Friday, October 19, 2007

The Gramm - Leach - Bliley Act Part 1

by: AFI

The never ending excitement of attempting to comprehend the Gramm - Leach - Bliley Act is next on our list. Compliance with this act is a HUGE part of how to measure a well run Automotive F&I Department. Enjoy:

The Gramm - Leach - Bliley Act was enacted in 1999 with the intent of protecting the confidential personal and financial information disclosed by consumers. This Act has two phases.

1 The first phase of the Gramm - Leach - Bliley act, the "Financial Privacy Rule," became effective in November 2000 and caused us to have to issue privacy notices.

2 The second phase, the Safeguards Rule, went into effect May 23, 2003. It sets out specific steps dealerships and other financial institutions must take to protect nonpublic customer information from unauthorized access.

The Privacy Rule mandates the issuance of Privacy Notices to inform customers as to the disposition of the nonpublic personal information they provide dealers in the course of purchasing a vehicle, arranging for funding and in some cases, acquiring insurance.

Essentially, the customer has to be told what is being done with his or her information beyond sending it to banks and/or lenders for the purpose of securing funding for the vehicle.

The customer is given the right to "opt-out" with regard to the sharing of his or her confidential information.

Dealers are required to issue privacy notices. These notices must be delivered regardless of whether the nonpublic information is shared with unrelated entities or not.

In addition, the financial institution to whom the dealership assigns the loan to is required to provide annual notices regarding it's privacy policy. (These are the legal-ese small print notices you get in the mail from every lender you have an open account with).

The rule went into effect in November 2000 and compliance was required as of July 1, 2001. I will never forget all the "jumping through hoops" my Finance Department did during this time. We did what we had to to do it right. We were a well run F&I department.

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