by Jeff Sovern
[W]hen presented with the prospect of lessening burden and saving costs by providing a streamlined, short form privacy notice containing only certain key information – some in the industry seem to balk. Marketing departments get uneasy because simple and straightforward disclosure of a bank’s information sharing policies and an easy means for customers to opt out of that sharing might mean – that customers will actually understand those policies – and decide to opt out! The tension here is that shorter, focused consumer disclosures can meaningfully reduce regulatory burden, but, if they are done well, they will also empower consumers to make some decisions that a particular bank may not like.
(emphasis in original). Soon we may get a chance to find out whether and how consumers respond to simplified notices. Last fall Congress added a new subsection (e) to 15 U.S.C. § 6803, directing federal regulators to develop a model privacy disclosure form. Federal regulators presumably have no incentive to fashion a form that is more complex than necessary, and so, If we're lucky, the new form will be both short and comprehensible. While financial institutions will be under no obligation to use the model form, the statute offers them an incentive to do so by providing that those using the model form will be deemed in compliance with the statute. And if financial institutions prefer their own more complicated forms to the simpler form, that too will say something.