The Fair Credit Reporting Act (FCRA) promotes accuracy, fairness and privacy of information in the files of consumer reporting agencies.
In October of 2008, the Federal Trade Commission (FTC) issued an Affiliate Marketing Rule implementing amendments to the FCRA by the Fair and Accurate Credit Transactions Act of 2003 (the FACT Act). This has important consequences on the handling of consumer information by financial service organizations. Read on to find out more.
What is the Affiliate Marketing Rule?
The Affiliate marketing rule pertains to the use of consumer information shared among companies for the purpose of marketing solicitation. The information covered by the Affiliate Marketing Rule is known as ‘Eligibility Information’. The most important categories of Eligibility Information for insurers are as follows:
- Information about an individual collected on a personal insurance application used to determine coverage eligibility and risk rate.
- Information regarding transactions and experiences other than medical information. This can fall into two categories. Category 1 is the marital status information used to determine rates for private passenger auto insurance. Category 2 includes information like the claims history for a homeowner insurance policy.
- Consumer report information received from a third party – this cannot be used for marketing solicitation purposes unless the consumer gives consent.
The Affiliate Marketing Rule and related provisions of the FCRA can be a bit difficult to understand but here are a few points to take away.
Information that falls into Category 1 cannot be shared for any purpose unless the consumer is given the opportunity to opt out of sharing. Furthermore, if an affiliate receives information from another company for marketing solicitation purposes the consumer must be given the opportunity to opt out of marketing by the affiliate unless the affiliate using the information has a pre-existing business relationship with the consumer.
Affiliates may freely share any Category 2 information without giving consumers the opportunity to opt out. However, before an affiliate can use this information for marketing solicitation purposes, they must give consumers an opportunity to opt out of marketing use or have a pre-existing relationship with the consumer.
Although these are general rules that apply, in the long run, they may have little relevance to affiliate marketing programs due to an exception known as ‘constructive sharing’. Let’s take a closer look at how constructive sharing works.
Say a life affiliate establishes criteria concerning who it will be marketing insurance to. They might include people of a certain age, people with a good driving record, etc. Now they share that criteria with an auto affiliate.
The auto affiliate searches through its customer based and finds people who match that criteria
They then send them a solicitation inviting them to contact the Life Affiliate if they are interested in purchasing life insurance. This is permittable behavior in regard to Category 2 information and it may also be permitted for Category 1 information under certain circumstances.
Constructive sharing can also be permitted if a service provider to the Auto Affiliate matches the criteria provided by Life Affiliate with its claims data and sends out marketing solicitations for life insurance. However, the Auto Affiliate must have a contract with the service provider regarding the terms of access to information specifically concerning the policies and procedures used. Note that the service provider may also be an affiliate of the Auto and Life Affiliates.
The constructive sharing exception provides flexibility for insurers and other companies when it comes to using affiliate data for marketing purposes. In fact, it grants so much flexibility that many companies may decide there is no reason to provide a FCRA opt out for consumers.
However, insurers and other companies should be aware that additional restrictions on the sharing of health-related information established by the FCRA, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other state laws should be considered in the creation of any sort of affiliate marketing campaign.
Legal Help in the Marketing Affiliate Rule
The terms of the marketing affiliate rule can be quite confusing. If you feel your rights may have been violated concerning the sharing of information used for marketing solicitation purposes, it’s a good idea to consult with a reliable attorney.
If you are looking for an attorney in the state of Louisiana, call Samuel Ford of Alexander Shunnarah Personal Injury Attorneys. With years of experience in the field of consumer protection, he Can help you understand your rights and options.
Don’t let marketing solicitors get away with sharing your private information. Call the SVHC team today.
Samuel Ford of SVHC offers free consultations and, if you have a claim, you may be able to recover all associated costs and attorney’s fees, meaning SVHC may be able to represent you at no cost to you! Contact Samuel Ford today!