CFPB delays privacy incentive for banks

The Consumer Financial Protection Bureau (CFPB) is delaying a rule intended to limit how much data banks share about their customers.

The CFPB earlier this month proposed a rule that would allow banks to post their privacy disclosures online, provided that they limit their data-sharing activities. But the agency said Tuesday it is extending the comment period through July 14 to give industry more time to consider the plan.

The rule could save the banking industry millions of dollars each year, while at the same time providing customers with easier access to their bank’s privacy disclosures, the agency says.

“Consumers need clear information about how their personal information is being used by financial institutions,” CFPB Director Richard Cordray said in a statement on May 6 announcing the rule. “This proposal would make it easier for consumers to find and access privacy policies, while also making it cheaper for industry to provide disclosures.”

Currently, banks are required to mail privacy disclosures to their customers once a year. But the new rules would instead allow these disclosures to be posted online under certain conditions.

The privacy disclosures explain whether a bank is sharing customers’ personal information, what information is being shared, and with whom it is being shared with. 

Banks that disclose this information are required to notify customers of this practice, and inform them of their right to opt out of the data-sharing and how to do so.

But banks that do not share this information with unaffiliated third parties would be allowed to post their privacy disclosures online, saving them money and providing them with an incentive to limit data-sharing, the agency says.

The CFPB estimates the rule would save the banking industry about $17 million each year, because they would no longer be required to mail the privacy disclosures to many of their customers.