CUNA, NAFCU Agree: Flexibility Key to FACT Act Opt-Out for Affiliate Information Sharing

WASHINGTON – CUNA and NAFCU have written NCUA explaining that the important matter regarding the affiliate information sharing for marketing purposes regulation is that it be flexible. CUNA wrote a “substantially similar” letter to the Federal Trade Commission, which issued a similar rule, that applies to state chartered credit unions. CUNA’s official comment letter to the FTC said that the commission should not determine who provides the information sharing disclosures and opt-out notices. “That decision should be made by the affiliated parties in a manner that will ensure compliance with the final rule, while minimizing the burden on the relationship between these parties,” according to CUNA Assistant General Counsel Jeffrey Bloch. NAFCU concurred in its comment letter. The proposed rule states that the person communicating the information should be responsible for the notice, which the agencies said would ensure the receiving entity was not always responsible and the consumer may not expect important information about their rights from that entity. Additionally, NAFCU President and CEO Fred Becker wrote that the agencies did a good job of outlining the pre-existing business relationship exception, but feared it could be applied too narrowly. The trade association wrote, “.NAFCU is concerned that if the Agencies narrowly interpret this definition, it could present problems when credit unions create currently unconsidered consumer-affiliate relationships in the future. Therefore, NAFCU urges the Agencies to apply this regulation flexibly.” In addition to that exception, Bloch wrote that consumer inquiries should be an exception to the notice requirement and the FTC should remove the restrictions concerning this requirement, like that it be an affirmative request or that the consumer provide contact information. CUNA also said that oral opt-out notices should be permitted, as the Fair Credit Reporting Act allows and the FACT Act does not prohibit. “It may very well be that credit unions will prefer that such notices be provided in writing, but the choice should be made by the credit union, not the FTC,” Bloch wrote. He added that credit unions should be the ones to determine whether to put a deadline in their notices for consumers to opt-out since the consumer retains that right at any time. Additionally, credit unions should not have to include in the notice when the “opt-out” expires. The rule says the effective period for a consumer opt-out must be at least five years, but members don’t necessarily need to know how long it lasts because they will receive another opt-out notice at that time. NAFCU noted that the proposed definition of solicitation does not include advertisements directed to the general public without regard to eligibility information. No additional guidance is required at this time concerning other communications that might meet the definition of solicitation or whether Internet marketing tools, like pop-up ads, would constitute solicitation or a communication to the general public, Becker wrote. CUNA also recommended that the FTC delay mandatory compliance for “a reasonable period” beyond the effective date, just six months after the final rule is issued. “Specifically, financial institutions should be permitted to include the initial opt-out notice with the annual privacy notice that will be distributed in the one-year period after the effective date,” Bloch said. [email protected]