WASHINGTON-NCUA, in conjunction with the other federal financial regulators, shared findings recently from a report on how to make privacy notices more understandable for consumers. Evolution of a Prototype Financial Privacy Notice summarizes a year’s worth of consumer research to improve financial privacy notices. The report, conducted by Kleimann Communication Group, completes the first phase of an interagency project to clarify financial privacy reports for consumers. Survey data indicate that many consumers do not read or understand financial privacy notices. Phase two will be a quantitative study to assess the prototype. The report concludes that simpler financial privacy notices are possible working within the current law. After the Gramm-Leach-Bliley Act, which required the privacy notices, went into effect in 2001, “researchers reported that the privacy notices were too lengthy, dense in content and contained complex language; they found that most consumers neither read nor understand privacy notices,” the Kleimann report stated. Kleimann was retained for the research project in 2004. The project’s goals were to enable consumer comprehension, allow consumers to make comparisons and compliance. The design of the disclosures needed to be neutral and objective, but in addition to the content, the study found that the format was also crucial to consumer comprehension and usefulness. The final prototype consists of three pages: the key information of the disclosure, supplemental definitions and other information required under GLBA, and the opt-out form. All are in table format, which focus groups found to be easier to understand and make comparisons. “The findings were interesting because the [Federal Trade Commission] believes they have finally come up with a notice that will be meaningful for consumers,” NAFCU Senior Regulatory Counsel Carrie Hunt said. She said NAFCU would be seeking input from its members on the prototype. The 380+ page report is available at: http://www.ftc.gov/privacy/privacyinitiatives/ftcfinalreport060228.pdf.

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