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On May 24, 2000, the Federal Trade Commission has issued a final rule governing a financial institution's ability to disclose nonpublic information about consumers. The Commission considers educational institutions to be financial institutions for the purposes of this rule. These regulations were required by the Gramm-Leach-Bliley Act which was signed November 12, 1999. The FTC rulings are to go into effect on November 13, 2000 and compliance is required by July 1, 2001.

In brief, the FTC ruling

"...limits the instances in which a financial institution may disclose nonpublic personal information about a consumer to nonaffiliated third parties, and requires a financial institution to disclose to all of its customers the institution's privacy policies and practices with respect to information sharing with both affiliates and nonaffiliated third parties."

These rules are in addition to any other rules an institution may be obligated to, which limit the disclosure of nonpublic personal information. The Fair Credit Reporting Act (FCRA) and the Family Educational Rights and Privacy Act Regulations (FERPA) are two such examples.

The Commission has determined that compliance with FERPA will satisfy the conditions for compliance with the Commission's ruling.

"...institutions of higher education that are complying with FERPA to protect the privacy of their student financial aid records will be deemed to be in compliance with the Commission's rule"

Additional information
The information presented here is a summary of the extensive FTC ruling. Additional Information can be found on the following web sites.

• Federal Register: May 24,2000 [Page 33645-33689]
• The Senate Banking Committee has an entire page devoted to the Gramm-Leach-Bliley Act of 1999, including a Summary.
• The Law's full-text (HTML) can be found at the Government Printing Office's site. Section V (privacy) in PDF.
• The Federal Trade Commission's web site.
• A detailed review of the Gramm-Leach-Bliley Act's privacy issues can be found on FreeAdvice.Com
• Family Educational Rights and Privacy Act Regulations
• The Fair Credit Reporting Act

These recent privacy initiatives undertaken by the FTC may be of interest.

• FTC Recommends Congressional Action to Protect Consumer Privacy (May 22, 2000)
• FTC Report to Congress: "Fair Information Practices in the Electronic Marketplace" (May 22, 2000)