US financial firms are obliged to issue privacy notices under
the Gramm-Leach Bliley Act, which was passed in 1999 to protect
against the unauthorised access and abuse of personal customer
information held by companies operating in the financial sector.
Among other things, it gives individuals the right to opt out of
information sharing among companies.
But the privacy notices used by firms are often so complex that
consumers find them hard to read – if they bother reading them at
all.
Six US federal regulators – the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation,
the Federal Trade Commission, the National Credit Union
Administration, the Office of the Comptroller of the Currency, and
the Securities and Exchange Commission – are therefore working
together to find a better way to provide the notices.
Last week the agencies published a report commissioned from the
Kleimann Communication Group.
The report, ‘Evolution of a Prototype Financial Privacy Notice’
concludes that consumers need a context for understanding
information in financial privacy notices. It finds that consumers
are overwhelmed by complex information, and the simplification of
financial privacy notices enhances consumers' ability to read the
notices and make informed choices about the use of their personal
information.
The research also demonstrates that consumers more easily
understand the important information in the notice when good design
reinforces the content, and details how researchers modified
content and design to create simplified notices in a tabular
form.
The six agencies, together with the Office of Thrift
Supervision, are now funding a second phase of the project, after
which they will consider policy action with respect to financial
privacy notices.
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