Privacy Act - Account Numbers on Back of Checks

In December, 2001 the agencies issued a Q&A document on the new Privacy Rules. Here's Q&A #I.3:

Q. I offer consumer checking accounts. I notify my customers that, among other things, I make disclosures as permitted by law. My checking account customers deposit checks made payable to my customer but drawn on a financial institution unaffiliated with me. My practice is to write my customer's account number on the back of the deposited check to facilitate its processing. The check itself then goes to the maker's financial institution, with my customer's account number on the check. Is this a disclosure of nonpublic personal information that would be subject to opt out requirements or the prohibition against sharing account numbers?

A. No. The opt out provisions do not apply to disclosures in connection with servicing or processing a financial product or service that a consumer requests or authorizes, nor do they apply to disclosures that are required, or are a usual, appropriate, or acceptable method in connection with settling, processing, clearing, transferring, reconciling or collecting amounts charged, debited or otherwise paid. Section Section 332.14(a), 332.14(b)(2)(vi)(A). Also, because the account number is added to the check solely for use in processing the check and is not used in connection with marketing by a third party, this disclosure is not prohibited by the ban on disclosing account numbers for marketing purposes. Section 332.12.

First published on BankersOnline.com 3/05/07