When you set up an account with a financial services company, you provide them with your personal and financial information. In turn, they have to provide you with a copy of their privacy notice. This document lets you know how they plan to use the information they collect from you, and gives you the right to limit the information they share about you with other companies. In most states, if you don't exercise that right, you are giving your implicit consent to having your personal information shared with outside marketers.
Sharing information
Some financial services companies share their customer information with affiliated companies, such as those owned by the same parent corporation. They may also share your information with their service providers (for instance, the companies that print their account statements or checks), and with companies they've established marketing agreements with. Financial services companies can also sell your personal information to unaffiliated third parties, such as telemarketers and companies offering unrelated products. Under no circumstances, however, are financial firms allowed to share your credit card numbers, account numbers, or access codes with outside marketers, although they can legally share them with their affiliates.
Many financial firms say that by sharing data with their partners, they can customize their services, offer new products, and operate more efficiently while passing those savings on to their clients. They also say that they can more effectively protect individuals from fraud, identity theft, and other criminal activity. Some investors appreciate the enhanced service, while others would prefer to have more control over what happens to their personal information.
New protections for consumers
In 1999, the U.S. Congress enacted the Financial Services Modernization Act of 1999 — also known as the Gramm-Leach-Bliley Act. This law modernized bank rules in place since the depression, which had kept the banking, insurance, and securities businesses separated. Together with legislation allowing financial companies to affiliate, the act also included new provisions to protect consumer privacy. Financial companies must take provisions to safeguard all customer information, publish their privacy policy, and provide customers with the means to opt out of having their personal information shared with third parties.
Sharing information
