The Gramm Leach Bliley Act or GLB Act
The Gramm Leach Bliley Act is also known as the
GLB Act or the Financial Modernization Act of 1999. A
precursor to the new FTC Disposal Rule, the GLB Act was
established to provide guidelines for the safeguarding of
private consumer information for financial institutions.
The financial institutions referred to include not only
banks and securities companies, but also insurance
companies, and any type of business that handles financial
documents. This could include mortgage lenders, tax
consultants, credit counselors, debt collection agencies,
and any other businesses or service organizations that
handle private financial information. The act further
extends to those businesses, agencies or individuals that
receive financial information, even if they are not one of
the aforementioned entities. It includes the proper
handling of all financial records, which includes
destruction of information by means of paper shredders or
other appropriate methods.
The regulations set forth by the Gramm Leach Bliley Act
give federal agencies and the state governments the
authority to enforce two rules: the Safeguards Rule
and the financial privacy rule.
The Safeguards Rule
The Safeguards Rules that all types of financial
institutions and holders of private financial information
institute policies that govern the handling of this
information. This should be a ongoing process that is
maintained and given oversight to ensure that the policy
meets with the Federal Trade Commission Guidelines.
This part of the GLB Act does not call for the exact type of
way that an institution must dispose of their confidential
consumer documents, but is the impetus for the use of
crosscut paper shredders and other types of mobile shredding
services. The implementation of paper shredders is a
key method for protecting consumer information in an effort
to guard against identity theft and fraud.
The Financial Privacy Rule
This part of the FTC regulations governs the proper
methods for a financial institution to collect and disclose
customer information. Just as with the rest of the
regulations, the financial privacy rule applies to all
entities that keep or use private consumer information.
