FACTA Confusion - Sharing Information w/Affiliates

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Question:

I have read the FACT and FCRA guidelines, but find them confusing when it comes to sharing information with affiliates. I find reference to a proposal that would cause the need for a privacy notice with an opt out provision, but cannot find that it actually went into effect. Here is my scenario. Bank A and Mortgage Co. B are owned by the same holding company. Bank A receives a loan application. In order to provide the customer/consumer with the best loan product, Bank A would like to share the application and credit bureau information with Mortgage Co. B. Does Bank A have to provide a privacy notice with an opt out provision or would the sharing of information be considered exempt under the marketing exemption?

Answer:

First, we need to keep each privacy law separate. G-L-B privacy restricts certain types of sharing, but does not enter into the territory covered by FCRA. All affiliate information sharing is an FCRA issue. While there are not yet regulations that specifically address the affiliate sharing restriction, the best practice would be to get the customer's permission to share. Since you might have to provide an Affiliated Business Notice, required by RESPA, anyway, you can accomplish both things at once.

Now for a word on the philosophy of compliance. When there is a law but no regulation or clear guidance from regulatory agencies, the best practice is to stay within the spirit of the law.

First published on BankersOnline.com 5/1/06