An individual gives a bank nonpublic personal information solely for a one-time determination of eligibility for a personal-purpose mortgage, then stops. There is no loan, account, brokering agreement or other continuing relationship. Under Regulation P, does this inquiry make the person a customer entitled to annual privacy notices?
Correct Answer
D) No: the person is a consumer, but these facts do not establish a continuing customer relationship
D. Consumer status does not by itself establish a customer relationship. The eligibility inquiry using personal information fits the consumer example. The facts exclude a continuing relationship, so the annual customer-notice obligation is not triggered. Scope and exceptions: Initial-notice and information-sharing obligations are separate. Even where a customer relationship exists, the annual-notice exception may apply if its conditions are met. Source: Section 1016.3(e)(2)(ii), (i), (j)(1) — https://www.consumerfinance.gov/rules-policy/regulations/1016/3/ Section 1016.5(a), (e) — https://www.consumerfinance.gov/rules-policy/regulations/1016/5/
Why This Is the Correct Answer
D. Consumer status does not by itself establish a customer relationship. The eligibility inquiry using personal information fits the consumer example. The facts exclude a continuing relationship, so the annual customer-notice obligation is not triggered. Scope and exceptions: Initial-notice and information-sharing obligations are separate. Even where a customer relationship exists, the annual-notice exception may apply if its conditions are met.
Why the Other Options Are Wrong
Option A: No, because providing information for a loan-eligibility determination does not make the person a consumer
It incorrectly denies consumer status for the specified inquiry.
Option B: An annual notice is owed to anyone who supplied 1 piece of information
One item of information does not automatically create a continuing relationship.
Option C: An annual notice is owed for 2 years after the last contact with them
The rule has no automatic two-year notice tail after an inquiry.
Exam Tip
Distinguish consumer status, customer status and each notice obligation.
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