WASHINGTON, D.C. – Federal regulators today released Evolution of a
Prototype Financial Privacy Notice, a report by Kleimann Communication
Group summarizing consumer research commissioned by the regulators as part of
their ongoing efforts to develop improved financial privacy notices.
The report’s release concludes the first phase of an interagency project
by the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the Federal Trade Commission, the National Credit Union
Administration, the Office of the Comptroller of the Currency, and the
Securities and Exchange Commission to explore alternatives for financial
privacy notices that would be easier for consumers to read, understand, and use
than many of the notices consumers currently receive from financial
institutions. These six agencies
were among those that jointly issued regulations in 2000 implementing the
financial privacy provisions of the Gramm-Leach-Bliley Act, but survey data
indicate that many consumers neither read nor understand the notices financial
institutions provide under those regulations.
The report’s findings indicate that it is possible for financial privacy
notices to include all of the information required by law in a short document
that consumers can readily understand.
The report fully describes the extensive research that underlies these findings
and the development of a prototype simplified privacy notice.
Over a 12-month period, researchers conducted focus groups and in-depth
individual interviews with consumers throughout the United States.
Based on consumers’ reactions to sample privacy notices, the researchers
modified content and design to create notices in a tabular format that improved
consumers’ ability to read, understand, and use the notices, as well as to
compare the information sharing practices of different financial institutions.
The report concludes that consumers need a context for understanding
information in financial privacy notices.
The research shows that while there is a general awareness of information
sharing practices, most consumers do not understand them.
According to the report, consumers are overwhelmed by complex
information, and simplification of
financial privacy notices enhances consumers’ ability to read the notices and
make informed choices about the use of their personal information.
The research also demonstrates that consumers more easily understand the
important information in the notice when good design reinforces the content.
The six agencies, together with the Office of Thrift Supervision, will
fund a second phase of the project, to be contracted separately.
This research will involve interviewing a much larger group of consumers
throughout the United States to measure the effectiveness of the prototype and
other examples of notices. The
agencies have deferred consideration of policy action with respect to financial
privacy notices until the next phase of consumer testing is completed. At that
time, the agencies expect to consider a full range of options for improving
financial privacy notices in light of all their consumer research.
The agencies’ efforts to improve these notices complement efforts to
improve the effectiveness of privacy notices worldwide, as well as other
government efforts to improve financial literacy.
The report is available online at:
http://www.ftc.gov/privacy/privacyinitiatives/ftcfinalreport060228.pdf.
(PDF 14MB)
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Cherie Umbel
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Bryan Hubbard
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OTS
Chris Smith
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SEC
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