By this time you have
probably received notices from your bank, insurance, credit union and
credit cards concerning their policy on privacy and your right to
“opt out” and not have your personal non-financial information
shared with others. This is the Gramm-Leach- Bliley Act that was
drafted as a safeguard to The Financial Services Modernization Act of
1999. The FSMA allows financial service providers, banks, insurance
companies, brokerage firms, etc., to sell each other’s services.
This was a popular concept before the depression but was prohibited
after the failure of the economy and financial service companies were
pretty much restricted to only offering their specific services and
The question seems to
be what, if any, effect does this have on business credit? At the NACM
legislative conference in March of this year, Robert Gordon, Counsel
to the House Financial Services Committee (banking committee) stated
that it was the intention of Congress to subject all business entities
in the US to the provisions of the GLB. And that is, as they say, when
it all hit the fan.
I have spoken to both
the Federal Trade Commission and counsel for the Senate Banking
Committee who have assured me that it is not the intention of the GLB
to burden business trade creditors with following the letter of the
law as prescribed by GLB.
They both suggest the
1. Download or print
Title V, Section 502 of the GLB (this can be found at http://www.senate.gov/~banking/conf/index.htm
), You will need Acrobat Reader.) Give this to your legal counsel for
review and let them determine if your firm meets the requirements of
2. If they feel you
qualify then simply create a privacy statement and send it to your
existing customers providing them the opportunity to opt out. New
applicants should receive this statement with the credit application.
3. It is not
necessary to include the privacy statement on invoices or statements.
However, your privacy statement should be sent to all customers at
least once in a 12-month period.
4. Check the Federal
Trade Commissions website (www: ftc.gov) ever so often to see if any
action has been taken with regard to GLB and trade creditors. The law
becomes effective July 1, 2001 and there will obviously be questions
and opinions forthcoming during the next 12 months.
The privacy statement
provided by banks and credit card companies is sufficient for trade
creditor purposes. Of course they will need to be modified to meet
your firms’ criteria.
THE ABOVE IS PROVIDED
FOR INFORMATION ONLY AND IS NOT TO BE CONSIDERED AS LEGAL ADVICE.
LEGAL ADVICE SHOULD BE OBTAINED FROM A LICENSED PRACTICING ATTORNEY
PREFERABLY BOARD CERTIFIED IN CREDITORS RIGHTS OR OTHER APPLICABLE
wish you well.