the past three months. The covered consumers are your current customers, someone who was a customer within the past 18 months, or someone who was interested enough in your products to ask about one or more products within the past 3 months.
Before sharing consumer information for marketing purposes, you must give the consumer the opportunity to opt out. The opt-out notice format and content must be clear and concise. The "ordinary consumer (not a banker or regulator) should be able to easily read and understand the notice and follow the opt-out process. The entity that sends the notice is the entity that has the existing relationship with the consumer. The new rule includes model forms for opt-out notices. The opt-out period must be a minimum of five years.
Shared customer data bases present a challenge. Each affiliate must take steps to prevent the use of customer information for marketing by an affiliate. This may include special provisions with service providers to protect customer information.
If you don't use affiliate information for marketing purposes, you don't have to worry about this rule. Also, any marketing aimed at the general public and not using any customer information are not subject to this rule.
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First published on BankersOnline.com 1/8/2008
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