(a) Initial notice requirement. You must provide a clear and conspicuous
notice that accurately reflects your privacy policies and practices
to:
(1) Customer. An individual who becomes your customer, not later
than when you establish a customer relationship, except as provided
in paragraph (e) of this section; and
(2) Consumer. A consumer, before you disclose any nonpublic personal information
about the consumer to any nonaffiliated third party, if you make such
a disclosure other than as authorized by sections 1016.14 and 1016.15
of this part.
(b) When initial notice to a consumer is not required. You are not
required to provide an initial notice to a consumer under paragraph
(a) of this section if:
(1) You do not disclose any nonpublic personal
information about the consumer to any nonaffiliated third party, other
than as authorized by sections 1016.14 and 1016.15; and
(2) You do not have a customer
relationship with the consumer.
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(c) When you establish a customer relationship.
(1) General rule. You establish a customer relationship when you
and the consumer enter into a continuing relationship.
(2) Special rule for loans. You establish a customer relationship
with a consumer when you originate or acquire the servicing rights
to a loan to the consumer for personal, family, or household purposes.
If you subsequently transfer the servicing rights to that loan to
another financial institution, the customer relationship transfers
with the servicing rights.
(3) Examples.
(i) Examples
of establishing customer relationship by financial institutions other
than credit unions and covered entities subject to FTC enforcement
jurisdiction. For purposes of this paragraph (c)(3)(i), “you”
is limited to financial institutions other than credit unions and
financial institutions described in section 1016.3(l)(3). You
establish a customer relationship when the consumer:
(A) Opens a credit
card account with you;
(B) Executes the contract to open a deposit account with you, obtains
credit from you, or purchases insurance from you;
(C) Agrees to obtain financial, economic,
or investment advisory services from you for a fee; or
(D) Becomes your client for the
purpose of your providing credit counseling or tax preparation services.
(ii) Examples of establishing customer relationship
by covered entities subject to FTC enforcement jurisdiction. For
purposes of this paragraph (c)(3)(ii), “you” is limited to financial
institutions described in section 1016.3(l)(3) of this part. You establish
a customer relationship when the consumer:
(A) Opens a credit card account
with you;
(B) Executes
the contract to obtain credit from you or purchases insurance from
you;
(C) Agrees to obtain
financial, economic, or investment advisory services from you for
a fee;
(D) Becomes your
client for the purpose of your providing credit counseling or tax
preparation services or to obtain career counseling while seeking
employment with a financial institution or the finance, accounting,
or audit department of any company (or while employed by such a company
or financial institution);
(E) Provides any personally identifiable financial information to
you in an effort to obtain a mortgage loan through you;
(F) Executes the lease for personal
property with you;
(G)
Is an obligor on an account that you purchased from another financial
institution and whom you have located and begun attempting to collect
amounts owed on the account; or
(H) Provides you with the information necessary
for you to compile and provide access to all of the consumer’s online
financial accounts at your Web site.
(iii) Examples
of establishing customer relationship by credit unions. For purposes
of this paragraph (c)(3)(iii), “you” is limited to a credit union.
You establish a customer relationship when the consumer:
(A) Becomes your
member under your bylaws;
(B) Is a nonmember and opens a credit card account with you jointly
with a member under your procedures;
(C) Is a nonmember and executes the contract
to open a share or share draft account with you or obtains credit
from you jointly with a member, including an individual acting as
a guarantor;
(D) Is a nonmember
and opens an account with you and you are a credit union designated
as a low-income credit union;
(E) Is a nonmember and opens an account with
you pursuant to State law and you are a State-chartered credit union.
(iv) Examples of loan rule. You establish a
customer relationship with a consumer who obtains a loan for personal,
family, or household purposes when you:
(A) Originate the loan to
the consumer; or
(B) Purchase
the servicing rights to the consumer’s loan.
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(d) Existing customers. When an existing customer obtains a new financial product or service
from you that is to be used primarily for personal, family, or household
purposes, you satisfy the initial notice requirements of paragraph
(a) of this section as follows:
(1) You may provide a revised privacy notice,
under section 1016.8 of this part, that covers the customer’s new
financial product or service; or
(2) If the initial, revised, or annual
notice that you most recently provided to that customer was accurate
with respect to the new financial product or service, you do not need
to provide a new privacy notice under paragraph (a) of this section.
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(e) Exceptions to allow
subsequent delivery of notice.
(1) You may provide the initial notice
required by paragraph (a)(1) of this section within a reasonable time
after you establish a customer relationship if:
(i) Establishing
the customer relationship is not at the customer’s election; or
(ii) Providing notice
not later than when you establish a customer relationship would substantially
delay the customer’s transaction and the customer agrees to receive
the notice at a later time.
(2) Examples
of exceptions.
(i) Not at
customer’s election.
(A) In the case of financial
institutions other than credit unions and financial institutions described
in section 1016.3(l)(3), establishing a customer relationship
is not at the customer’s election if you acquire a customer’s deposit
liability or the servicing rights to a customer’s loan from another
financial institution and the customer does not have a choice about
your acquisition.
(B) In
the case of financial institutions described in section 1016.3(l)(3), establishing a customer relationship is not at the customer’s
election if you acquire a customer’s loan or the servicing rights
from another financial institution and the customer does not have
a choice about your acquisition.
(C) In the case of credit unions, establishing
a customer relationship is not at the customer’s election if you acquire
a customer’s deposit liability from another financial institution
and the customer does not have a choice about your acquisition.
(ii) Substantial delay of customer’s transaction. Providing notice not later than when you establish a customer relationship
would substantially delay the customer’s transaction when:
(A) You and the
individual agree over the telephone to enter into a customer relationship
involving prompt delivery of the financial product or service; or
(B) You establish a customer
relationship with an individual under a program authorized by Title
IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) or similar student loan programs where loan proceeds are disbursed
promptly without prior communication between you and the customer.
(iii) No substantial delay of customer’s transaction. Providing notice not later than when you establish a customer relationship
would not substantially delay the customer’s transaction when the
relationship is initiated in person at your office or through other
means by which the customer may view the notice, such as on a Web
site.
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(f) Delivery. When you are required to deliver
an initial privacy notice by this section, you must deliver it according
to section 1016.9 of this part. If you use a short-form initial notice
for non-customers according to section 1016.6(d) of this part, you
may deliver your privacy notice according to section 1016.6(d)(3).
