Continuing To Share With Affiliates
By Jerod Moyer
I was talking to a Bank Holding Company President the other day. He told me he had heard about some new regulation that was going to change how information was shared between his affiliates. I told him he was correct and that what he was referring to was the FACT Act Affiliate Marketing regulation. He asked me to share the "big picture" requirements with his compliance staff. He also indicated that he would like to continue share information between his affiliates in order to cross-sell products.
I presented the following information to the compliance staff based on my conversation with the Bank Holding Company President:
- You need to determine how you will deliver the opt-out notice. Will you deliver it with your Privacy notice as one document? Will you deliver it in a separate mailing as a separate document? If you include it on the Privacy notice document, you must inform the customer that if they have previously opted-out they are not required to do so again until the original opt-out time period expires.
- Do you plan to deliver a notice on behalf of your institution only or on behalf of all affiliates? The regulation provides a model notice for either. See pages 81 and 82 of the final rule.
- How will you process responses from joint account owners? If one account owner opts-out then all account owners must be opted out for
that relationship. - When you deliver your notice what "reasonable and simple" method will you use to allow your customer to opt-out? The regulation provide examples such as including check boxes on the notice with a self addressed envelope for easy return or a toll-free telephone number to opt-out.
- If you don't care to address items 1-4 you could also rely on the major loophole that allows you to market your affiliate's products to your customers without an opt-out. Basically, the regulation allows you to market your affiliate's products to your customers without an opt-out provided customer information is not shared with an affiliate.
For example, let's use a bank and an insurance company that are affiliates. The insurance company would like to advertise its hazard insurance products with the bank's home loan customers. To avoid the opt-out requirement the insurance company could provide the marketing materials to the bank and direct the bank to then send the materials out to it's home loan customers. The opt-out isn't required because the bank never shares customer information with the insurance company. Remember, the bank cannot disclose to the insurance company to whom the materials were sent.
Therefore, if you plan to share or are thinking about sharing information between affiliates for marketing purposes, you'll have to address these questions at some point. Good Luck!