New “Safe Harbor” Privacy Notice Takes Effect January 1, 2011

The FTC and Federal Reserve Board have published a new form of privacy notice that, if properly completed and followed, will give dealers a “safe harbor” (protection)  from liability.  It is a simple form that can be printed on both sides of a single  8.5 x 11 inch piece of paper.

The agencies have also established a privacy notice form builder website that lets you create your privacy notice online and print it out to give to your customers.

The webpage for the privacy notice builder is located athttp://www.federalreserve.gov/bankinforeg/privacy_notice_instructions.pdf

The page has links to six different forms.  Forms 1, 3, and 5 include the Affiliate Marketing Rule notice which is required by another FTC Rule.  Although the Affiliate Marketing Rule notice can be given in a separate document, it makes sense to put all your privacy information in one document so it is not a good idea to use Forms 2, 4, and 6 all of which exclude Affiliate Marketing.

The only difference in Forms 1, 3, and 5 is if and how you want to allow customers to opt out of information sharing.  In this information age, your customer list is an important corporate asset and you may want to share it with local merchants, aftermarket providers, or other unrelated companies.  To do so, you must disclose your sharing practices and give the consumer the right to opt out.  The new privacy notice makes this easy to do.

Form 1 is built to allow opt outs by going to a webpage or calling a dedicated phone number.  A dedicated email address should also work.  Form 3 is if you don’t share and don’t collect opt outs, and Form 5 is if you want to allow opt outs by mail, which requires using an 8.5 x 14 inch piece of paper to print the mail-in notice.  Form 1 is recommended for ease of use while maintaining your right to share information.

In completing the form, all of the items in black ink have to remain exactly as they appear.  You complete the items in red ink (do it right on the page in the form builder) that are appropriate for your dealership and then print out the privacy notice when you are finished doing so. (As of yet, the site does not permit you to save an elect There is a blank box at the bottom of the second page where you can add a line for the consumer to acknowledge receipt of the privacy notice.  This is not required by law but is a good practice to prove your compliance.

The privacy notice form builder instructions page links to more item-by-item detailed instructions to complete the form.  The link is to the entire regulation in the Federal Register.   Once there, scroll down to page 62965 which is where the FTC’s detailed form completion instructions appear. Then simply review the instructions for all the red fields and complete for your dealership.  It is not hard to do.

Having a safe harbor from liability is reason enough to use the new form.  Saving on the cost of paper and having a privacy notice that consumers can understand are also benefits.  Take a look and give it a try.  You will be glad you did.