By Tim Devaney - 05/06/14 02:41 PM EDT
The Consumer Financial Protection Bureau (CFPB) is pushing banks and other financial institutions to post privacy disclosures online, so information about their data-sharing activities is more accessible to consumers.
The CFPB announced Tuesday it is considering a new rule that is intended to limit banks' data-sharing activities and improve transparency, and claimed it would save the industry millions of dollars each year.
“Consumers need clear information about how their personal information is being used by financial institutions,” CFPB Director Richard Cordray said in a statement. “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 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 argues.
The CFPB estimates the rule would save the banking industry about $17 million each year, because they would no longer be required to mail these privacy disclosures to many of their customers.
"For this reason, financial institutions would have an incentive to limit their sharing to reduce their costs," the agency wrote.
But customers who still want to receive these privacy disclosures by mail would be able to request that their bank continue sending them that way.