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Reg P Restrictions on Giving out Account Info

Question: 
According to Reg P, a financial institution is not to give out any account information, including account balances and account status. We regularly get calls from other financial institutions, companies like Comdata, and individuals asking if a check or ACH will clear. Are we allowed to give out that information under Reg. P?
Answer: 

Answer by David Dickinson: Yes. First, you need to ensure that callers are who they say they are and that they have a need to know this information. If you satisfy these two, Reg P has several exemptions that apply to these types of situations.

Check Verification (FAQ I-1):
…you do not need to allow your customer to opt out of a disclosure made in connection with processing or clearing checks… or for the purposes of preventing actual or potential fraud, unauthorized transactions, claims or other liability... Therefore, if you have notified your customer that you make disclosures as permitted by law, you may disclose whether your customer's checking account has sufficient funds to cover a check, regardless of whether or not the customer has exercised his or her opt-out rights.

Skip Trace (FAQ I-4):
You may disclose nonpublic personal information to… an unaffiliated financial institution without complying with the opt-out provisions, as necessary, to enforce a consumer loan where the disclosure is required or is one of the lawful or appropriate methods to enforce your rights.

You should review the Privacy FAQs:http://www.fdic.gov/news/news/press/2001/pr9301a.html

Answer: 

Answer by Ken Golliher: This is an interesting compliance issue. Some banks refuse to verify funds indicating that they are prohibited by law from doing so. As David notes, that is flatly incorrect.

Yet, those same institutions have no qualms about calling other banks to verify funds on their behalf. "Compliance justice" might involve only verifying funds for the banks that would do the same for you.

First published on BankersOnline.com 10/10/11

First published on 10/10/2011

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