Kelly’s Korner – Privacy notice & customer’s app.
Q: Is a privacy notice still required when I complete a customer’s credit application?
A: Yes – and I’m very glad you asked! As I travel around the country helping dealerships install the Safeguards Rule, I am dismayed to find that some dealerships have stopped using the Privacy Notice, or worse yet, never got started!
The Gramm-Leach-Bliley Act requires vehicle dealerships to comply with both The Privacy Rule and The Safeguards Rule specified in the Act. The Privacy Rule defines the way you share personal, non-public information about consumers who obtain, or apply for, financial products or services from you. The Safeguards Rule dictates how you must protect consumer information.
As of July 1, 2001, dealerships should be using the Privacy Notice to advise anyone from whom they obtain nonpublic, personal information how they will use and safeguard that information. If you are not in compliance, you can obtain sample privacy notice statements from your forms distributor, industry association or corporate counsel. Some credit applications now include a privacy notice.
Steps you must take to comply with the Privacy Rule:
(1) Ensure that applicant and co-applicant(s) sign both the credit application and the privacy notice.
(2) Give a copy of the signed credit application and privacy notice to the applicant(s).
(3) Maintain a copy of both forms in your files for a minimum of 25 months.
Refer to Regulation B of the Federal Reserve System, Section 202.12 (b), Auto Advisory, or your legal counsel for further guidance on records retention.
The Federal Trade Commission is one of 8 agencies with the authority to enforce The Privacy Rule. You can view the FTC’s own privacy policy at www.ftc.gov/privacy.
Compliance with The Privacy Rule is neither an option nor a matter of convenience. Ignore it at your own risk!
OIADA Squeaky Wheel Newsletter, August 2004, p. 24
Article written by Gary Munger, Kelly Enterprises consultant and trainer specializing in compliance issues. Contact Gary at 800-336-4275 or email gary@JLKelly.com for more information about the Privacy Rule and Safeguards Rule.