A lender wants to sell its closed-loan list of 900 borrowers to an insurance agency it has no ownership connection with. Assuming the proposed sale contains nonpublic personal information and no disclosure exception applies, what notice and opt-out steps are required?
Correct Answer
D) Notice and a reasonable chance to opt out are owed before disclosing
Disclosure of nonpublic personal information to a nonaffiliated third party outside the recognized exceptions requires notice and a reasonable opportunity to opt out first. Other choices: the relationship ending does not release the information, since the privacy obligation follows the data; signing the 1003 is an application rather than consent to a later sale of the list; and the disclosure is not forbidden outright, which is why the opt-out machinery exists. Source: 12 CFR 1016.10, limits on disclosure and the opt out
Why This Is the Correct Answer
Disclosure of nonpublic personal information to a nonaffiliated third party outside the recognized exceptions requires notice and a reasonable opportunity to opt out first. Other choices: the relationship ending does not release the information, since the privacy obligation follows the data; signing the 1003 is an application rather than consent to a later sale of the list; and the disclosure is not forbidden outright, which is why the opt-out machinery exists. Source: 12 CFR 1016.10, limits on disclosure and the opt out
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