12 C.F.R. Subpart A—Privacy and Opt Out Notices
Title 12 - Banks and Banking
(a) Initial notice requirement. A bank must provide a clear and conspicuous notice that accurately reflects its privacy policies and practices to: (1) Customer. An individual who becomes the bank's customer, not later than when the bank establishes a customer relationship, except as provided in paragraph (e) of this section; and (2) Consumer. A consumer, before the bank discloses any nonpublic personal information about the consumer to any nonaffiliated third party, if the bank makes such a disclosure other than as authorized by §§40.14 and 40.15. (b) When initial notice to a consumer is not required. A bank is not required to provide an initial notice to a consumer under paragraph (a) of this section if: (1) The bank does not disclose any nonpublic personal information about the consumer to any nonaffiliated third party, other than as authorized by §§40.14 and 40.15; and (2) The bank does not have a customer relationship with the consumer. (c) When the bank establishes a customer relationship—(1) General rule. A bank establishes a customer relationship when it and the consumer enter into a continuing relationship. (2) Special rule for loans. A bank establishes a customer relationship with a consumer when the bank originates a loan to the consumer for personal, family, or household purposes. If the bank subsequently transfers the servicing rights to that loan to another financial institution, the customer relationship transfers with the servicing rights. (3)(i) Examples of establishing customer relationship. A bank establishes a customer relationship when the consumer: (A) Opens a credit card account with the bank; (B) Executes the contract to open a deposit account with the bank, obtains credit from the bank, or purchases insurance from the bank; (C) Agrees to obtain financial, economic, or investment advisory services from the bank for a fee; or (D) Becomes the bank's client for the purpose of the bank's providing credit counseling or tax preparation services. (ii) Examples of loan rule. A bank establishes a customer relationship with a consumer who obtains a loan for personal, family, or household purposes when the bank: (A) Originates the loan to the consumer; or (B) Purchases the servicing rights to the consumer's loan. (d) Existing customers. When an existing customer obtains a new financial product or service from a bank that is to be used primarily for personal, family, or household purposes, the bank satisfies the initial notice requirements of paragraph (a) of this section as follows: (1) The bank may provide a revised privacy notice, under §40.8, that covers the customer's new financial product or service; or (2) If the initial, revised, or annual notice that the bank most recently provided to that customer was accurate with respect to the new financial product or service, the bank does not need to provide a new privacy notice under paragraph (a) of this section. (e) Exceptions to allow subsequent delivery of notice. (1) A bank may provide the initial notice required by paragraph (a)(1) of this section within a reasonable time after the bank establishes a customer relationship if: (i) Establishing the customer relationship is not at the customer's election; or (ii) Providing notice not later than when the bank establishes a customer relationship would substantially delay the customer's transaction and the customer agrees to receive the notice at a later time. (2) Examples of exceptions. (i) Not at customer's election. Establishing a customer relationship is not at the customer's election if a bank acquires a customer's deposit liability or the servicing rights to a customer's loan from another financial institution and the customer does not have a choice about the bank's acquisition. (ii) Substantial delay of customer's transaction. Providing notice not later than when a bank establishes a customer relationship would substantially delay the customer's transaction when: (A) The bank and the individual agree over the telephone to enter into a customer relationship involving prompt delivery of the financial product or service; or (B) The bank establishes a customer relationship with an individual under a program authorized by Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) or similar student loan programs where loan proceeds are disbursed promptly without prior communication between the bank and the customer. (iii) No substantial delay of customer's transaction. Providing notice not later than when a bank establishes a customer relationship would not substantially delay the customer's transaction when the relationship is initiated in person at the bank's office or through other means by which the customer may view the notice, such as on a web site. (f) Delivery. When a bank is required to deliver an initial privacy notice by this section, the bank must deliver it according to §40.9. If the bank uses a short-form initial notice for non-customers according to §40.6(d), the bank may deliver its privacy notice according to §40.6(d)(3). (a)(1) General rule. A bank must provide a clear and conspicuous notice to customers that accurately reflects its privacy policies and practices not less than annually during the continuation of the customer relationship. Annually means at least once in any period of 12 consecutive months during which that relationship exists. A bank may define the 12-consecutive-month period, but the bank must apply it to the customer on a consistent basis. (2) Example. A bank provides a notice annually if it defines the 12-consecutive-month period as a calendar year and provides the annual notice to the customer once in each calendar year following the calendar year in which the bank provided the initial notice. For example, if a customer opens an account on any day of year 1, the bank must provide an annual notice to that customer by December 31 of year 2. (b)(1) Termination of customer relationship. A bank is not required to provide an annual notice to a former customer. (2) Examples. A bank's customer becomes a former customer when: (i) In the case of a deposit account, the account is inactive under the bank's policies; (ii) In the case of a closed-end loan, the customer pays the loan in full, the bank charges off the loan, or the bank sells the loan without retaining servicing rights; (iii) In the case of a credit card relationship or other open-end credit relationship, the bank no longer provides any statements or notices to the customer concerning that relationship or the bank sells the credit card receivables without retaining servicing rights; or (iv) The bank has not communicated with the customer about the relationship for a period of 12 consecutive months, other than to provide annual privacy notices or promotional material. (c) Special rule for loans. If a bank does not have a customer relationship with a consumer under the special rule for loans in §40.4(c)(2), then the bank need not provide an annual notice to that consumer under this section. (d) Delivery. When a bank is required to deliver an annual privacy notice by this section, the bank must deliver it according to §40.9. (a) General rule. The initial, annual, and revised privacy notices that a bank provides under §§40.4, 40.5, and 40.8 must include each of the following items of information, in addition to any other information the bank wishes to provide, that applies to the bank and to the consumers to whom the bank sends its privacy notice: (1) The categories of nonpublic personal information that the bank collects; (2) The categories of nonpublic personal information that the bank discloses; (3) The categories of affiliates and nonaffiliated third parties to whom the bank discloses nonpublic personal information, other than those parties to whom the bank discloses information under §§40.14 and 40.15; (4) The categories of nonpublic personal information about the bank's former customers that the bank discloses and the categories of affiliates and nonaffiliated third parties to whom the bank discloses nonpublic personal information about the bank's former customers, other than those parties to whom the bank discloses information under §§40.14 and 40.15; (5) If a bank discloses nonpublic personal information to a nonaffiliated third party under §40.13 (and no other exception in §§40.14 or 40.15 applies to that disclosure), a separate statement of the categories of information the bank discloses and the categories of third parties with whom the bank has contracted; (6) An explanation of the consumer's right under §40.10(a) to opt out of the disclosure of nonpublic personal information to nonaffiliated third parties, including the method(s) by which the consumer may exercise that right at that time; (7) Any disclosures that the bank makes under section 603(d)(2)(A)(iii) of the Fair Credit Reporting Act (15 U.S.C. 1681a(d)(2)(A)(iii)) (that is, notices regarding the ability to opt out of disclosures of information among affiliates); (8) The bank's policies and practices with respect to protecting the confidentiality and security of nonpublic personal information; and (9) Any disclosure that the bank makes under paragraph (b) of this section. (b) Description of nonaffiliated third parties subject to exceptions. If a bank discloses nonpublic personal information to third parties as authorized under §§40.14 and 40.15, the bank is not required to list those exceptions in the initial or annual privacy notices required by §§40.4 and 40.5. When describing the categories with respect to those parties, the bank is required to state only that it makes disclosures to other nonaffiliated third parties as permitted by law. (c) Examples—(1) Categories of nonpublic personal information that the bank collects. A bank satisfies the requirement to categorize the nonpublic personal information that it collects if it lists the following categories, as applicable: (i) Information from the consumer; (ii) Information about the consumer's transactions with the bank or its affiliates; (iii) Information about the consumer's transactions with nonaffiliated third parties; and (iv) Information from a consumer reporting agency. (2) Categories of nonpublic personal information the bank discloses. (i) A bank satisfies the requirement to categorize the nonpublic personal information that it discloses if the bank lists the categories described in paragraph (e)(1) of this section, as applicable, and a few examples to illustrate the types of information in each category. (ii) If a bank reserves the right to disclose all of the nonpublic personal information about consumers that it collects, it may simply state that fact without describing the categories or examples of the nonpublic personal information it discloses. (3) Categories of affiliates and nonaffiliated third parties to whom the bank discloses. A bank satisfies the requirement to categorize the affiliates and nonaffiliated third parties to whom it discloses nonpublic personal information if the bank lists the following categories, as applicable, and a few examples to illustrate the types of third parties in each category: (i) Financial service providers; (ii) Non-financial companies; and (iii) Others. (4) Disclosures under exception for service providers and joint marketers. If a bank discloses nonpublic personal information under the exception in §40.13 to a nonaffiliated third party to market products or services that it offers alone or jointly with another financial institution, the bank satisfies the disclosure requirement of paragraph (a)(5) of this section if it: (i) Lists the categories of nonpublic personal information it discloses, using the same categories and examples the bank used to meet the requirements of paragraph (a)(2) of this section, as applicable; and (ii) States whether the third party is: (A) A service provider that performs marketing services on the bank's behalf or on behalf of the bank and another financial institution; or (B) A financial institution with whom the bank has a joint marketing agreement. (5) Simplified notices. If a bank does not disclose, and does not wish to reserve the right to disclose, nonpublic personal information about customers or former customers to affiliates or nonaffiliated third parties except as authorized under §§40.14 and 40.15, the bank may simply state that fact, in addition to the information it must provide under paragraphs (a)(1), (a)(8), (a)(9), and (b) of this section. (6) Confidentiality and security. A bank describes its policies and practices with respect to protecting the confidentiality and security of nonpublic personal information if it does both of the following: (i) Describes in general terms who is authorized to have access to the information; and (ii) States whether the bank has security practices and procedures in place to ensure the confidentiality of the information in accordance with the bank's policy. The bank is not required to describe technical information about the safeguards it uses. (d) Short-form initial notice with opt out notice for non-customers. (1) A bank may satisfy the initial notice requirements in §§40.4(a)(2), 40.7(b), and 40.7(c) for a consumer who is not a customer by providing a short-form initial notice at the same time as the bank delivers an opt out notice as required in §40.7. (2) A short-form initial notice must: (i) Be clear and conspicuous; (ii) State that the bank's privacy notice is available upon request; and (iii) Explain a reasonable means by which the consumer may obtain that notice. (3) The bank must deliver its short-form initial notice according to §40.9. The bank is not required to deliver its privacy notice with its short-form initial notice. The bank instead may simply provide the consumer a reasonable means to obtain its privacy notice. If a consumer who receives the bank's short-form notice requests the bank's privacy notice, the bank must deliver its privacy notice according to §40.9. (4) Examples of obtaining privacy notice. The bank provides a reasonable means by which a consumer may obtain a copy of its privacy notice if the bank: (i) Provides a toll-free telephone number that the consumer may call to request the notice; or (ii) For a consumer who conducts business in person at the bank's office, maintain copies of the notice on hand that the bank provides to the consumer immediately upon request. (e) Future disclosures. The bank's notice may include: (1) Categories of nonpublic personal information that the bank reserves the right to disclose in the future, but do not currently disclose; and (2) Categories of affiliates or nonaffiliated third parties to whom the bank reserves the right in the future to disclose, but to whom the bank does not currently disclose, nonpublic personal information. (f) Sample clauses. Sample clauses illustrating some of the notice content required by this section are included in Appendix A of this part. (a) (1) Form of opt out notice. If a bank is required to provide an opt out notice under §40.10(a), it must provide a clear and conspicuous notice to each of its consumers that accurately explains the right to opt out under that section. The notice must state: (i) That the bank discloses or reserves the right to disclose nonpublic personal information about its consumer to a nonaffiliated third party; (ii) That the consumer has the right to opt out of that disclosure; and (iii) A reasonable means by which the consumer may exercise the opt out right. (2) Examples. (i) Adequate opt out notice. A bank provides adequate notice that the consumer can opt out of the disclosure of nonpublic personal information to a nonaffiliated third party if the bank: (A) Identifies all of the categories of nonpublic personal information that it discloses or reserves the right to disclose, and all of the categories of nonaffiliated third parties to which the bank discloses the information, as described in §40.6(a)(2) and (3), and states that the consumer can opt out of the disclosure of that information; and (B) Identifies the financial products or services that the consumer obtains from the bank, either singly or jointly, to which the opt out direction would apply. (ii) Reasonable opt out means. A bank provides a reasonable means to exercise an opt out right if it: (A) Designates check-off boxes in a prominent position on the relevant forms with the opt out notice; (B) Includes a reply form together with the opt out notice; (C) Provides an electronic means to opt out, such as a form that can be sent via electronic mail or a process at the bank's web site, if the consumer agrees to the electronic delivery of information; or (D) Provides a toll-free telephone number that consumers may call to opt out. (iii) Unreasonable opt out means. A bank does not provide a reasonable means of opting out if: (A) The only means of opting out is for the consumer to write his or her own letter to exercise that opt out right; or (B) The only means of opting out as described in any notice subsequent to the initial notice is to use a check-off box that the bank provided with the initial notice but did not include with the subsequent notice. (iv) Specific opt out means. A bank may require each consumer to opt out through a specific means, as long as that means is reasonable for that consumer. (b) Same form as initial notice permitted. A bank may provide the opt out notice together with or on the same written or electronic form as the initial notice the bank provides in accordance with §40.4. (c) Initial notice required when opt out notice delivered subsequent to initial notice. If a bank provides the opt out notice later than required for the initial notice in accordance with §40.4, the bank must also include a copy of the initial notice with the opt out notice in writing or, if the consumer agrees, electronically. (d) Joint relationships. (1) If two or more consumers jointly obtain a financial product or service from a bank, the bank may provide a single opt out notice. The bank's opt out notice must explain how the bank will treat an opt out direction by a joint consumer (as explained in paragraph (d)(5) of this section). (2) Any of the joint consumers may exercise the right to opt out. The bank may either: (i) Treat an opt out direction by a joint consumer as applying to all of the associated joint consumers; or (ii) Permit each joint consumer to opt out separately. (3) If a bank permits each joint consumer to opt out separately, the bank must permit one of the joint consumers to opt out on behalf of all of the joint consumers. (4) A bank may not require all joint consumers to opt out before it implements any opt out direction. (5) Example. If John and Mary have a joint checking account with a bank and arranges for the bank to send statements to John's address, the bank may do any of the following, but it must explain in its opt out notice which opt out policy the bank will follow: (i) Send a single opt out notice to John's address, but the bank must accept an opt out direction from either John or Mary. (ii) Treat an opt out direction by either John or Mary as applying to the entire account. If the bank does so and John opts out, the bank may not require Mary to opt out as well before implementing John's opt out direction. (iii) Permit John and Mary to make different opt out directions. If the bank does so: (A) It must permit John and Mary to opt out for each other; (B) If both opt out, the bank must permit both of them to notify it in a single response (such as on a form or through a telephone call); and (C) If John opts out and Mary does not, the bank may only disclose nonpublic personal information about Mary, but not about John and not about John and Mary jointly. (e) Time to comply with opt out. A bank must comply with a consumer's opt out direction as soon as reasonably practicable after the bank receives it. (f) Continuing right to opt out. A consumer may exercise the right to opt out at any time. (g) Duration of consumer's opt out direction. (1) A consumer's direction to opt out under this section is effective until the consumer revokes it in writing or, if the consumer agrees, electronically. (2) When a customer relationship terminates, the customer's opt out direction continues to apply to the nonpublic personal information that the bank collected during or related to that relationship. If the individual subsequently establishes a new customer relationship with the bank, the opt out direction that applied to the former relationship does not apply to the new relationship. (h) Delivery. When a bank is required to deliver an opt out notice by this section, the bank must deliver it according to §40.9. (a) General rule. Except as otherwise authorized in this part, a bank must not, directly or through any affiliate, disclose any nonpublic personal information about a consumer to a nonaffiliated third party other than as described in the initial notice that the bank provided to that consumer under §40.4, unless: (1) The bank has provided to the consumer a clear and conspicuous revised notice that accurately describes its policies and practices; (2) The bank has provided to the consumer a new opt out notice; (3) The bank has given the consumer a reasonable opportunity, before the bank discloses the information to the nonaffiliated third party, to opt out of the disclosure; and (4) The consumer does not opt out. (b) Examples. (1) Except as otherwise permitted by §§40.13, 40.14, and 40.15, a bank must provide a revised notice before it: (i) Discloses a new category of nonpublic personal information to any nonaffiliated third party; (ii) Discloses nonpublic personal information to a new category of nonaffiliated third party; or (iii) Disclose nonpublic personal information about a former customer to a nonaffiliated third party, if that former customer has not had the opportunity to exercise an opt out right regarding that disclosure. (2) A revised notice is not required if the bank discloses nonpublic personal information to a new nonaffiliated third party that the bank adequately described in its prior notice. (c) Delivery. When a bank is required to deliver a revised privacy notice by this section, the bank must deliver it according to §40.9. (a) How to provide notices. A bank must provide any privacy notices and opt out notices, including short-form initial notices, that this part requires so that each consumer can reasonably be expected to receive actual notice in writing or, if the consumer agrees, electronically. (b) (1) Examples of reasonable expectation of actual notice. A bank may reasonably expect that a consumer will receive actual notice if the bank: (i) Hand-delivers a printed copy of the notice to the consumer; (ii) Mails a printed copy of the notice to the last known address of the consumer; (iii) For the consumer who conducts transactions electronically, posts the notice on the electronic site and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining a particular financial product or service; (iv) For an isolated transaction with the consumer, such as an ATM transaction, posts the notice on the ATM screen and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining the particular financial product or service. (2) Examples of unreasonable expectation of actual notice. A bank may not, however, reasonably expect that a consumer will receive actual notice of its privacy policies and practices if it: (i) Only posts a sign in its branch or office or generally publish advertisements of its privacy policies and practices; (ii) Sends the notice via electronic mail to a consumer who does not obtain a financial product or service from the bank electronically. (c) Annual notices only. A bank may reasonably expect that a customer will receive actual notice of the bank's annual privacy notice if: (1) The customer uses the bank's web site to access financial products and services electronically and agrees to receive notices at the web site and the bank posts its current privacy notice continuously in a clear and conspicuous manner on the web site; or (2) The customer has requested that the bank refrain from sending any information regarding the customer relationship, and the bank's current privacy notice remains available to the customer upon request. (d) Oral description of notice insufficient. A bank may not provide any notice required by this part solely by orally explaining the notice, either in person or over the telephone. (e) Retention or accessibility of notices for customers. (1) For customers only, a bank must provide the initial notice required by §40.4(a)(1), the annual notice required by §40.5(a), and the revised notice required by §40.8 so that the customer can retain them or obtain them later in writing or, if the customer agrees, electronically. (2) Examples of retention or accessibility. A bank provides a privacy notice to the customer so that the customer can retain it or obtain it later if the bank: (i) Hand-delivers a printed copy of the notice to the customer; (ii) Mails a printed copy of the notice to the last known address of the customer; or (iii) Makes its current privacy notice available on a web site (or a link to another web site) for the customer who obtains a financial product or service electronically and agrees to receive the notice at the web site. (f) Joint notice with other financial institutions. A bank may provide a joint notice from it and one or more of its affiliates or other financial institutions, as identified in the notice, as long as the notice is accurate with respect to the bank and the other institutions. (g) Joint relationships. If two or more consumers jointly obtain a financial product or service from a bank, the bank may satisfy the initial, annual, and revised notice requirements of §§40.4(a), 40.5(a), and 40.8(a), respectively, by providing one notice to those consumers jointly.
Title 12: Banks and Banking
PART 40—PRIVACY OF CONSUMER FINANCIAL INFORMATION
Subpart A—Privacy and Opt Out Notices
§ 40.4 Initial privacy notice to consumers required.
§ 40.5 Annual privacy notice to customers required.
§ 40.6 Information to be included in privacy notices.
§ 40.7 Form of opt out notice to consumers; opt out methods.
§ 40.8 Revised privacy notices.
§ 40.9 Delivering privacy and opt out notices.
