FDIC ISSUES FINAL RULE FOR OPTING OUT OF MARKETING

On July 15, 2004, the Agencies published a joint notice of proposed rulemaking regarding the issuance of opt out notices by institutions that share information with affiliates.  The proposed rulemaking would prohibit affiliates from using that information for marketing purposes, unless the affected consumer has been provided the opportunity to opt out but have elected not to do so.

The FDIC received 29 comments from financial institutions or holding companies, trade associations, businesses, community groups, the National Association of Attorneys General, and various individuals.  Among the highlights of the final rule are as follows:

-          Three conditions must be met before an affiliate may use eligibility information for marketing purposes: 1) an affected consumer must receive clear written notice that the affiliate may use shared eligibility information to make solicitations to that consumer; 2) the consumer must be provided with reasonable opportunity to opt out; 3) the consumer must not have exercised the opportunity to opt out.

-          An opt out must be valid for at least five years.  Thereafter, consumers must be given a renewal notice and a reasonable opportunity to opt out.

-          The opt out notice must be provided by an affiliate that has or has previously had a pre-existing business relationship with the consumer.

-          Service providers may receive eligibility information from an affiliate and market to the affiliate’s customers without a notice and opt out.  This ensures that the affiliate with the pre-existing relationship controls the service provider’s receipt and use of the information.

-          An affiliate marketing notice may be coordinated and consolidated with other notices or disclosures that are required to be issued.

There are certain exceptions to the notice and opt out requirements, such as instances where there is a pre-existing business relationship, responding to a communication initiated by the consumer, and complying with state laws.

A copy of the final rule can be found here.