Gramm-Leach-Bliley Act Overview

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Questions and Answers

What does the Gramm-Leach-Bliley Act (GLBA) primarily govern?

The sale of financial products to consumers

The assessment of interest rates by lenders

The length of mortgage loans

The treatment of nonpublic personal information by financial institutions (correct)

Which entity holds rulemaking and enforcement authority over residential mortgage lenders under the GLBA?

Consumer Financial Protection Bureau (CFPB) (correct)

Federal Reserve

Securities and Exchange Commission (SEC)

Department of Justice (DOJ)

What must occur before a financial institution can disclose nonpublic personal information to nonaffiliated third parties?

There must be a court order permitting the disclosure

The consumer must provide written documentation

The consumer's consent through verbal agreement

The institution must provide notice and allow the consumer to opt-out (correct)

Which of the following is considered nonpublic personal information?

A consumer's Social Security number Signup and view all the answers

Which situation allows a financial institution to disclose nonpublic personal information without complying with disclosure requirements?

It is necessary for a transaction that the consumer requests or authorizes Signup and view all the answers

Under what condition can a financial institution share nonpublic personal information with third parties?

If the third party is contracted to perform services on behalf of the institution and is prohibited from further disclosure Signup and view all the answers

What type of information is classified as public information?

Federal, state, or local government records accessible to the public Signup and view all the answers

What is the primary purpose of a financial institution notifying consumers of its privacy policies?

To inform consumers of their rights and opt-out possibilities Signup and view all the answers

What distinguishes a consumer from a customer in financial terminology?

A consumer is an individual who uses services; a customer has ongoing services. Signup and view all the answers

Which of the following is NOT a requirement for financial institutions when providing notice of privacy policies?

Should only contain the types of information collected. Signup and view all the answers

What is one of the primary purposes of the National Do-Not-Call Registry?

To stop unwanted sales calls. Signup and view all the answers

Which statement about the Safeguards Rule under GLBA is true?

It mandates the development of an information security program to protect consumer information. Signup and view all the answers

When are sales calls permitted according to the rules established by the FTC?

From 8:00 AM to 9:00 PM, regardless of registration. Signup and view all the answers

What are financial institutions not permitted to do with consumer account numbers?

Disclose them for marketing purposes without consent. Signup and view all the answers

Which type of calls is exempt from Do-Not-Call restrictions?

Political calls. Signup and view all the answers

What must financial institutions do concerning redisclosure of nonpublic personal information?

They must follow redisclosure and reuse limitations. Signup and view all the answers

What is required in the opt-out notice provided under the FCRA?

Methods for opting out of affiliate information sharing. Signup and view all the answers

What financial institutions are required to do regarding their security programs?

Have a written security program addressing specific threats. Signup and view all the answers

Study Notes

Gramm-Leach-Bliley Act (GLBA)

GLBA regulates how financial institutions handle consumer nonpublic personal information.
The Consumer Financial Protection Bureau (CFPB) enforces GLBA for residential mortgage lenders.

Nonpublic vs. Public Information

Nonpublic information: Information not publicly available – provided by consumers to financial institutions to get products/services, obtained during transactions. Examples: names, addresses, social security numbers, credit scores.
Public information: Information available to the public; examples include government records, telephone books, newspapers, websites.

Disclosure Rules

Financial institutions must provide notice of privacy practices and allow opt-out choices for sharing nonpublic consumer info with non-affiliated third parties, unless exceptions apply.
Exceptions include: services for the institution (marketing, joint products), necessary for requested/authorized transactions (account statements, credit audits), normal business conduct (fraud prevention, legal compliance), and disclosures to attorneys, accountants, auditors.

Notice Requirements

Clear and conspicuous notice in writing or electronically (with consumer consent).
Must include: types of data collected and disclosed, types of third parties, policies about former customer data, third-party service provider details, opt-out rights and methods, security policies, disclosures of info for everyday business.

Consumer vs. Customer

Consumer: obtains or has obtained a financial product or service.
Customer: consumer with an ongoing relationship receiving services.
Short-form notice permitted for consumers who are not customers.

Safeguards Rule

GLBA requires financial institutions to have an information security program protecting customer data.

National Do-Not-Call Registry

Maintained by Federal Trade Commission (FTC) under the Telephone Consumer Protection Act.
Purpose: Stop unwanted sales calls.
Consumers can register phone numbers for free.
Telemarketers must review lists monthly and remove registered numbers.

Do-Not-Call Rules & Exceptions

Allowed calls even with registration: political, charitable, debt collection, informational, surveys (no sales).
Sales calls: 8:00 AM to 9:00 PM.
Robocalls: Illegal unless consumer provides written permission.
Penalties for violating the registry: up to $43,792 per call.
Record-keeping compliance required for telemarketers.

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Description

This quiz covers the key aspects of the Gramm-Leach-Bliley Act (GLBA), including regulations on how financial institutions manage consumer nonpublic personal information. It also delves into the distinction between public and nonpublic information and the disclosure rules that institutions must follow. Test your knowledge on consumer privacy regulations in the financial sector!