The Gramm-Leach-Bliley Act (GLBA) of 1999, also known as the Financial Services Modernization Act, is a federal law that governs the collection, use, and disclosure of personal financial information by financial institutions. The law was enacted to provide consumers with greater privacy protections and to promote competition in the financial services industry.
The GLBA requires financial institutions, such as banks, credit unions, and investment firms, to provide consumers with notice about their privacy practices and to obtain their consent before sharing their personal financial information with third parties. The law also requires financial institutions to implement safeguards to protect the confidentiality and integrity of the personal financial information that they collect and maintain.
The GLBA has several key provisions, including:
Privacy notice: Financial institutions must provide consumers with a privacy notice that explains the types of personal financial information that they collect, how it is used, and how it is shared with third parties. The notice must be provided annually, and consumers must be given the opportunity to opt out of certain types of sharing.
Opt-out rights: Consumers must be given the opportunity to opt out of certain types of sharing, such as sharing with affiliates or nonaffiliated third parties for marketing purposes.
Safeguards: Financial institutions must implement safeguards to protect the confidentiality, integrity, and availability of personal financial information, such as through the use of encryption, access controls, and employee training.
Pretexting: The GLBA prohibits the practice of pretexting, which involves using false pretenses to obtain someone else’s personal financial information.
The GLBA has had a significant impact on the financial services industry, requiring financial institutions to be more transparent about their privacy practices and to implement stronger safeguards to protect personal financial information. By providing consumers with greater control over how their information is shared, the GLBA has helped to promote privacy and security in the financial services industry.
