The Right to Privacy Act, more commonly known as Regulation P, is not well known outside of the banking industry. However, it’s an important law that governs how the information obtained and stored by financial institutions is handled. And whether you’re a bank constrained by Regulation P, or a consumer intended to be protected by it, it’s important to know what rights and responsibilities Regulation P confers.
Regulation P does three principle things. First, it dictates how nonpublic consumer information can, or cannot, be used by banks and other financial institutions, and imposes a duty for these financial institutions to protect consumer information from being unlawfully accessed or abused. While it does permit these institutions to disclose consumer data to unrelated third parties under certain circumstances, it does also allow consumers to “opt out” of having their nonpublic financial information from being shared.
Second, Regulation P establishes the rights that consumers have with respect to their nonpublic financial data. It requires that consumers be informed, both at the time they begin a relationship with the financial institution, as well as once per year afterwards, that their financial information may be transmitted to unaffiliated third parties, and that they have a right to opt out of that information sharing. It also places limits on the reuse and redisclosure of information obtained from unaffiliated financial institutions, such as other banks a consumer may have previously banked with in the past.
Finally, Regulation P governs how account information, including account numbers, may be shared to unaffiliated third parties who perform actions on behalf of financial institutions. This includes marketing firms that advertise on behalf of the financial institutions, as well as third party companies that process or service financial transactions. This is to ensure that unaffiliated companies who do business with financial institutions do not become risks to consumer financial data.
If you need any help starting or running your bank or other financial institution, you’ll need an attorney who thoroughly understands the banking law and its tax implications. The non-profit law attorneys at Wingate, Kearney, & Cullen, LLP have offices in Brooklyn and Long Island, New York. The firm is experienced in helping banks comply with the law. For more information or to schedule a consultation, call (718) 852-5900 or fill out our contact form.