By this time you have probably received notices from your bank, insurance, credit union and credit cards concerning their policy on privacy and your right to “opt out” and not have your personal non-financial information shared with others. This is the Gramm-Leach- Bliley Act that was drafted as a safeguard to The Financial Services Modernization Act of 1999. The FSMA allows financial service providers, banks, insurance companies, brokerage firms, etc., to sell each other’s services. This was a popular concept before the depression but was prohibited after the failure of the economy and financial service companies were pretty much restricted to only offering their specific services and related activities.

The question seems to be what, if any, effect does this have on business credit? At the NACM legislative conference in March of this year, Robert Gordon, Counsel to the House Financial Services Committee (banking committee) stated that it was the intention of Congress to subject all business entities in the US to the provisions of the GLB. And that is, as they say, when it all hit the fan.

I have spoken to both the Federal Trade Commission and counsel for the Senate Banking Committee who have assured me that it is not the intention of the GLB to burden business trade creditors with following the letter of the law as prescribed by GLB.

They both suggest the following:

1. Download or print Title V, Section 502 of the GLB (this can be found at http://www.senate.gov/~banking/conf/index.htm ), You will need Acrobat Reader.) Give this to your legal counsel for review and let them determine if your firm meets the requirements of GLB.

2. If they feel you qualify then simply create a privacy statement and send it to your existing customers providing them the opportunity to opt out. New applicants should receive this statement with the credit application.

3. It is not necessary to include the privacy statement on invoices or statements. However, your privacy statement should be sent to all customers at least once in a 12-month period.

4. Check the Federal Trade Commissions website (www: ftc.gov) ever so often to see if any action has been taken with regard to GLB and trade creditors. The law becomes effective July 1, 2001 and there will obviously be questions and opinions forthcoming during the next 12 months.

The privacy statement provided by banks and credit card companies is sufficient for trade creditor purposes. Of course they will need to be modified to meet your firms’ criteria.

THE ABOVE IS PROVIDED FOR INFORMATION ONLY AND IS NOT TO BE CONSIDERED AS LEGAL ADVICE. LEGAL ADVICE SHOULD BE OBTAINED FROM A LICENSED PRACTICING ATTORNEY PREFERABLY BOARD CERTIFIED IN CREDITORS RIGHTS OR OTHER APPLICABLE LAW.