While currently a proposed rule, it is expected that the CFPB will move quickly to finalize the rule and credit unions would be able to reduce their costs immediately. Credit unions should review their current practices now to determine if they would qualify for the alternative delivery method. 

In order to qualify for the proposed alternative delivery method, a credit union must meet these conditions:

• The credit union does not share member information with nonaffiliated third parties other than through the existing exceptions in Regulation P (12 C.F.R. 1016);

• The credit union does not include on its annual notice an opt-out under Section 603(d)(2)(A)(iii) of the Fair Credit Reporting Act (FCRA);  

• If the credit union shares information with its affiliates for marketing purposes, the annual privacy notice is not the only notice provided to satisfy Section 624 of the FCRA;

• The credit union's privacy policy has not changed since the previous notice was delivered; and

• The credit union uses the model privacy form for its privacy notice.

Under the proposed rule, a credit union meeting the criteria above would not be required to send an annual privacy notice to its members (provided it took the steps required below).

Notifying Members of Privacy Policy

Credit unions that qualify for the "alternative delivery method" would be required to take certain steps to notify members of their privacy policy. These steps include:

• Providing a notice - annually - to members stating that its privacy policy has not changed and that its privacy policy is available on its website (and a hard copy will be mailed, if requested); 

• Posting its current privacy policy (using the model privacy form) continuously and in a clear and conspicuous manner on a page of the credit union's website that contains only the privacy notice; and 

• Promptly mail its current privacy policy to any member who requests it by telephone.   

Of course, these requirements could change in the final rule. However, it is clear that utilizing the alternative delivery method would significantly reduce costs for credit unions.

How We Can Help

We have the experience needed to review your credit union's current sharing practices (and current privacy notice) to determine if you would qualify for the alternative delivery method. If needed, we can easily transition your privacy notice to the model privacy form to satisfy that condition.

One area of confusion is the categorization on the privacy notice of third parties into nonaffiliates; affiliates; and "joint marketing" partners. The alternative delivery method can only be used by credit unions that do not share with entities falling under the definition of "nonaffiliates" under Regulation P. We can help your credit union analyze - and document - your sharing with third parties to ensure each entity is properly categorized. 

Contact Us

If you have any questions or would like additional information on how Howard & Howard can help your credit union prepare to save costs each and every year, please contact Steve Van Beek.